What is the simplest way to assess which of your recruiting efforts work best

Understanding how to calculate recruitment KPIs, or key performance indicators, can help you improve your recruiting strategies. In this guide, we share examples and formulas for the top recruitment KPIs to measure in 2021. You’ll also learn how to align recruitment KPIs to business strategy using real-time dashboards.

In this article:

• How to use KPIs to measure recruitment effectiveness
• How to set KPIs for recruitment
• Top recruiting KPIs for 2021
• Recruitment KPI dashboards

What Are KPIs in Recruitment?

Recruitment KPIs are used to measure recruiting performance and process. They can reveal areas for improvement and show the value and return on investment for specific recruitment efforts.

KPIs for measuring the recruitment process include both popular HR performance metrics and some unique to recruiting. For example, you might look at cultural fit and productivity levels, as well as KPIs like how long the hiring process takes, the source of the hire and sourcing channel effectiveness.

Recruiting KPIs vs. Metrics

Metrics are measures of your business performance. Usually expressed through data, such as the number of visitors to your website or the number of applicants for an open position.

KPIs are the most important metrics

What are some of the most helpful hiring KPIs? KPIs are, by definition, the key or most vital measures for your business or department. KPIs should relate to specific company goals and are a way to show how you are achieving or working toward those objectives.

KPIs are boiled down into a single figure for uncomplicated and easy communication

Recruiting KPIs are often presented as percentages, ratios or single-digit numbers so you can see progress toward goals or performance improvement over time at-a-glance.

Performance-based that tie to overall business objectives

The most effective recruitment KPIs are based off performance and tie to overall objectives. For example, rather than just looking at a metric like the number of people who apply for an open position, a KPI will reveal the number of qualified candidates who are able to contribute to your business.

Key Takeaways

• The recruiting process should add value to the business, and you should be able to show the return on your investment for recruiting activities.
• You can use the data and insights gleaned from recruitment KPIs to align your recruiting funnel with business outcomes.
• Gathering and monitoring recruitment analytics like KPIs can be overwhelming if you don’t have the right technology, leadership and strategy in place.
• Recruitment KPIs are only as useful as the data-visualization and communication tools you use to analyze and distribute them.

How to Use KPIs to Measure Recruitment Effectiveness

Align your recruiting efforts to overall business strategy and objectives and use KPIs to measure your success.

Choose recruiting KPIs that are specific, measurable, achievable, relevant and timely (SMART). Because recruiting is a considerable operating expense, choose KPIs that show how your efforts are saving the business money, hiring top talent, improving efficiency or otherwise reflect the return on investment for recruiting costs. If your company has other specific goals that could tie to recruitment, select KPIs to show your value. For example, if new hire retention is a broader workforce planning goal, tightening up your recruitment funnel and finding the right candidate for the position can help with retention efforts.

Consider industry, company and position

Think about your industry, company size and position in the labor market to pick recruitment KPIs that best align with your overall HR and human capital management (HCM) strategies. Pick the KPIs that make the most sense for your company and industry. And keep in mind, these may change over time.

Build an efficient recruitment pipeline

A recruitment pipeline, also known as a talent pool, is a proactive approach to hiring. It’s a process of attracting a pool of possible candidates for hard-to-fill roles or positions with high turnover. It involves building a brand as an attractive workplace, finding passive candidates and staying in touch with applicants. Identify specific teams, roles or types of positions that may need an extra boost and focus efforts. For example, you may need to zero-in on your finance team recruitment and retention and strengthen that specific hiring pipeline.

Closely measure your recruiting funnel

Building up and maintaining a talent pipeline will likely require a significant investment of resources. KPIs can help tie those efforts to measurable outcomes that boost your business’s bottom line and performance.

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HR and Payroll

How to Set KPIs for Recruitment

What are the most important KPIs? Ask the following questions to help determine the value of your recruitment process and which KPIs to monitor.

• How often do we source the right candidates for specific job requisitions?
• How long does it take to recruit the right candidate for particular jobs or particular teams?
• How much does it cost to identify and engage with qualified candidates?
• How many qualified candidates make it to the interview round?
• How many interviews does it take for specific hiring managers to select a candidate?
• How long does it take to recruit a qualified candidate?
• How does our compensation rank with the competition?
• How do new hires rate our recruiting process?
• How many internal referrals have we received for the open position?

