As a founder or talent leader - it is important to track key metrics in order to understand the effectiveness of your recruitment efforts and identify areas for improvement.
In this blog post, we'll take a look at the top 8 metrics that you should track, how to measure these metrics, and how to improve your performance on each one. We have listed the metrics in order of importance.
Of course, these same metrics are key for each individual recruiter to track and improve on as well. If you are a recruiter - you should know these metrics inside out and drive conversations about your performance using them!
1. Time to fill
Time to fill is a measure of how long it takes to fill a job opening, from the time the job is posted until the time a candidate is hired and is by far the most important metric for your team. The point of recruiting is to fill open roles on your team so hiring managers can get the work done.
If the roles take too long to fill, then recruiting is letting the company down.
To measure this metric, you can simply track the number of days between the job posting date and the hire date for each open position. It is pretty easy to calculate although some ATSs will even calculate and provide the metric to you. Ranges for time to fill will vary depending on the type of job and the industry in which you operate. Generally speaking, a time to fill of 30-60 days is considered to be best in class. Above 90 days is definitely a problem to deep dive into.
To improve your performance on time to fill, the key is to understand what is driving the poor performance. Is it a lack of candidates (adding more recruiters/sourcers or adding outside agencies like Rocket can help)? Or taking too long in the interview process (streamline your recruitment process and using an applicant tracking system to automate parts of the process can help)? Or are too many offers being declined which means a lot of work is being wasted?
Once you know the root cause - you can try to address it. Some of the metrics below can help you diagnose further.
2. Cost per hire
Cost per hire is a measure of how much it costs in total to fill a job opening, including the cost of advertising, recruiting, interviewing, and hiring. Cost per hire is an important metric because if your hires are happening at a reasonable pace (time to fill metric above is in good shape) then you may want to optimize for the cost.
To measure this metric, you have to track the total costs associated with filling a job opening and divide that by the number of hires made in a time period. To be honest, this is one of the hardest metrics to track as there a variety of costs that are not easy to measure that need to be included:
- People costs of the talent team such as sourcer and recruiter time
- People costs of the hiring team for interviews, debriefs and selling
- Software costs such as for ATSs like Lever, Greenhouse etc., data sources such as LinkedIn, SeekOut etc., and outbound software like Hireflow, Fetcher, Gem etc.
- Advertising costs for the job postings such as LinkedIn, Indeed, ZipRecruiter etc.
- Costs for using recruiting agencies like Rocket, Randstad, RobertHalf etc.
To improve your performance on cost per hire, you can try to reduce the costs associated with filling job openings, such as by using free or low-cost job posting platforms. You can also try to negotiate better rates with recruitment agencies and other vendors.
Ultimately, the biggest driver of your cost per hire will however be the denominator of this equation i.e. the number of hires you make.
If you make a reasonable number of hires, then your cost per hire will end up in the reasonable range of $20-25k per hire (obviously varies by type of hiring - that data is for startups hiring engineers, PMs, designers etc). To make more hires focus on improving the interview process, such as by using structured interviews and standardized evaluation criteria, to identify the best candidates consistently.
3. Offer accept rate
There are a variety of metrics that can track the efficiency of your recruiting pipeline. Our favorite at Rocket is Offer accept rate. It is simple to calculate - just take the number of offers that were accepted and divide by the total number of offers extended. Note - many companies have weird processes around offers - for example, they may only issue a formal offer after the candidate verbally accepts. If your company is among those, then use the number of offers you extended verbally as the denominator. Ultimately, the goal is to measure, how successful you were at getting the people you wanted to join to accept the offer.
A good rule of thumb is that a 65-75% offer accept rate is good. Anything less than 60% should have the alarm bells going.
To improve your performance on this metric, we can dive deeper into what drives offer accept rate:
- The compensation and benefits package - one reason many companies have a lower offer accept rate is that their compensation and benefits package is very different than the market. Benchmarking your compensation and adjusting if needed will help. Also might need the recruiters to more firmly establish compensation alignment early in the process. You can also try to improve the employee value proposition and the benefits offered, which can make your job offers more attractive to candidates.
- Not enough selling - a lower offer accept rate also results from not spending enough time "selling" the candidate once you have extended the offer. Some best practices include making time for the candidate to chat with the hiring manager and other execs, sending a congrats emails/gift, taking time to understand what they are looking for and tackling any objections they have.
- Recruiting the wrong candidates - recruiting the wrong candidates is another big driver of lower than anticipated numbers of candidates accepting their offers. If you are a startup but you have candidates who are interviewing with Facebook and Google and only interested in your company as a backup or as interview practice then you will end up with many declined offers.
You should ensure that the talent team has a clear idea of what went wrong with each offer that is declined and mark the decline reason.
The reasons should be in a few buckets and rigorously tracked:
- What did the candidate do? Did they take another offer or stay at their current company? If another company - which company? Similar stage as you or totally different?
- What was the reason for their decision? Compensation, Company Fit, Title or something else?
