Measuring the success of your recruitment efforts is no easy task. In the digital age, there are a wealth of recruiting KPIs you could be tracking and plenty of data to draw on. However, sometimes, more isn’t better, it’s just overwhelming! That’s why we’ve put together the top recruitment metrics you should be tracking in order to strengthen your hiring process and grow your organisation.
1. Vacancy rate
Purpose: Your vacancy rate shows how many positions are open, relative to how many existing positions you have. This can tell you a lot about the current state of your business, but it can also help you compare your business with trends in your industry.
How to calculate vacancy rate:
Vacancy rate = Number of open positions / Total number of positions in the organisation or department X 100
Example: A restaurant currently has 25 front-of-the-house employees and 30 back-of-the-house employees, including management, for a total of 55 employees. However, they’re looking to hire four servers, one bartender, and three cooks, meaning they have eight vacancies. To calculate vacancy rate, the restaurant would divide 8 by 55, which is 0.1454, then multiply this by 100 to get a percentage: 14.5%. This is their vacancy rate.
2. Fill rate
Purpose: Fill rate shows you how many jobs you have filled, over a time period, compared to how many jobs are open. A high fill rate is generally a good sign. It means that your HR team is working hard to fill vacancies. However, like any KPI, there’s always more to the story: a high fill rate doesn’t mean much if your employee retention rate is low, which would indicate that you’re not spending enough time during the interview process to ensure you’re hiring the right people.
How to calculate fill rate: Total positions filled / Total job openings X 100
Example: At the beginning of QTR 1, a hotel has 42 job openings. By the end of QTR 1, they’ve filled 33 of these positions. To find their fill rate, they would divide 33 by 42 to get 0.78, and then multiply that by 100 to get the percentage: 78%.
3. Time to fill
Purpose: Time to fill shows how long it takes from the time a job requisition is approved until an employee is hired for that position. This helps you identify problems with your recruiting process. A long time to fill might indicate a number of things. Perhaps you’re short-staffed in your HR department, or your HR team isn’t being proactive enough. It may also indicate something about the job market, such as a lack of qualified candidates in your area.
How to calculate time to fill: Subtract the date the job requisition was approved from the date an employee was hired.
Example: You receive approval for a job requisition for a front desk attendant on June 2nd. You hire an employee for this position on July 14. Determine the time that’s elapsed between the two dates: in this case, that’s 28 days in June and 14 more in July, for a total “time to fill” of 42 days.
4. Cost per hire
Purpose: Cost per hire, or cost to fill, shows you how much you spent to hire one employee. Cost per hire is a great way to measure the total cost of your recruitment and hiring process, so you can optimise it later and provide more accurate forecasting and budgeting.
How to calculate cost per hire: (Total internal costs + total external costs) / Total number of hires
Example: A luxury retail store has hired eight people during QTR 2. To measure cost per hire, a manager adds up both internal and external costs from April through June. Internal costs include payroll and benefits for the HR team, while external costs include the fees they paid to online job boards, job fairs, and Facebook ads. After determining their total costs (€20,000), they divide this number by the total hires during that period (8). Their cost per hire is €2,500.
5. Quality of hires
Purpose: Quality of hire helps you see which of your hires are the most valuable to your team, based on a scoring system that takes multiple factors into account. Use this KPI to compare employees with each other, to determine which are bringing value to the business and which may need additional training or support.
How to calculate quality of hire: Use a 1-10 rating system to grade your employees on each of the four following categories. Assess employees yourself, and include other team members’ feedback when appropriate.
(Job performance score + time-to-productivity score + employee engagement score + cultural fit score) / 4
Example: A restaurant manager wants to determine quality of hire for her four new wait staff. She assesses how much revenue each server brings in (job performance), how quickly each server completes training and is fully functional on the floor (time-to-productivity), how each server feels about the work they’re doing and their role at the restaurant (employee engagement), and how the rest of the team feels about the employee (cultural fit).
She uses a simple 1-10 grading scale for each of these categories, and comes out with the following scores:
- Job performance – 8
- Time-to-productivity – 6
- Employee engagement – 9
- Cultural fit – 8
Then, she divides the total by four to get the final “quality of hire” score: 7.75.
6. Source of hire
Purpose: The source of hire metric shows you which channels each of your hires came from.
How to calculate source of hire: Record the source of hire for each employee when they’re hired.
Example: A dentist’s office has hired 13 new employees over the course of a year. The hiring manager looks at “source of hire” data to create a pie chart showing which channels bring in the most hires, with 75% of these coming from their website. The hiring manager decides to invest more budget next year into optimising their website, in order to attract more candidates.
7. Source quality
Purpose: The source quality KPI determines which hiring channel brought in the most high-quality employees. While you can measure which channels bring in the most candidates using a KPI called yield ratio, that’s not the purpose of this KPI. Instead, source quality aims to show you which channels connect you with the most ideal candidates.
How to calculate source quality: Number of hires provided by one channel / number of received job applications from that source
Example: A digital agency wants to see which hiring source is higher-quality: LinkedIn or Monster.com. They compare data for both.
- On LinkedIn, they had 4 hires and 40 job applications received. Dividing 4 by 40, the source quality for LinkedIn is 0.1 (or 10% when expressed as a percentage).
- On Monster.com, they had 6 hires and 62 applications received, for a source quality of .09 (or 9%).
