In Berlin, when people want to work through problems or want to brainstorm an idea, you meet for coffee. I had a conversation yesterday with a Berlin HQ e-commerce company about a large inter-department challenge concerning which Key Performance Indicators (KPIs) are used in HR and if they are best measurements for the desired outcome. It was getting very emotional and political because their “gut” was telling them that something was flawed in the process such as ”the hiring manager is too picky”, “the applicants are not what we expected”, “time-to-hire is unrealistic for this type of role.” Does this situation sound familiar?
We both agreed that as the saying goes: “Numbers don’t lie”, but the bigger question was what should actually be measured in recruitment that will ultimately be actionable. The key word is actionable and when I built and led teams in talent acquisition and consulted large and small companies, the first question is: “What is your #1 talent challenge and how will this impact your business?” Once you know this, dive deeper into setting up a KPI system that will yield actionable indicators. Understand the root causes and make changes along the way to arrive at your goal. So which hiring KPIs are truly measureable and meaningful? I now recommend just four modern KPIs:
KPI #1: Candidate Feedback. We live in a world where “customer comes first”, but somehow, HR and hiring managers often forget that candidates are customers too. Finding a new job can be a jolt of energy, as you start somewhere new and emotionally connect with the company and colleagues. Taking this further, the experience a person has as a candidate = experience as an employee. Your whole recruitment objective should be candidate-focused and not company-focused (another blog post coming soon), so start by asking candidates a few simple questions to gauge their experience interviewing with your company. Examples are below, and question #1 should weight high in your full list. Use a 1-5 scale, with five being the highest and then ask 2 drill down questions to shed light on what went great or not:
Question #1:
Overall, how was your candidate experience with [Company Name]?
Use a scale out of 5:
5 = Excellent
4 = Good
3 = Fair
2 = Poor
1 = Very poor
Please explain why you chose that rating. (open-ended)
Question #2:
Was there any part of your experience with our hiring process that stood out to you as particularly excellent or enjoyable? (yes / no)
If yes, please explain. (open-ended)
Question #3:
Was there any part of your experience with our hiring process that stood out to you as particularly bad or unpleasant? (yes / no)
If yes, please explain. (open-ended)
Remember to ask ALL candidates who interacted with you or anybody at your company after you’ve made your hire. We need to shift from scaring off candidates or ruining the employer brand because they never hear from us, to engaging candidates by asking them their honest opinion.
KPI #2: Apply to Close. Companies always want new hires walking in the door as soon as possible, but the older metric “time-to-hire” is becoming less valid because we actually want to measure from the time that a candidate applies to the time that they either accept or rejected your offer, so the candidate is closed. You will be able to measure time gaps in the stages of hiring, such as in scheduling, feedback, and even offer, and then adjust accordingly. Plus, just using “hire” as the metric doesn’t capture what commitments the future employee has to a current employer until a candidate can actually start (in Germany, traditionally 1-3 months).
Example Calculation:
Day 1: Candidate applies via the ATS for a software engineer role
Day 4: CV review
Day 6: Scheduled for HR phone/video screen
Day 9: HR phone/video screen
Day 10: Scheduled for coding review via video
Day 13: Coding review via video or skype with Hiring Manager
Day 14: Scheduled for onsite day
Day 20: Onsite day
Day 21: Verbal offer
Day 22: Offer accepted
Day 26*: Contract signed
Do you notice all of the steps that need to be defined for each role, which you can dig into if something is happening because you see a large time lapse?
*Very ambitious, but I want to show you how you can hire a software engineer in less than 30 days.
KPI #3: Qualified Candidate per Role. As in sales, you need to turn “Leads” into “Qualified Lead” or “Pursuit” – yes, activate that pursuit number now in Salesforce or another CRM. Personally, I like calling “leads” simply “applicants” or those people who have not yet gone through an initial phone screen. Once they are qualified by an initial screen and deemed good, they become candidates or just “qualified candidates”. Now look at this number per source to determine if your pipeline is on track or if you need to reallocate resources to increase this number. Exceptional recruiters are innately looking at the sources numbers, spotting trends and knowing where to find talent. The days of posting and praying qualified candidates fall into our ATS are gone. You might have to completely re-work the job description, including title, with the hiring manager to identify qualified candidates.
KPI #4: Hires per Goal. Recruitment needs to create and implement realistic hire goals on a monthly, quarterly and yearly basis and make this very visible. Working closely with senior management to know and predict needs of the business, you will then be able to create the right hiring goals. This will vary greatly per company, so there are no set averages. Take this simple equation and adapt to your company:
Pipeline + Hiring Process Time + Candidate Experience = Hire (Signed contract/Intent to start)
Plan based on a weighting system for each category and generate a hire goal plan over time to capture which positions are feasible to be hired when.
Knowing if you are hitting monthly goals is a good start to understanding where you need to allocate time and energy on business critical roles, or even if you have enough manpower to deliver. At one time, I had 116 roles open and only 3 recruiters, one coordinator and one intern, including 20 priority roles to fill at very senior levels – VP, Directors, etc. We needed to hire more people on our team fast and the case was made by showing senior management the quarterly forecast.
Launch these KPIs formally and empower every recruitment team member – including senior management and anyone involved in the hiring process – to utilize these 4 KPIs almost on a daily basis. This will dramatically change discussions to be more meaningful and actionable and will guide the organization to arrive at one of the most important KPIs of the whole company: great hires.
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