Power In Numbers: Measure These 8 Recruitment Metrics To Elevate Your Strategy
There are a variety of ways you can measure the success of your recruitment efforts, and it can quickly become overwhelming.
You may be asking yourself: What do the numbers actually mean, and now that I have the metrics, how do I implement change?
We’ve broken down the eight most important recruitment metrics you should focus on, and under each section, we’ve covered what the metric is, how to calculate it and how to translate the numbers into actions.
- Applicants Per Opening
- Application Completion Rate
- Cost of an Unfilled Position
- Time to Hire
- Offer Acceptance Rate
- Cost Per Hire
- Quality of Hire
- Employee Retention Rate
Applicants Per Opening
What is applicants per opening?
Applicants per opening measures the number of people who complete an application for an open role. While this may seem like a simple metric, it’s important to consider why you are measuring it and what the results mean.
The number of people who apply for a job is an indicator of your recruitment marketing efforts. If you have a low number of applicants or a high number of unqualified candidates, you need to rework where and how you attract candidates. Now’s a great time to look into which platforms are performing well and adjust where you allocate resources and pursue recruitment marketing efforts that are yielding the best candidates.
What is the average number of applicants per opening?
The average number of applicants per open role is 36, according to Jobvite. Honestly, take this metric with a grain of salt. The average number of applicants per open role is highly dependent on your industry, open role and physical location of your company.
Different industries flourish in different locations and talent follows industry trends. For example, if you’re a fintech company hiring a VP of Finance, are you going to find more applicants in New York City or Seattle? Probably New York City, the finance capital of the US.
You should, however, research your industry average as a benchmark to check against until you have enough statistics of your own to compare from candidate to candidate.
How to calculate the average applicants per job opening:
Total number of applicants in a set period of time [divided by] Total number of open roles in the same period of time
Start by gathering the total number of applications completed from each source where candidates applied, including job boards, referrals or social media platforms.
Your Applicant Tracking System should have most of this information, but you’ll also want to check with your hiring team to see if individuals have reached out to candidates outside of the ATS.
Once you’ve gathered all the data, add it up and divide by the total number of open roles.
Application Completion Rate
What is the application completion rate?
The application completion rate compares the number of people who start filling out an application with the number of people who actually submit a complete application. This is a strong indicator of the complexity of the application process.
Consider this: 20% of candidates will not spend more than 20 minutes on an application, and with today’s job market, candidates have the power to pick and choose which companies they spend their time applying to.
While you may think you’re weeding out unqualified candidates with a more complex application, you’re actually weeding out top talent that knows their worth. Instead, collect only the basic information you need to qualify candidates and remove any sections that could be handled later in the interview process.
What is the average application completion rate?
The average application completion rate is 10.60%, according to Recruiter. That percentage drops drastically if an application takes more than 5 minutes to complete or it contains more than 25 questions — which, really, should be more than enough.
Keep the questions to a minimum and target only the information you really care about. Remember that most candidates have LinkedIn profiles full of supplemental information, and if they’re writers or digital creatives, they are sure to have a portfolio that can provide more context than any application question.
How to calculate the application completion rate:
Number of applications completed [divided by] the number of applications started [multiplied by] 100
To calculate the application completion rate, you’ll want to gather the number of applications completed across all sources (job boards, referrals, etc.) and divide that by the number of people who started applying for a job but did not complete the application. This information can typically be found in your ATS. Then you’ll multiply that number by 100 to get your percentage.
Cost of an Unfilled Position
What is the cost of an Unfilled Position?
The cost of an unfilled position, also known as the cost of vacancy, is the amount of money a company loses each day a position is left unfilled.
Every year, companies lose thousands due to vacancy costs. Unfilled roles also mean that other team members are taking on the work of the missing person, which quickly leads to employee dissatisfaction and higher turnover, thus perpetuating the issue.
It can be difficult to decide if you’ve found the best possible candidate or if you should hold out for someone with more experience, but this metric will help you weigh the cost. Having well-defined candidate personas before a role becomes vacant will help your team know when the right candidate comes along and how to seek them out.
What is the average cost of an unfilled position?
