Using Metrics to Manage a Recruiting Department

As many of you know, I host a monthly metrics discussion group (see below if you’d like to participate) for corporate recruiting managers. In our last session, we introduced two key topics:

1. The most important metrics to track and why.

Short-term vs. long-term metrics: why they’re different, and why short-term is more important.

I’ll use this article to recap those discussions, and set the floor for our next call. If you have a different viewpoint email me (lou@powerhiring.com), and we’ll try to get it on our next agenda. Despite a number of protestations, there was general agreement that quality, cost, and time were all important factors to measure. The order was debated at length. The how never came up. Here are some of the key points made about each. Quality While generally considered the most important factor, certainly by me and others, we could not sway the whole group. The issues, pro and con:

The business impact of a top performer outweighs an average person by 50% to 500%, dwarfing the cost to hire on an ROI basis.
Incoming candidate quality is too hard to measure.
Measuring candidate ROI is also too hard to measure.
Just because it’s too hard to measure doesn’t mean you shouldn’t focus on quality.

Cost per Hire This is considered by many to be the most important factor, but not universally so. The issues:

It’s relatively easy to measure ó and during a time when candidate supply exceeds demand, cost control is an essential role for the recruiting manager.
Staffing.org’s efficiency per hire is probably a better measure of cost per hire. Efficiency per hire is the total cost to hire, divided into the total compensation of the candidates hired. This results in a percent which is comparable to an external agency’s fees. For example, if a company spent $100,000 to hire 8 people, the cost per hire would be $12,500. But if the total compensation of the candidates hired was $1.1 million, then the efficiency per hire would be 9.1%. While the $12,500 seems high, when compared to typical agency fees 9.1% is quite low. By tracking efficiency per hire, trends are more meaningful.
An overemphasis on costs can backfire and cause quality to decline. An extreme “for example”: only run $100 ads on HotJobs or Monster and hire the best person who applies.
Cost only matters if quality is consistently high. Hiring managers won’t give a recruiter high marks for average quality and low costs. Ask hiring managers what’s most important and they’ll say quality and time to hire every time.

Time per Hire All agreed that this was important, with the issues focused on how to best measure it. The points raised:

Concerns about the real dates, including things like getting the real beginning date right, managers who start and stop, managers who don’t respond quickly enough, and recruiters who only count their actual time involved, not calendar dates (for some, three weeks is really only three days).
Just be consistent with whatever you measure. It’s the trends that are important.
The cost of not having a person onboard can dwarf the cost per hire. Lost sales, delayed implementations of projects, and dissatisfied customers make the time to hire for some jobs the most important criteria.

Our general conclusions were reasonably satisfying to all.

While cost per hire is an important metric to track and reduce, it should not come at the expense of candidate quality and time per hire. Staffing.org’s efficiency measure seems like a better tool than cost per hire. One good tactic is to put good cost control methods in place, but then put equal emphasis on measuring quality and time. Bottom line: these are more important ways to measure a recruiting department’s performance.
Quality is a critical factor ó and even if it’s hard or impossible to measure, it still must be done. The focus on improving candidate quality needs to dominate the recruiting department’s attention. Some basic approaches include tracking candidate quality by sourcing channel using qualitative measures like hiring manager satisfaction. Other more quantitative means to measure incoming candidate quality need to be developed. One approach might be to use POWER Hiring’s performance profiles in combination with ePredix’s bio-data filtering systems. A prototype of this new method will be presented at the next discussion group.
Time to hire is more important than many realized, and sometimes a convincing business case can be made that it’s more important than both quality and cost. Regardless, time to hire should be tracked by process steps to see whether delays are more a result of recruiter inefficiency or hiring manager procrastination.

While these measures of recruiting department performance are critical, the timeliness of the data is often more important. For example, if you don’t get the data immediately, what’s the point of the data? From our observations, data that’s over 30 days old takes at least another 30 days to implement changes, and then another 30 days to see if the changes worked. That’s 90 days after the problem really occurred. The most useful metrics are daily or weekly. Some key important short term metrics to track include:

Sendouts/hire by recruiter. Keep a trend line for this by recruiter. You’ll observe changes in weekly productivity, and it’s a good indirect measure of candidate quality. Four to five should be about right for most jobs.
Sendouts per week by recruiter. This is a direct measure of sourcing and recruiting skills, since the hiring manager needs to agree to see the candidate.
Candidates by sourcing channel. This indicates the effectiveness of your sourcing efforts. It gives the recruiting manager an indication when one channel has dried up and when it’s time to move to a different ó maybe more costly, but hopefully more effective ó channel.
Candidate quality by sourcing channel. Indirectly, you’ll get this by surveys of recruiters, hiring managers, source of sendouts, and the ePredix/POWER Hiring quality indicator.
Hiring manager satisfaction survey by assignment. Put a quick email together after every assignment is completed, asking the hiring manager to rank the quality of the candidates seen and hired, the timeliness of the candidates submitted, and general satisfaction with the recruiter’s understanding of job needs, interviewing assessment skills, and cooperation.
Time for the first slate of candidates to be sent to the hiring manager by assignment. This makes sure you don’t overlook any assignments and that hiring managers’ needs are being met.

There are probably other short-term metrics to track, but this represents a good sample. More important to this discussion is the fact that short-term metrics as a group are probably more important to track than long-term metrics. Recruiting is about filling positions with high quality candidates as quickly as possible, at reasonable cost. If you’re doing everything right on a daily basis, the long-term issues will naturally take care of themselves. If the short-term data indicates problems, you might have to make long-term changes (new systems, new channels, more training, etc.). But if you wait for 30 days or more to find out something’s amiss today, you’re already too late. Adios. (Note: As many of you know, I host two monthly online discussion groups where we explore these topics in greater depth around the theme “Metrics for Recruitment Management.” One of the discussion groups is exclusively for those in corporate recruiting management, and the other exclusively for third-party recruiting management. Both groups are sponsored by POWER Hiring, Staffing.org, and ERE.