In the current job market, companies are competing for workers, and having a solid recruitment process is a strategic advantage. Given this scenario, it is necessary to know the key performances indicators for hiring processes, which will help identify opportunities for improvement. In this article, we will highlight which indicators are the most important and why you should pay attention to them.
What is the purpose of having HR KPIs?
When the HR department is actively working towards strategic goals, it is paramount to have a way to measure results – this is the only way to assert whether the current strategy is working or if some course-correction is needed. Thus, HR KPIs serve the following functions:
- Communicating goals to the company;
- Evaluating the efficacy of actions;
- Align and motivate the team;
- Focus on the processes;
- Identify opportunities for improvements;
- Justifying investments in HR.
7 KPIs in the hiring process
Before we get into the KPIs in hiring processes, let’s have a look at the main types of KPIs:
- Productivity indicators: the relationship between the quantity of tasks completed and the resources employed within the same period of time.
- Quality indicators: the relationship between the number of tasks completed with excellence vs total tasks completed.
- Capacity indicators: indicates maximum amount of tasks that can be completed with the current resources within a pre-determined period of time.
- Strategic indicators: these are directly related to critical success factors, and show how close the company is to achieving its strategic goals.
Within these 4 types, there are many relevant KPIs for HR as a whole, however we will be focusing solely on hiring processes here.
1. Number of applicants
This is the first metric to analyze, as it is the first step in any hiring process. The number of applicants should be in line with expectations and estimates considering the current job market. If the number is lower than expected, it can indicate HR needs to invest more to promote job openings, or even look at the current pay and benefits offered and see if it’s competitive enough in the job market.
2. Hiring Costs
Every hiring process requires certain investments. Keeping track of these costs ensures there will not be any unnecessary spending.
Calculating this KPI is easy: just divide the total amount of expenses by the number of roles that were filled in the process.
Knowing how much you spend currently can also help you compare new solutions and figure out if they would be good investments.
3. Time-to-fill
How long it takes to fill a role is extremely important. The longer a hiring process takes, the more expensive it is for the company. Furthermore, taking too long to fill a role is a key indicator that the hiring process is not working properly.
If a specific department has a longer hiring process overall, it can demand extra care and investments to find the right candidate.
4. Number of processes finished within the deadline
Another important indicator is the number of processes finished within the set deadline. As mentioned before, if one specific department is having issues, it can be a matter of understanding the scenario in that specific market. However, if the company as a whole is not meeting hiring deadlines, it points to a larger issue, and a need to either work on employer branding or offer more competitive salaries and benefits for employees.
5. Turnover costs
Evaluating turnover costs is essential: the cost of conducting new hiring processes and training new employees must be included here too.
6. Turnover rate in recent hires
Speaking of turnover, if applied specifically to recents hires, it can give valuable insights on the quality of the hiring process, the quality of the onboarding process and the company’s ability to retain talent.
If the turnover rate is high amongst new hires, it can indicate the process is not aligned with the organizational culture, and needs to be adjusted to correctly reflect company values.
7. Conversion rate in the hiring funnel
We can divide the hiring “funnel” in four parts: applicants, qualified applicants, final candidates and hired candidates. Having a closer look at each step of the process can help identify opportunities for improvement.
How to apply this knowledge
Before setting off to track every indicator possible, you need to know why you are tracking it. What is the purpose, the objective you are seeking?
The main motivation is usually improving performance. By keeping track of KPIs related to the hiring process, you can improve recruitment efforts and increase the likelihood of hiring the right people. Another motivation can be to collect data to make an investment decision – such as adopting new technology to support the process. The more relevant data you have on the process, the easier it is to pinpoint issues and find viable solutions.