The volume of HR-related data and recruiting metrics can get overwhelming. KPIs can help you see what efforts are working, what areas of your recruitment need improvement and how recruitment impacts other components of your overall HCM strategy. They do this by measuring improvement over time, benchmarking against peer companies, as well as examining metrics like costs associated with hiring.

Top 11 Recruiting KPIs for 2021

Here are some of the most impactful recruitment KPIs with examples and how to use them to measure performance.

1. Time to Hire

This KPI measures the time between when a candidate is contacted for a job opening or enters the recruiting funnel, and when they accept a job offer.

Time to hire = Days elapsed from date the job was posted or candidate was contacted for recruitment to the day an offer is accepted

Time to hire (or days to offer) is an essential measure of efficiency and helps identify bottlenecks in the recruitment process. Top talent can be off the market within a few weeks, as they’re desirable candidates. So, keeping the time-to-hire as short as possible can boost your quality of hire and lower costs. Additionally, monitoring this KPI can inform hiring decisions for specific timelines or outcomes. If you know how long it takes on average to hire new salespeople and customer service agents, for example, it can help inform when to start the hiring process for a new project or product line. It’s an essential metric for HCM strategy and workforce planning.

Segment and track time-to-hire by department, team and hiring managers. Monitor a separate time-to-hire KPI for recruitment consultants and a KPI for recruitment managers if you use third-party recruiting agencies. Use an applicant tracking system (ATS) or human resources management system (HRMS) to automatically monitor and organize this data.

2. Sourcing Channel Efficiency

This KPI measures the usefulness of your sourcing channels, or where you advertise job openings. It helps you understand where you find the most qualified candidates and the ROI of different sourcing pipelines.

Sourcing channel efficiency = Number of qualified candidates from a specific source – the average number of applicants from all sources

Knowing the sourcing channel efficiency KPI helps you develop effective sourcing strategies and improve the overall recruiting process. To track and monitor this KPI, set up conversion tracking tools like Google Analytics or leverage analytics tools from third-party applications. Use your ATS or HRMS platform to track sourcing channel data for each candidate. Use the data to analyze trends and compare results with related metrics like sourcing channel cost, application drop off rate, cost per hire and recruitment funnel effectiveness.

3. Number of Qualified Candidates

Use this KPI to assess how well your sourcing efforts are finding and progressing qualified candidates through the recruiting funnel. It’s expressed as a ratio of qualified candidates who make it past the initial stage of recruiting.

Number of qualified candidates ratio = # of candidates hiring managers deem qualified / # of candidates who make it past the initial screening

So how do you decide what makes a qualified candidate? There are a few approaches you can take. The simplest is asking or sending surveys to hiring managers if the candidates who emerge from the screening process are qualified. If you’re unable to do that, you can also look at other metrics. For example, of the candidates who make it through the initial round of screening, how many did hiring managers want to interview? Or you can use recruitment metrics like referral rate or interview-to-hire ratio to give insight into how qualified your candidates are for specific postings. A high interview-to-hire ratio helps surface issues with your advertising efforts, job descriptions, candidate screening process or sourcing channel effectiveness. You can also establish this KPI as a per hire ratio.

4. Submit to Interview Ratio

This KPI looks at the number of candidates submitted to hiring managers for possible interviews. A higher ratio might indicate issues with sourcing and screening because the sourcing and screening process should result in only qualified candidates that meet the manager’s needs. The ideal ratio here is 1:1.

Submit to interview ratio = # of candidates submitted for consideration / # of candidates interviewed

Monitor recruiting metrics like hiring manager satisfaction and source of hire if you notice issues with achieving your recruiting KPI benchmark for submit to interview ratio.

5. Interview to Offer Ratio

Interviews are crucial to recruiting, but they can be a time-consuming activity for candidates and hiring managers. An unsatisfactory interview to offer ratio creates a higher cost per hire. Interviews are also key factors in other recruitment KPIs, such as candidate experience and net promoter score (NPS).

The optimum interview to offer ratio is 3:1. If you average a higher rate, verify that the hiring manager is writing or reviewing every job description. Then focus on your sourcing and screening activities and KPIs like source quality, sourcing channel efficiency and the number of qualified candidates.

Interview to offer ratio = # of candidate interviews / # of job offers

6. Offer Acceptance Rate

After finding qualified candidates and taking them through the screening and interviewing process, you want them to accept the job offer. If they don’t, there may be some issues with company reputation or your compensation and benefits strategy. Working with your finance team can help inform a proactive retention strategy, as well as boost the offer acceptance rate.

