Hiring the wrong person is costly. You can mitigate these costs by being clear about what key performance indicators (KPIs) you’re tracking to know what to fix and when. In this article, we'll explore 5 KPIs to monitor in your hiring process.
1. Cost per Hire
By far one of the most illuminating KPIs for your hiring process is cost per hire.
Foro estimates that the cost per hire of a UK senior developer can easily exceed £20,000. That’s a lot to invest!
Cost per hire is affected by everything else you do and thus is the clearest indicator for how effective your hiring process actually is.
If your hiring process is producing inconsistent results and your cost per hire is trending upwards, maybe it’s time to rethink your hiring process.
2. Time to Hire
Time to hire is one of the most commonly used recruiting metrics and one of the easiest to measure. Simply put, it’s the time it took from the day a candidate entered the pipeline to the day they accepted the offer. It can even be used to measure each stage of the hiring process to determine what areas could be improved.
If your time to hire is less than satisfactory, this can have adverse effects on other KPIs. For example, you may find the quality of the hire is reduced or that candidate experience has been negatively impacted.
To reduce your time to hire consider streamlining your hiring process by doing the following:
- Collect data on each stage of your current process as well as the overall hiring process.
- Utilise skills assessments to quickly identify promising candidates.
- Automate tasks by using an ATS to track applicants or automate replies at certain stages.
3. Quality of Hire
Quality of hire refers to the value added to a company by a new hire. What this means exactly can vary from business to business.
Some companies may take into account metrics such as:
- Performance ratings
- Manager satisfaction and,
- Retention rates
You may also wish to consider other factors like culture fit or ramp-up time (time to productivity) too.
While there are many other metrics that can be used to assess the quality of the hire, experts agree that data should be measured both pre and post-hire to better understand and predict the value added by a new employee.
Some companies struggle however with knowing exactly how to measure the quality of hire. To do this effectively, Lou Adler, CEO of the Adler group, recommends standardising how you are assessing new hires by agreeing on criteria beforehand.
4. Candidate Experience
Candidate experience is a KPI that covers the whole hiring process and one that is especially important to get right because it can become a competitive advantage.
It relies primarily on candidate’s feedback. You can collect information on:
- How candidates located your company
- How consistent the job description was to what was shown to them
- How they found the assessment/interview
- Whether they would recommend the company to someone they know
- What could be improved
Collecting this information from candidates gives you a deeper insight into what areas of your process need more attention, as well as, what’s working well.
After all, going the extra mile and creating a positive candidate experience for your candidates could be what sets you apart from the competition.
5. First Year Churn
It can take time before new hires are as productive as already established team members. If you find new hires are leaving within their first year however this can be detrimental to overall team performance.
Not only can it take at least a year before new hires are likely to deliver their best work, time is inevitably lost training a new hire too and during this time you are not getting any ROI from your hire.
There are ways you can reduce first year turnover however:
- Ensure job descriptions are accurate and up to date.
- Assess tech skills using technical assessments.
- Assess soft-skills and culture fit by asking the right questions in interviews.
The KPIs we’ve discussed here aren’t the only ways to measure the effectiveness of your hiring process. There is always room for improvement as far as hiring is concerned but knowing what you’re measuring and why is a step in the right direction.