Employee recruiting metrics and economics can be confusing. But, a good grasp of how to measure the success of your employee recruiting activities goes a long way to improve your hiring.
Unfortunately, you can waste a lot of money on various recruiting activities. Advertising is expensive, on-line postings can be a time drain, and headhunters might just drain your bank account. Your primary question is: How do I get the best return on my investment?
To measure your return you need to start monitoring a couple of different activities and costs. The first key metric is your cost per hire (cph). This is the number that tells you how much you are spending to bring a new employee on board.
The second key metric is time to fill (ttf). This tells you how long it is taking to fill your open positions.
There are other employee recruiting metrics and you can get as complicated as you like with these two. But this is a good place to start.
Cost Per Hire
Cost per hire tells you how much you are spending on each new hire. This number is critical for both planning and tracking purposes. Once you know what you are spending on cph you can plan budgets for future hires. And, by tracking actual numbers for each hire, you can measure how effective each of your employee recruiting efforts have been. You will know which employee recruiting sources are working the best.
Here is a list of just the major expenditures you should track to determine your cost per hire:
• Advertising Fees
• Job Posting Fees
• Recruiting Agency Fees (Headhunters and Search)
• Employee Referrals
• Travel Expenses
• Relocation Fees
• Internal Recruiter Costs
• Administrative Costs
Each of these is a hard cost and should be straight forward to record with the exception of internal recruiter and administrative costs. For those two metrics you will need to make a few calculations. The easiest way to determine these costs are to determine the total you spend on your recruiting staff and the people who support them. Next, divide that number by the number of people you hire each year. This is a rough calculation for this component of the cost per hire but gets you in the right ballpark.
You can add all of these costs together to determine how much you have spent on a single hire. Or you can add the total spent over a year and then divide by the number of people you hire to get your average cost per hire.
This might seem intimidating but is actually pretty easy. You are already tracking most of the numbers. Every time you write a check for an ad or posting it is recorded as part of your accounting system. You can simply create a specific account for recruiting to track your employee recruiting metrics.
Once you have the data in hand, you can begin to see which employee recruiting activities and sources gave you the best return. You can use the data to help refine your employee recruiting strategy.
Time To Fill
The next key employee recruiting metric is time to fill. It is critical you understand how long it is taking to fill your open positions. Every day a position is open you are either losing money or not addressing a key business issue. (That is why you hire people after all) The faster you can fill your positions, the better you are serving your business. So you have to track just how long each job takes to fill.
The good news is that this is a very easy employee recruiting metric to determine. Record the date the position comes open. Next record the date the position is filled. The difference is your time to fill.
You will find this data critical in measuring the productivity of your recruiting staff as well as determining which employee recruiting sources are working best. Are your recruiting efforts delivering good hires in a reasonable time for a good return on your investment?
Armed with just the two employee recruiting metrics cost per hire and time to fill you have a good chance of answering this key question. Get into the habit of tracking all your employee recruiting efforts. With each subsequent campaign you should be getting a better return on your investments of time and money.