Obviously, HR and the corporate executives want to know areas of recruiting and hiring processes need to be measured.
They get the usual list: cost-per-hire, source of recruits, time-to-fill, quality of hire, and perhaps a few more. The trouble starts as soon you begin to dig into actually generating this data. Challenges include:
- The data is hard to get
- The specifics of how to calculate the metrics are surprisingly complex
- The accuracy of the data is debated
- The business relevance of the metrics is uncertain
Of the typical recruiting metrics, which ones will matter to your CEO? Of course, CEOs care about costs, but the savings from reducing cost-per-hire are too small to significantly affect the bottom line. What CEOs care about most is quality of hire. In fact, it is not just CEOs who care; Dave Ulrich’s research shows that one of the most important factors for investors is leadership quality—and that depends on quality of hire along with succession and development.
The topic of Recruiting or hiring metrics can raise a good deal of angst within the HR function. This angst is well founded. Gathering the metrics can be far more difficult than leadership realizes and too often the result of that effort is numbers that are not particularly useful for the business.
The most important solution is to think in terms of seeking the answer to an important business question, and not in terms of creating a report full of metrics. The more focused HR is on a specific question that really matters, the easier it is to come up with recruiting metrics that matter.
The second part of the solution is to be fully aware that gathering recruiting metrics can be a complicated process. Leaders need to have a realistic understanding of what they are asking for when they want HR to produce common metrics like cost-per-hire, source of hire, and time-to-fill. The only way for leaders to get a realistic understanding is for HR to educate them.
It goes without saying that HR needs good talent management systems to collect and analyze recruiting data. The good news is that if HR is using metrics to answer questions that matter to the business, then it is easy to justify the investment in an up-to-date system. Metrics that matter follow from questions that matter. Remember that single secret and HR will have success with recruiting metrics.
The rewards of effective recruiting are clear. It brings top talent into your and will drive business success.
At the same time, the stakes are high. Current data shows that companies can spend $4,000 on average to recruit a new hire (see Appendix I). If an employee jumps ship, the turnover and total replacement costs have been estimated to run as high as 150 times annual salary for specialized senior level positions.