There is no statistic for the average cost of an unfilled position. This statistic is highly dependent on individual company sizes and revenue models, so it’s better to compare this one over time against your own company’s metrics.
How to calculate cost of an unfilled position:
Company revenue [divided by] Number of employees [divided by] Working days in one year (220)
You'll need to gather some information before calculating the cost of an unfilled position. You can get your company revenue from your finance team, and as a recruiter, we hope you know the number of employees working for your company.
Start by dividing total company revenue by the number of employees. Then divide that number by 220, which is the number of working days in a calendar year. This will give you the amount an unfilled position costs your company each business day.
Time to Hire
What is time to hire?
Time to hire measures the number of days between when a job is first posted until a candidate accepts an offer for the role.
Every day a role goes unfilled costs the company hundreds if not thousands of dollars. A recruiter's biggest priority is to hire the best candidate in the shortest amount of time, but there are a lot of moving parts that contribute to time to hire.
Time to hire can be broken up into different stages to see what areas of your recruitment process need more attention.
For example, if your application completion rate is low — another metric on this list — you should look into how you can create a more attractive and simplified application process so that more candidates are moving through your initial stages of the pipeline quicker.
Again, time to hire is a simple metric to calculate, but it’s crucial that you consider everything that contributes to it, especially as a recruiter who is constantly under fire to hire better talent faster.
What is the average time to hire?
The average time to hire is 38 days, according to Jobvite. Like many recruitment metrics, time to hire is heavily dependent on the industry, role and job market. While professional services takes an average of 25 days to fill a role, financial services takes an average of 45 days to fill a role.
That’s a substantial differences between time to hire, and you can get even more specific for certain roles within the industry. It will take much longer to hire a senior level role than it will to hire an entry level role, so do your research before a role opens up so your teams knows what to anticipate.
How to calculate time to hire:
Day candidate accepts offer [minus] Day the candidate entered your pipeline
To calculate time to hire, take the day a candidate accepts your offer and subtract the day they entered your pipeline, with the day the job is posted being equal to one.
For example, say the job is posted on day one, and a candidate accepts your offer on day 40 after entering your pipeline on day 16. Your time to hire would be:
40 - 16 = 24 days
Offer Acceptance Rate
What is offer acceptance rate?
Offer acceptance rate is simply the percentage of candidates that accepted an offer vs. the total number of people to which an offer was extended.
Once you’ve expended your time and resources pursuing a top candidate, the last thing you want is lose them at the finish line. If you do, you'll likely have to start the process all over again, thus doubling your cost to hire.
Your offer acceptance rate is a helpful insight into how well your jobs, perks, benefits, compensation and hiring process compares with that of your competitors. If you have a low acceptance rate, research what your competitors are doing to determine what the top candidates are looking for in an employer.
What is the average offer acceptance rate?
The average offer acceptance rate is 68.2%, according to NACE. Nearly a full third of applicants will end up rejecting your offer in the end. That can be tough to swallow.
As your acceptance rate improves, so too will your cost to hire and time to hire as you won’t be wasting resources on candidates that won’t accept your offer.
This statistic will also vary by industry, role and location, so research the average for your specific situation to compare.
How to calculate offer acceptance rate:
Number of offers accepted [divided by] Total number of offers extended [multiplied by] 100
To calculate offer acceptance rate, divide the number of people who accept an offer by the total number of offers extended to candidates. Then multiply that number by 100 to get your percentage.
Cost Per Hire
What is cost per hire?
Cost per hire measures the amount of money a company spends to hire an individual employee. Different from the cost of an unfilled position, cost per hire is the actual amount a company spends on a new hire from the point a role opens up to the point a candidate accepts their offer.
Cost per hire incorporates every expense your company incurs to make a hire. This includes — but is not limited to:
- The cost of posting open roles to third party job boards
- The cost of outsourcing resources for marketing and employer branding
- The time recruiters spend networking with candidates
- The time recruiters spend reviewing applications and scheduling interviews
- The opportunity cost associated with an unfilled role
Another thing to consider is that while hiring more efficiently is a top priority among recruiters, the cost of hiring a bad employee may outweigh the cost of waiting for the right person.
What is the average cost per hire?
