Written by Joni Beatrice
Are you looking for your next great team member? Having an effective applicant tracking system is one of the best ways to make the most of your candidate search. Not only does it provide a comprehensive overview of your job orders, recruitment planning, candidates and onboarding (among other intel), but the metrics you can derive from an applicant tracking system can go a long way in streamlining your recruiting and HR processes.
Being able to gauge the efficiency of your recruiting efforts is absolutely vital, because it allows you to know definitively if your current approach is working. Finding the perfect candidate is always exciting, but if you are spending more than you are earning based on your methods, something has to change. At the end of the day, having a positive return on investment from your recruitment efforts needs to be top priority, and there are some key metrics that can help you uncover this info.
Below, we have compiled the top five best recruiting metrics to keep in mind when measuring the return on investment of your candidate search.
Interview Per Hire
Interview per hire is the number of interviews it takes before an offer is made to a potential candidate. Computing this is fairly straightforward: collate the number of interviews it took before X number of new employees were hired. Divide the sum by that number and you will get the interview per hire. Alternatively, if you applicant tracking system offers this report, just run it and presto – you’ll have your answer!
A good starting point for determining this is the Rule of Four, popularized by Google. As per this rule, four interviews are enough to determine whether someone ought to be hired at Google — while it isn’t absolute, it’s a good benchmark. If a company like Google takes only four interviews to find the best candidate, then why do five, six, or more? Your time is valuable, and efficiency should be a priority for any hiring department.
Time to hire
The time to hire is the average number of days it takes for candidates to get hired, from submission of application to acceptance of job offer. Add the number of days it took to hire your new employees, then divide by the number of new hires in order to find your average time to hire. Again, an intuitive applicant tracking system will do the work for you and offer time to hire as a canned report.
Doing this lets you identify pain points in your candidate search and allows you to make the necessary improvements in order to reduce that time as much as possible. A recent survey showed that 57% of job seekers admit to losing interest in a job if the application process is too long. Wherever you can, try to streamline and shorten your process, because demonstrating that you understand your candidate’s time is valuable will do wonders for your employer brand.
Cost Per Hire
The cost per hire is the average amount of money companies spend on each new employee they hire. This metric allows you to budget accordingly in case your company needs to ramp up hiring or reallocate funds. In addition, it can help you spot inefficiencies in your methods; fluctuating costs per hire is often a chief indicator of a system that needs attention. A benchmark you can use is $4,000, which is the average cost per hire in the U.S.
To calculate the cost per hire, either run the report in your recruiting software or add together your company’s external and internal costs. Then, divide the sum by the total number of hires in a given time period (usually 12 months). The quotient is your businesses’ average cost per hire.
The turnover rate is the percentage of employees who leave the company during a particular period. Researchers from the University of Washington have identified over fifty reasons as to why employees leave a position, including high demand, negative feelings towards managers, and lack of non-monetary benefits. Having said that, no company wants to invest money recruiting and training new employees, only to see them leave after just a few months.
To find your organization’s turnover rate without an applicant tracking system, you have to first identify the first-year turnover rate within your industry. Then, gather data on your employees’ first year and divide the number of employees leaving in their first year by the total number of employee separations. Next, multiply the quotient by 100 and you’ll get the first-year turnover rate. If your organization’s turnover rate is higher than that of your industry, it’s time to revisit your recruiting methods as you might be reaching the wrong candidates for your positions.
Candidate satisfaction refers to candidates’ perception of your organization’s hiring process, and it is gleaned from what’s called candidate experience. This strongly dictates whether a candidate will accept an offer, as the higher the satisfaction, the more likely they are to accept.
One way to assess candidate satisfaction is to survey your new hires and ask them about your recruiting, hiring, and onboarding processes. Afterwards, you can use that data to improve your organization’s candidate experience. Laika recommends streamlining your recruitment process, creating clear and precise job ads, ensuring transparent communication, using technology, and treating every candidate with respect and honesty.
These metrics are very important for any company to follow. Without the data collected from these metrics a company will be hiring blind, which will increase the chances of employing the wrong people as well as wasted expenditure. However, manually calculating them for each candidate can be very time-consuming – and we know just how valuable your time is!
That’s why we have developed a variety of innovative Business Intelligence tools, including over 100 canned reports, the ability to create your own ad hoc reports, as well as design custom reports and dashboards unique to your organization. At Mindscope, our goal is to make sure you have easy access to the data and metrics that matters the most to you – with no limitations! It’s just one more way that Mindscope aims to give you an edge against the competition.
Reach out today to find out more!