To be a successful tech recruiter, you need to make your hiring data-driven. To recruit the best software developers, you need to make informed decisions and stay away from the gut feeling as much as possible. Luckily, your rescue comes in the shape of recruitment metrics which allow you to objectively evaluate whether your talent acquisition strategy is efficient or not. They also give you the ability to streamline it wherever necessary.
According to Jibe, the most important recruitment metrics are:
- Source of hire – 57%
- Time to hire – 50%
- Applicants per hire – 42%
- Cost per hire – 41%
- Candidate experience – 41%
- Retention – 38%
- Offer acceptance per hire – 37%
- Quality of hire – 36%
- Vacancies vs. positions filled – 36%
- Diversity – 25%
In this article, we look at 5 recruitment metrics:
- Source of Hire
- Time to Hire
- Applicants per Hire
- Employee Net Promoter Score (eNPS)
- Offer Acceptance Rate
What are recruitment metrics?
Recruitment metrics (KPIs) are Key Performance Indicators. Here’s a simple explanation of the term:
- KEY: related to the most significant aspects
- PERFORMANCE: tell you how you’re doing and are focused on business objectives
- INDICATORS: they signal instead of telling you the whole story
KPI #1 Source of Hire (SoH)
Source of Hire is one of the key recruitment metrics which tells you what percentage of your hires enter your talent pipeline from each recruiting source, such as referrals, LinkedIn, industry specific-sites (like Stack Overflow or GitHub), job boards, career fairs, and events.
Imagine you’ve made 50 technical hires in the last 6 months. What you need to do is look at the source they came from which should be recorded in your ATS. To calculate SoH correctly, you need to determine whether you group your sources together (so all job boards become one, collective category) or make each job board into its own category.
Here’s an example of a Source of Hire chart from Workable:
To obtain your Source of Hire data, you can use surveys, look in your ATS (it should automatically record the source the candidate came from), and compare notes with your fellow recruiters as some candidates have multiple touchpoints and sometimes it’s hard to determine which one was first. Another useful tip is to create UTMs for your job offers so you get more information about the user in your Google Analytics dashboard.
SoH is a game-changer when it comes to allocating your talent acquisition budgets. It tells you which of your channels perform best so you can allocate more resources to them, as well as gives you data so you can make an informed decision to drop a given channel which simply isn’t working for you.
Bear in mind that because candidates have multiple touchpoints with your company, SoH can be misleading. It may oversimplify your results, or even worse when looking into various automation platforms you’re likely to see different results. The best way around this dilemma is to survey all new hires and ask them questions like “How did you learn about this opportunity?” or “How did you apply for this position?”. A word of caution at this point is to remember that SoH doesn’t represent good quality candidates who entered your talent pipeline from a given source but didn’t get hired for whatever reason.
SilkRoad’s 2017 Source of Hire report analyzing over 14 million applicants and 329 thousand hires established that both internal (52%) and external (48%) sources produce hires. Study results indicate that employee referrals continue to be the top source for hires.
The 2017 Stack Overflow Developer Hiring Landscape presents the data from the perspective of the developer, which can also give you some insights into how they learn about jobs.
KPI #2 Time to Hire (otherwise known as Time To Fill)
Time to Hire allows you to measure the time from the start to the end of the recruitment process. It’s one of the most significant recruitment metrics because it allows you to continuously streamline and optimize your recruitment pipeline and give you an exact understanding whether you’re going in the right direction or not. It also gives you an insight into whether you and your team are taking too long at some of the stages or a particular roadblocks. This, in turn, lets you identify possible roadblocks and ineffective recruitment practices, which altogether leads to reducing your Cost per Hire because every unfilled position can cost you $500 a day (according to CEB).
This recruitment metric has a number of variables depending on what you count as conversion (e.g. when an offer is made, when it’s accepted or when the new employee turns up for their first day at work). You can look at the number of days it takes to hire someone from the day you acknowledge the need for the new opening or look at how long you need to present the candidate with an offer (Days to Offer).
Benchmarking Time to Hire
Hiring for technical positions takes longer than for most jobs because it requires technical screening, which when inefficient, can make the recruitment process too long. According to Glassdoor, Software Engineer ranks sixth on the list of jobs with the longest interview process, with an average of 40.8 days.
Recommended reading: How to speed up a long recruitment process
KPI #3 Applicants per Hire
Applicants per Hire is a great recruitment metric because it allows you to evaluate your recruitment marketing efforts. It tells you how successful you are in your sourcing, as well as how you market your job ads, how attractive your employer brand is and so forth. In other words, it tells you how efficient you are at filling the interview funnel with viable candidates.