Because LinkedIn has a higher number for source quality, it’s a slightly more lucrative channel for hiring.
8. Application time
Purpose: This KPI is used to measure the time it takes between a job being posted and an application being submitted for that opening. This KPI is useful for forecasting how long it will take to fill an open job.
How to calculate application time: Use an applicant tracking system, or manually record the day and time job is posted and the day and time each application is received. You can also generate an average application time by adding up the time spans for each application you received, and then dividing by the total number of applications.
Example: A manager posts a job at 8:00 in the morning on August 10th. He records the time that elapses between the job posting and the receipt of five applications:
- #1: 8 hours
- #2: 24 hours
- #3: 29 hours
- #4: 31 hours
- #5: 40 hours
To get an average application time, he adds up all of these to get 132 hours, and then divides by the number of applications (5) to get 26.4 hours.
9. Pass-through rate
Purpose: Pass-through rate shows how many candidates move forward into the next stage of your hiring process. This KPI is useful for analysing your hiring process and identifying problems.
How to calculate pass-through rate: Number of applicants who move forward / Total applicants X 100
Example: A manager wants to compare pass-through rates throughout their hiring process: from application to interview, interview to offer, and offer to hire. There are 56 candidates who apply, 20 candidates who are interviewed, 4 who receive offers, and 3 who accept the offer. Using the formula above, these are the pass-through rates for these three stages:
- Application to interview: 35%
- Interview to offer: 20%
- Offer to hire: 75%
10. Offer acceptance rate
Purpose: Offer acceptance rate shows you the rate at which candidates accept your job offers. If your offer acceptance rate is low, this may tip you off to a problem with your offers: perhaps you need to offer better compensation or benefits.
How to calculate offer acceptance rate: Total number of offers accepted / Number of offers
Example: A cafe manager creates seven job offers for candidates, and five of these are accepted. By dividing accepted offers by total offers, he comes up with an offer acceptance rate of 0.71 (or 71%).
11. Application drop-off rate
Purpose: This rate compares how many applicants started (but didn’t complete) an application with those who did complete applications. This KPI is useful in determining if you need to simply your applications or add more complexity to them to narrow your candidate pool.
How to calculate application drop-off rate: Number of applicants who didn’t complete applications / Total number of applications received
Example: A manager uses an applicant tracking system that informs her when an applicant has started an application. She sees that 87 people started filling out applications, but only 34 completed them. Using this rate, she calculates her application drop-off rate as 0.39 (or 39%).
12. Candidate experience score
Purpose: Candidate experience measures how satisfied your candidates were with the recruiting process, and how likely they are to recommend your brand to their friends and colleagues.
How to calculate candidate experience score: Total rating (have all candidates and hires answer a series of questions ranking their experience on a scale of 1 to 10) / Number of candidates who submitted ratings
Example: Create a simple survey with questions allowing candidates to rank various factors on a scale of 1 to 10. You could include agree/disagree questions like “the interview process was efficient” or “I would recommend this brand to my friends.” Once you have gathered data from a variety of candidates, add up all of the scores and divide this number by the total number of survey respondents. This is your candidate experience score.
13. Early turnover rate
Purpose: Early turnover rate tells you how many employees are leaving your organisation early in their employment. This KPI is useful because it indicates whether you’re selecting new hires who are good matches.
How to calculate early turnover rate: New hires who quit or are terminated / Total new hires in that same time period
Example: A recreation centre suspects that their early turnover rate is high, causing unnecessary recruiting expenses. They have had 89 new hires who quit or were terminated within one month of becoming employed. In that same time period, they had just 125 new hires. Using this formula, they confirm their suspicions, discovering that their early turnover rate is 0.71 (or 71%).
14. Employee retention rate
Purpose: Employee retention rate shows you how many of your new hires remain on your team over a period of time. This is one of the most popular KPIs for measuring the overall success of your recruitment and hiring efforts.
How to calculate employee retention rate: Number of retained employees / Total number of new hires in the same time period
Example: A hotel chain wants to determine how successful their HR strategy was last year, so they calculate their employee retention rate. Over one year, they hired 272 new employees. During that year, 249 of those employees remained with the company. Dividing 249 by 272, they get their retention rate: 91%.
15. Hiring diversity
Purpose: Hiring diversity is a KPI for assessing if you’re bringing on a wide enough range of employees. It’s now well-known that teams made up of people with various ethnic, ideological, and socioeconomic backgrounds are more creative and have a more positive impact on work culture.
How to calculate hiring diversity: There’s no single formula for calculating hiring diversity, but a good place to start is by having your employees fill out optional surveys about their personalities and backgrounds. Chart this information to see how diverse your employees are, and make a plan to recruit people from under-represented groups.
Which are the most important recruitment KPIs to track?
Your industry and business objectives are unique to you. However, in general, your KPIs should give you a balanced view of:
- The cost-effectiveness of your hiring process
- The speed of your hiring process
- The quality of the employees you onboard
What’s the best way to monitor my recruitment efforts?
While some industries may still utilise paper applications and offline recruiting tactics, it’s far easier to track your recruiting process when it’s digitised. Consider implementing a CRM (candidate relationship management) or ATS (applicant tracking system) software solution. Not only will these programs often automatically track important KPIs, but they’ll make it far easier to generate reports and make sense out of your data.