Note: this article was originally published on LinkedIn. Read or follow my latest posts on LinkedIn.
What are the 3 most important recruitment analytics? A great question as it forces you think about the things that really matter in recruiting. The answer must be sought in recruiting KPI’s, metrics or analytics that uncover the dollar impact or Return On Investment (ROI).
If you are thinking about purchasing a new ATS, will this result in faster, better and / or lower costs in hiring? For an international organisation that hires 500 new staff each year the answer will likely be yes, for a small company that hires 5 people per year probably not. Paying for a LinkedIn Recruiter seat? Manually posting jobs or automate the distribution of job postings? The ROI will probably be positive, if you use it extensively.
There is nothing more important than demonstrating the (dollar) impact of your recruitment actions. The 3 most important aspects that really matter to your business and have the biggest impact are quality, speed and costs – or better: yield or revenue – of new hires.
#1 Quality of hire.
There are many metrics related to the quality of hire. Is your new hire evaluated as a top performer? Great! But be careful to interpret this data as it cannot be seen in isolation. If a candidate is an top performer, has low retention, and an ambassador for your organisation, the ROI of this hire will be high. However if a top performer stays for only a few months, the end result (ROI) is poor. Recruitment analytics, big data and predictive analyses can provide great insight in what it takes to hire top performers.
#2 Delivering on recruiting i.e. speed of hire.
There is a strong correlation between speed, quality and costs in recruiting. A faster hiring process will result in higher quality candidates at (often) lower costs. And the cost of an empty seat can be high, especially in business critical positions.
Fact: better performing organisations move 1.6 times faster from the un-official opening of a position to approving that position (source: 2012 BCG/WFPMA analysis).
#3 Benchmarking out-of-pocket recruiting costs.
Relatively easy to measure and, if benchmarked against direct competitors, gives an indication in the performance of high-quality and low cost sources such as employee referrals, internal promotions and direct sourcing.
But same as before, cost-per-hire or the performance of low-cost high-quality sources cannot be seen in isolation. Example: if you competitor hires 60% via employee referrals and your organisation 30% (which is pretty good), your competitor is more likely to be a ‘magnet’ for talent.
In short, everything you can measure is, or should, be related to ROI and provide insight in how quality, speed and costs (or yield) can be improved. Recruiting is an HR function with the highest impact on revenue growth and profit margin, and we need to prove this.