Qualified applicants are the HR equivalent of Marketing Qualified Leads (MQL) and Sales Qualified Leads (SQL). In other words, they are the candidates who reach your first recruitment process milestone, like a technical screen or phone interview.
How to calculate Applicants per Hire?
Applicants per Hire is one of the easiest recruitment metrics to calculate. You simply look at how many people from your pool of applicants for a given position made it to the first milestone.
Applicants per Hire depends on the specifics of the role to be filled. In the case of software engineering candidates, it takes an average of 120 candidates who apply for the position to make one hire. From these 120, 23 make it to the first meaningful milestone which is screening. This is much more difficult when compared with all candidates.
As you can see, it takes a much larger candidate pool to make one engineering hire. For that reason, it’s important you screen technical skills automatically and without having to involve your IT department too early in the process.
Benchmarking Applicants per Hire
According to Workable, the US average Applicant per Hire is 19, as compared to 22 rest of the world. The US average for Engineering and Information Technology are 22 and 18, respectively.
If you want to improve your Applicants per Hire ratio, you should strengthen your job advertising,
KPI #4 Employee Net Promoter Score (eNPS)
Net Promoter Score (NPS) is a customer loyalty index designed & trademarked by Bain & Company. The metric ranges from -100 to +100 and divides customers into three groups: Promoters, Passives, and Detractors based on their answer to the following question:
“How likely are you to recommend [company/product name] to a friend or relative?”
Employee Net Promoter Score (eNPS) is a recruitment metric built on Net Promoter Score which gauges employee engagement and satisfaction. To calculate eNPS, survey participants are asked one question:
“How likely are you to recommend XYZ as a place to work?”
Answers are based on a scale from 0 to 10 and the respondents are grouped as follows:
0-6: Detractors are unhappy employees who are highly likely to leave.
7-8: Passives are “satisfied but unenthusiastic”. They have no effect on the overall result.
9-10: Promoters These are your most loyal & satisfied employees who are highly likely to recommend you to their friends or colleagues.
Source: Usability Hour
How to calculate eNPS?
eNPS = % Promoters – % Detractors (you leave passives out because they are considered neutral)
The beauty of eNPS is that it gives you the possibility to see how various factors affect employee satisfaction over a longer period of time. The eNPS question is often paired with a follow-up question to why employees gave a particular grade. In fact, often the intel you receive from the follow-up question is actually more valuable than the score itself because it provides qualitative feedback which allows you to understand what exactly makes or breaks the deal for your employees.
Running the eNPS survey requires very little time and effort on the side of the HR department because it’s automated. At the same time, it requires even less time and effort from the employees. A word of caution is to ensure that your employees taking part in the survey know the results are anonymous.
According to Officevibe, “anything from +10 to +50 is considered a good score.”
KPI #5 Offer Acceptance Rate
Offer Acceptance Rate (OAR) shows the percentage of candidates who accepted a formal job offer. The formula should be calculated consistently, i.e. using only formal offers to external candidates. Informal offers or offers made early in the process don’t typically count towards this metric, but you may want to calculate your OAR including them for various reasons. Make sure to be consistent.
How to calculate the Offer Acceptance Rate?
Here’s the formula to calculate your Offer Acceptance Rate:
Offer Acceptance Rate (%) = (Number of Acceptances / Number of Offers) x 100
The metric is used to evaluate the effectiveness of talent acquisition strategy of a given company. There’s also the Offer to Acceptance ratio which shows you how many offers or interviews are needed to make a hire.
There are a number of things you can do to improve your Offer Acceptance Rate. The first step is to review your offers given to see if the salary or perks offered are in agreement with industry standards. Another thing you can do to increase your offer acceptance rates is to provide “a realistic presentation of both the opportunities and the challenges of a prospective position”, which also results in lower turnover and better post-employment job satisfaction.
What you want to do is to give the candidate a chance to decide for themselves whether they want to take on a challenge or not instead of surprising them with it after they sign the job agreement. That doesn’t mean you shouldn’t focus on the positives
Benchmarking Offer Acceptance Rate
Looking for a benchmark? When it comes to the Offer Acceptance Rate, you should aim at anything north of 90%. A good offer acceptance rate indicates that there’s a match between what your requirements are and what your candidates expect from you.
Because hiring is a science and not an art, it needs to be based on recruitment metrics. In fact, recruitment metrics are an inseparable part of a functional hiring process because they allow you to understand how effective you are. They also let you understand whether the changes you’re introducing have a positive or negative effect on your recruitment process.