Offer acceptance rate = (# of accepted job offers / total offers extended) X 100

Alongside the offer acceptance rate, keep track of compensation negotiations with qualified candidates to provide even more insight into whether your pay is competitive and if adjustments need to be made. Additional insight can come from looking at if improving other KPIs, such as the time to hire, can help boost the acceptance rate.

7. Cost Per Hire

How much does it cost to fill a vacant position? This KPI should take into account all the associated costs, including things like how much you pay to post the job on different job boards, any referral fees, the cost of attending job fairs, etc. Additionally, you should account for the time of the HR recruitment team, and if possible, the cost for others to help recruit and train new employees, including onboarding and interview time. By looking at the bigger picture here, you can start to find areas where you can improve efficiency, as well as justify retention efforts to decrease employee turnover. It’s also a key measure to inform your recruiting budget.

Cost-per-hire = Total recruiting cost / # of hires

The average cost per hire varies by industry and position and is heavily influenced by the labor market.

8. Quality of Hire

There isn’t a one-size-fits-all approach to determining the quality of your hire. Usually, this is a conglomerate of measures that can include everything from employee productivity at the three-, six- and 12-month marks, to new-hire attrition. Generally, this is broken into two categories: pre-hire quality and post-hire quality.

Pre-hire quality

Based on references, resumes and work experience, are you attracting the type of candidate who you believe has the ability to perform the job to your satisfaction? A few measures to look at include time-to-hire and first-offer acceptance rate. And ask your hiring managers how satisfied they are with the pool of candidates they receive for each job posting and track their level of satisfaction.

Pre-hire quality satisfaction rate = (# of managers who are extremely or very satisfied with candidate pool / total number of surveys filled out) x 100

Post-hire quality

How long does it take for new employees to become productive, and how does that productivity compare to peers who have been doing similar jobs? Also, look at things like cultural fit with specific teams and overall company culture. And consider measures of employee engagement, which can lead to better employee retention and higher employee satisfaction. Employee surveys and performance reviews can be important tools for determining post-hire quality.

One of the KPIs for post-hire quality is one-year attrition. A high turnover rate can indicate a recruiting problem with finding the right employees for the job.

One-year turnover rate = # of employees who leave within one year of hire date / total number of employees who leave during the same period

9. Hires to Goal

This is a KPI to use if you have a goal for the number of new hires to make for a specific time period. For example, you may need to hire 15 new employees to help roll out a new product line in this quarter. It could comprise salespeople, IT professionals and administrative support.

Hires to goal = (# of new hires in a given period / hiring goal for that period) x 100

Reaching hiring goals is a good measure of the strength of your candidate pipeline, workforce planning and recruiting processes.

10. Candidate Net Promoter Score (NPS)

This KPI measures the applicant/candidate experience during the recruiting process. Candidate NPS provides insight into how likely candidates are to recommend your company based on their recruiting experiences.

Candidate NPS = % of promoters – % of detractors

Ask applicants, whether they’re hired or not, this survey question: “On a scale of 1-10, how likely are you to recommend our company to a friend or colleague?”

Subtract the percentage of 1-6 responses (detractors) from the percentage of 9 or 10 responses (promoters). Don’t include answers of 7 or 8 in the calculation. Collect NPS data at various stages of the recruiting process and segment the data by recruiter and recruiting stage. An NPS above 50% is usually considered excellent.

11. Recruitment Site Analytics and Social Listening

Customize this KPI to fit your social media and online recruiting strategy. Use website analytics tools and social listening technology to gather and analyze user data, including visitor demographics, source channel effectiveness, source channel cost and candidate engagement online.

Website and social listening KPI = (# of applicants from a social platform (e.g., LinkedIn) / total # of online applicants) x 100

Combine various recruiting metrics to form your website and social listening KPIs. For example, to gauge your employer brand on each social media platform, use social listening tools such as Sprout Social or Hootsuite to track candidate engagement by conversations and comments related to the recruiting process.

Use Google Analytics to track conversions from the websites you use to post job openings, including demographic data. Using an HRMS platform to combine the disparate data from social media platforms and recruitment websites with integrated recruitment KPI dashboards can help you avoid paralysis by analysis.

Recruitment KPI Dashboards

How do you measure success in recruitment? Well, that depends on the goals of your business. Are you expanding and need to drastically increase the number of employees? Or maybe you’re working to attract just a few key top-level positions. Whatever your goals may be, defining them and then tracking progress with dashboards is an important step. Recruitment dashboards are reporting tools that help you visualize KPI data and evaluate performance. Dashboards display real-time details to empower decision-making and align recruiting activities with business objectives.

