As many recruiters and HR managers know, the moment your top candidate accepts your offer letter is the moment when a huge weight is lifted. Now that the position is filled with a candidate you feel confident about, it’s time to celebrate — so kick back, pour yourself a glass of wine and congratulate your team on its newest member. For many businesses, recruitment software makes the process of finding great talent easier than ever, making the celebration of filling an open position even sweeter. However, can you ever really be certain that your recruitment system is working for you? Let’s talk about how to use recruiting metrics to measure the success of your system.
Tracking the recruitment metrics of your system involves far more than just answering the question of whether or not the tools help you find a candidate to fill the open position within your organization. There are a variety of factors to consider, from how many interviews you conduct during the hiring process to how well the candidate performs after you hire them. Overall, there are many components that you can measure to determine if your recruitment product is as helpful as you need it to be.
What Should Your Recruitment System Do?
When you first began shopping for your recruitment system (or even if you’re just starting to look), the first thing you should have done is create a list of requirements for the solution. There are likely a few key features that were a must-have for the system when you did your shopping and began comparing vendors. When it comes time to measure the ROI of your recruitment product, you’ll want to refer back to this list to see if the system is achieving all of the goals you had for it.
Some of the important features you might want to pay attention to include:
- Applicant Tracking System (ATS): An effective ATS feature will allow you to store and assess candidates automatically as well as facilitate tracking them as they move through the interview process.
- Candidate Management: Once you’ve selected your top candidate and they’ve accepted your offer, there’s a slew of tasks that need to be completed for them to become an active member of the team. From onboarding and documentation to training, this feature can smooth the transition that occurs after hiring an applicant.
- Job Posting: Writing the perfect job posting isn’t enough to find the ideal candidate; you also need to share it on the proper job boards and social networking sites. The job posting feature helps you post jobs in the places where candidates are looking.
- Recruitment Process Management: This feature helps attract candidates and facilitates communication with applicants. Because it manages the recruitment process from start to finish, this function is arguably one of the most important capabilities of any recruiting solution.
- Reporting and Analytics: In-depth analytics can provide a high-level overview of the candidates who are applying to open positions within your organization. This information can be valuable in informing future job postings and can guide any future changes that need to be made to your recruitment process.
Why Should You Measure the ROI of Your Recruitment Solution?
The standard measurement to determine the success of any recruiting product has always been cost-per-hire. This metric is insanely easy to calculate and provides excellent information about whether or not your money is being used effectively. However, though this is the standard that talent acquisition leaders tend to focus on, it is a far cry from providing an accurate depiction of whether or not the software is actually working. That’s why you need to focus on overall ROI. Though determining this may be a far more involved process, it’s worth the time and effort.
While cost-per-hire is an important part of determining overall ROI, it only gives insight into the financial side of an investment, whereas a complete ROI gives insight into far more than just the money. While you want to be sure you aren’t overspending, you also want to ensure that you aren’t spending more time on the hiring process than you need to. Most importantly, you want to be sure that the applicants you hire are going to not only do good work, but also stay with your organization long term.
By conducting an ROI assessment, you’ll be able to see the full picture of whether or not your solution is worth the investment you’ve already made. Once you’ve done this assessment, you’ll know if the system you use meets your needs or if it’s time to drop your current solution and look for a new one.
Five Ways to Measure Recruitment System ROI
While cost-per-hire isn’t the best measurement to determine the success of your recruiting system, it’s still an important metric. However, it isn’t the only metric you should look at to determine whether or not the product you use is meeting your business’s hiring needs. It’s also important to recognize that while the factors you’ll want to measure can provide insight into the success of your recruitment product, they might also reflect other aspects of your business. For this reason, it’s important to look at a variety of data metrics so that you can have a complete picture of your recruiting processes.
Unfortunately, not all of the recruiting metrics you’ll want to track will be easy to measure, but don’t let that be a deterrent from effectively measuring your ROI. With a little bit of planning, it’s easy to implement best practices that will allow you to analyze these factors, which will not only help you track the success of your recruiting system, but will also provide insights into your hiring and retention processes.
1. Turnover Rates
The primary function of a recruiting system is to find and hire the best candidates. However, simply hiring a new employee is not enough. Once you’ve hired a new team member, you need them to stay with your team. That’s why it’s important to look at rates of retention and turnover. Specifically, you should be looking at what your turnover rates are for employees within their first year with your organization.
To measure this and use the data effectively, you may need to do a small amount of research. Begin by calculating what your turnover rates are and be sure to look specifically at the number of employees who leave within their first year. Once you have this information, you’ll want to do additional research to discover what the typical turnover rates are within your industry. From there, you can see how your retention rates stack up against other companies in your business sector. If you’re losing new employees more frequently than others within your industry, you may have a problem.
If you’ve measured and assessed your turnover rate only to discover that you’re losing employees at alarming rates, then it’s time to take steps to resolve the issue. High turnover can indicate two things. The first problem could be with your company culture. If your employees aren’t receiving enough support or don’t feel welcome, they could leave sooner than you expect. However, equally as likely is the possibility that high turnover is a result of ineffective recruiting efforts.