The average cost per hire is $4,129, according to SHRM. That means you're spending more than $4k on a new hire before they even show up for their first day. Think about how much it costs to hire managers...or worse, the C-Suite.
Not only that, but every industry has its own differences. Software engineers are notoriously hard to hire and expensive to recruit for. That’s why you see careers pages, employer branding and recruitment marketing efforts dedicated to open engineer roles alone. On average, it costs $50k to hire an engineer. Now that’s a number that will significantly alter your recruitment efforts and conversations with hiring managers.
How to calculate cost per hire:
Total internal recruiting costs [plus] Total external recruiting costs [divided by] Total number of hires
When calculating cost per hire, you’ll need to do some initial calculations. First add up every single internal cost related to hiring. Then add up all of your external recruitment costs, such as job board fees, costs for external recruiters and anything else done outside of your team.
Add those two costs together and divide that number by the number of people hired within a certain period. For this particular metric, it’s easier to measure this over the course of a year, but you can also break it down by months, especially if you want to measure certain growth periods.
Quality of Hire
What is quality of hire?
Quality of hire measures the number of employees who add value to your organization.
This is by far the most challenging recruitment metric to measure because how do you measure the quality of a human being? For the purpose of this article, rather than measuring the quality of individual employees, we’re looking at the number of quality employees hired. This will give insight to the recruitment process and should lead to an examination of where and how the highest quality hires are sourced and how well your onboarding and training prepare new hires for their role.
What is the average quality of hire?
There is no generally available statistic for the average quality of hire, and even if there was it would be difficult to compare as this metric is the most subjective of them all and will vary by the person who is calculating it.
For that reason, it would be beneficial to set some guidelines among hiring managers and recruiters at your company to determine what they mean by ‘satisfactory’ and ‘quality’ so that your metrics are consistent each time you measure quality of hire.
How to calculate quality of hire:
Number of hired candidates considered satisfactory* [divided by] Total number of hired candidates [multiplied by] 100
*Satisfactory employees should be determined by direct managers.
To calculate the quality of hire, you’ll identify a certain period of time to measure, whether it be weeks or months. Then within that time period, take the number of candidates hired who are considered by their managers to be satisfactory, and divide it by the total number candidates hired within that period of time.
Employee Retention Rate
What is employee retention rate?
Employee retention rate measures the percentage of people who stay at a company within a set period of time.
While some turnover is par for the course, high turnover should raise major red flags for an organization as a whole and especially for its recruitment efforts.
Retention starts with recruitment. The best way to set up your company for continued success is to always hire the right people for each role. Once you’ve found the right hire, the job doesn’t stop there. You’ll want to make sure they are continuously satisfied and engaged with their work throughout their time with your company.
There are unlimited factors that affect employee retention, but here are a few things recruiters should consider:
- Perks and benefits
- Company culture
- Onboarding and training
- Flexibility and work-life balance
- Career growth and learning opportunities
- Recognition and celebration of accomplishments
Also, keep in mind that when people leave a company, it can take months to fill the role and bring the new hire up-to-speed, meaning other team members are divvying up an additional 40 hour work week on top of their own for months on end. Not only does that lead to decreased productivity, it also leads to decreased satisfaction, which can lead to a snowball effect of high turnover.
What is the average employee retention rate?
The average employee retention rate is 81%, according to SHRM. This stat will vary by industry and the type of people you’re recruiting.
For example, the staffing industry itself has one of the highest turnover rates — yeah… sorry to break the news. There are also differences in employee retention related to demographic differences (e.g., Millennials notoriously being the hardest generations to retain as employees).
How to calculate employee retention rate:
Total number of employees at the end of a set period of time [divided by] Total number of employees at the beginning of that same period of time [multiplied] by 100
To calculating employee retention rate, first divide the total number of employees at the end of a set period of time by the total number of employees at the beginning of the same period of time. Then multiply that number by 100 and you will have your retention rate percentage.
For example, if you measure employee retention rate, and you have 50 employees on January 1 and by January 31 you have 40 employees (some of the original 50 left, and you’ve added a few new hires). This is how you would calculate employee retention for the month of January.
40 ÷ 50 x 100 = 80%