KPIs for Recruitment Agencies

How do you measure effectiveness of a recruiter? This may vary for agencies, consultants or individual recruitment managers. Recruiting agencies need to move fast and produce results in a highly competitive market. The essential KPIs for agencies focus on the early stage and top-of-funnel recruiting activities. Build a dashboard that highlights sourcing and talent screening activities featuring the following KPIs:

• Hires to goal
• Application completion rate
• Submit to interview ratio
• Number of qualified candidates

KPIs for Recruitment Consultants

Recruiting consultants often provide a targeted approach to a recruiting strategy. They use their expertise to augment existing HR resources and improve performance at specific recruiting funnel stages. Build a dashboard that highlights data from niche recruiting activities and strategies featuring the following KPIs:

• Recruitment site analytics and social listening
• Candidate experience
• Hiring manager satisfaction
• Adverse impact
• Offer acceptance rate

KPIs for Recruitment Managers

Recruiting managers are responsible for showing ROI for recruiting activities. The essential recruitment analytics for management help them visualize the cost of various stages of the recruitment funnel. Build a dashboard that highlights value-added recruiting activities featuring the following KPIs:

• Time to hire
• Cost per hire
• Sourcing channel cost
• Sourcing channel efficiency
• Interview to offer ratio

New Methods to Increase Recruitment Effectiveness

The talent war is now a digital battlefield. Monitoring recruitment KPIs and using data is a winning strategy. To keep up with the competition, you’ll also need modern technology and digital recruiting plans.

• AI screening software: Recruiting software powered by machine learning algorithms can instantly screen out unqualified applicants and shortlist thousands of qualified candidates based on parameters you search for in your ATS or HRMS platform. AI-powered software can screen for and remove discriminatory language to avoid adverse impact.
• Predictive hiring assessments: Advances in data science and predictive analytics are empowering data-driven recruiting and hiring. Software applications can process large data sets from performance management systems and HRMS databases with predictive models and advanced algorithms. The data analysis creates more accurate hiring assessments using business intelligence that may improve KPIs such as turnover rate, quality of hire and cost of hire.
• AI recruiter chatbots: Machine learning algorithms and modern web design combine to create AI-powered chatbots embedded in websites and recruiting portals. These digital AI assistants engage with candidates 24/7. They can help navigate the application process and supplement phone screening interviews with automated questionnaires to determine qualifications.
• Digitized reviews: Online career websites and employer review platforms like Glassdoor changed the way candidates engage in the recruiting process. Digital reviews on these platforms reveal information about the employer’s brand, including workplace culture, compensation and work-life balance, before the recruiting process starts. Your recruiting strategy should include managing the information on these websites with employer branded content and monitoring KPIs related to the conversations occurring in this space.
• Video interviews: Recruiting is an expensive, time-consuming endeavor for businesses of all sizes. Factor in time and opportunity cost, and it’s clear the interview stage is a costly activity. Incorporating video interviews in the recruiting process is a cost-effective, flexible strategy that improves investment returns and creates more schedule flexibility. These changes can impact critical KPIs like cost per hire, hiring manager satisfaction, interview to offer ratio and more.
• Mobile engagement: Candidates overwhelmingly prefer a mobile-friendly application process. Meet your candidates where they engage with your job opportunities and extend your mobile-friendly recruiting activities to sourcing and screening activities. Seek permission to communicate with candidates via text messages and leverage your mobile engagement to improve your employer brand with different demographics.

How to Simplify Recruitment KPI Reporting and Recruitment Effectiveness

Recruitment KPIs help your recruiting efforts be more data-driven and cost-effective. To manage recruitment analytics, you need technology that automates the process and delivers advanced data-visualization and reporting features. Companies with an advanced HRMS solution can integrate real-time recruiting data with financial analytics across a single source of truth. It will also provide advanced dashboards to demonstrate the value of recruitment efforts, improve HR efficiency and enhance engagement in the recruiting process.

NetSuite’s Human Resource Management System

HR-related recruiting costs are one of the largest expenditures for companies of any size. An integrated HRMS platform provides a suite of software applications that can store and organize your data to help you track KPIs and report on progress. Easily track and monitor vital recruiting KPIs that measure performance and highlight investment returns using real-time, company-wide financial dashboards.

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