Your recruiting system should find top candidates for your organization, but it should also find candidates who will benefit from your organization. Hiring employees who are interested in the industry that you operate in or who are on a career path that aligns with your organizational goals will help to keep those top candidates with your business once they’re hired. After all, investing in hiring and onboarding a new employee is a wasted effort if they leave their position too soon.
2. Employee Performance
Of all of the metrics used to measure the success of your recruitment product, employee performance can be the most difficult to assess. Though it may be challenging to track and measure, this metric will provide valuable insight into the quality of the candidates that your hiring process is bringing through the doors of your business.
There are a handful of factors that could influence employee performance. However, regardless of the elements that could affect performance, you’ll want to ensure that the candidates you choose to bring on as members of your team will perform at a high level. Of course, you’ll need to provide some type of training to any new employee, but your recruiting process should source candidates who are qualified for the position and equipped with skills that prepare them to be successful in the role that they are hired for.
So, how can you measure this? The best method for evaluating the performance of your new employees is to set up a system of regular check-ins so that you can see how they’re doing. This may require a meeting with other managers to determine how best to track, measure and evaluate performance. However, once the initial work to set up this program is done, you’ll be able to see whether or not the candidates that your recruiting application finds are truly best-suited for your organization.
3. Cost Per Hire
Often the standard recruiting metric to gauge the success of your solution, cost per hire needs little introduction. As the name implies, this metric focuses on how much money your organization spends on hiring each new employee. This is relatively easy to calculate. In fact, there is a very simple formula for determining this information.
So, what are some of the expenditures you’ll need to collect to calculate this? Start by totaling all of your internal costs. Internal costs include factors such as recruiter salaries, employee referral bonuses and physical infrastructure, such as the meeting room used to conduct interviews. You’ll want to total your external costs as well. External costs include expenses such as career fairs, advertising and recruiting software. Once you’ve combined both your internal and external costs, divide them by the number of hours spent to hire someone and voila! You’ll have an idea of how much it costs your organization to hire a new employee.
4. Time to Hire
If you guessed that this metric is all about how long it takes to fill a position, then you guessed correctly. If it’s taking more than a month to fill an open position within your organization, then there’s a problem. While it’s often been debated on how long the hiring process should take, this timeframe should be the one that you aim for.
Why is two to four weeks the ideal? Imagine that you are considering two top candidates to fill a position within your organization. However, since you’ve found such excellent candidates, one of them is also a prime candidate with three other organizations. If you take too long to extend an offer, your top candidate may have already accepted an offer with another organization. You’ll still have a pool of candidates to choose from, but the candidates that are left likely won’t be your top choices.
Additionally, during the time that you’re interviewing candidates to hire, your organization will be down a member. This means that your other employees might be under additional stress as they complete extra tasks while awaiting a replacement for the vacant position. While this might be manageable short term until you hire and train a new employee, this can have many long term downsides. If your employees are spread too thin for an extensive length of time, the quality of their work may suffer, and their job satisfaction could decrease. Once a position opens within your organization, hiring a new employee quickly helps to ensure that your team is not at risk of falling behind on work, and allows you to train your new employees as soon as possible, making for a seamless transition.
5. Candidate Experience
Finally, while the recruiting process is focused on finding the best candidates for your organization, it should also prioritize the candidates who move through the recruitment and hiring processes. Double-check that the job postings you create are clear about what the position is, what the job duties will entail, and if there are any opportunities for professional development. If you don’t do this, then you could be sifting through candidates who aren’t truly interested in the position they’re applying for.
You’ll also want to ensure that recruiters are aware of not only what you’re looking for in a candidate, but also what the candidates they speak with are looking for in a job. While you want to hire the most qualified applicant, you also want to be sure that the applicants you devote time to are also interested in staying with your organization for longer than a year. Ideal candidates will not only benefit your organization, but will also receive their own incentives for working at your company, such as career development. If you can provide additional opportunities to the new employees you hire, then they’ll be far more likely to stay with your organization.
What to Do if Your ROI Isn’t Enough
Now that you know what factors you should assess to determine the ROI of your recruitment solution, what should you do with that information? If your system is effective and scores well among all of these metrics, then you should keep the program you’ve already implemented. However, if you’re concerned about the recruiting metrics you’re looking at, then your recruiting product might not be as effective as it needs to be. In this scenario, it’s probably time to start looking for a new solution.
If you’ve decided to look for a better recruiting solution, then your first instinct might be to compare your current system to others that are available. However, for that comparison to be effective, you’ll need to do a little bit of backtracking.
Remember that list of requirements we mentioned earlier? This is a perfect time to dust off that list and update it. Use your new knowledge of what your current solution isn’t doing, and be sure to highlight those things on your list of must-have features. You can then use this to ensure that whatever new recruiting products you consider will be a good fit for your business. Then, once you’ve narrowed down a list of software vendors, you can begin to compare them to the system you currently use.
The Wrap Up
In a perfect world, your recruitment processes would always find the most qualified applicants quickly, making it easy to find and retain skilled candidates. Unfortunately, that is not always the case. If your current recruitment system isn’t being as helpful as you wanted it to be, then it might be time to find a new solution that will meet your organization’s needs. If that’s the case, then consider reviewing all of our recruitment reference materials to help guide your search for a new solution that delivers everything you need.
Where does your recruitment software fall short? Let us know by leaving a comment below!