4. Interested response rate
There are again many metrics that can track the efficiency of your outbound recruiting but I am a big believer in Interested response rate. It is simple to calculate and takes both the messaging and the targeting of your sourcing into account. Interested response rate is calculated as the number of candidates who receive your email/InMail outreach and respond that they are interested in having a conversation to learn more divided by the total number of candidates you reached out to.
Our experience shows that a healthy interested response rate is between 2.5-4%. Anything less than 1% probably requires improvement and intervention.
You are the Golden State Warriors of talent if your interested response rate is over 15% at scale!
To improve your interested response rate, you can:
- Improve the messaging you use in your outreach - check out our blog post on creative outreach as an example
- Make your messaging more personalized and targeted to the candidate - don't send the same generic message to everyone
- Use tools like Hireflow or Gem to add multiple messages in your sequence and track which candidates open your emails and interact with them
- Use omni channel outreach - e.g. interleave emails, InMails and LinkedIn connection requests
- Target the candidates better - target candidates better based on their skills and likely interest in the role - you can use AI based sourcing tools like Hireflow, SeekOut and Fetcher to help you
- Try to improve the job postings and job descriptions to entice candidates and pique their curiosity
5. Candidates sourced per role
Candidates sourced per role is a good metric of how much work your talent team is putting into hitting the proverbial pavement in search of candidates. It isolates the candidates in your talent pipeline by source and focuses on the passive candidates your team actively tries to recruit. Why are passive candidates the best?
Passive candidates tend to be highest-quality candidates because they are already employed and have a strong track record of success in their current role.
Measuring this metric is also easy - it is just the number of candidates sourced divided by the open roles you had. You can get the number of candidates sourced from whichever sourcing tool you are using like Hireflow, Gem etc. and the number of open roles from your ATS. Ranges for what is good here vary by company and industry but we generally see 500-1000 candidates sourced per role as pretty healthy.
What can you do to improve candidates sourced per role?
- Make more time for your talent team to source
- Use effective tooling like Hireflow, Gem etc.
- Hire more sourcers!
- Use AI sourcing technology like Hireflow, Fetcher etc.
6. Employee referral rate
Employee referral rate is a measure of the percentage of hired candidates who were referred by current employees. To measure this metric, you can track the number of candidates who are hired and the number of candidates who were referred by employees, and calculate the referral rate as a percentage. The reason employee referral rate is important is because:
Firstly, referrals make the best employees - all research has consistently shown this to be true
Secondly, referrals are also the cheapest and fastest hiring source as you avoid paying any advertising or agency fees and can quickly hire someone without spending a lot of time on the interview process.
While ranges vary based on the industry and size of the company - an employee referral rate north of 25% is stellar while under 5% is concerning.
To improve your performance on employee referral rate, you can try to implement an employee referral program that rewards employees for referring qualified candidates and let everyone know how important referrals are to continued growth of the company. More importantly you can try to create a positive and supportive workplace culture that encourages employees to refer their colleagues and friends for open positions - people are natural evangelists when they are happy.
7. Diversity percentage
Diversity percentage is a measure of the representation of diverse groups in your candidate pool and in your hiring decisions.
Why is diversity important? In our experience, diversity can lead to a more innovative and creative work environment. Different perspectives and backgrounds can lead to new ideas and approaches to problems, which can be particularly beneficial for a company trying to stand out in a competitive market. Secondly, diversity can help a company better serve its customer base. If a company's employees reflect the diversity of its customers, they may be better able to understand and meet the needs of those customers.
Lastly, it is just the right thing to do from a moral and ethical standpoint.
Measuring diversity is important because you can't improve what you can't measure and track over time! To measure this metric, you can track the gender, race, and other characteristics of the candidates who apply for job openings, as well as the characteristics of the candidates who are hired. This is much harder than it sounds as you either need to setup your ATS to collect this data when an application is submitted or use tools like Hireflow to automatically infer this data for you. There are no set benchmarks for this metric but we have seen a few rules of thumb that could be useful.
- At least 25% of the engineering and product teams are female
- At least 10% of the engineering and product teams from underrepresented minorities in technology
Or better yet come up with your goals based on the team's values and priorities!
To improve your performance on diversity, you can:
- target outreach to diverse candidate pools. You can use specialized tools like Hireflow and source diverse candidates for every role
- implement the Rooney rule which requires your talent teams to interview a set number of diverse candidates before they make a decision
- you can also try to create a more inclusive and welcoming workplace culture, which can help attract and retain diverse candidates
8. Candidate experience (NPS)
Candidate experience is a measure of how well the candidates who apply for job openings are treated throughout the recruitment process. Why does this matter? Candidate experience matters because in today's world the experience your candidates had can influence the type and number of applications you get from word of mouth or review sites like Glassdoor. If your recruiting team is treating candidates poorly through the interview process, it will make your job that much harder in the future.
To measure this metric, you can track the candidate satisfaction with the recruitment process, such as by conducting surveys at the end of the interview process. Two key questions to ask are:
- How likely are you to recommend our company to a potential employee?
- Would you be open to interviewing with us again in six months?
It is important to send the survey to all candidates and range for this metric will vary depending on the industry in which you operate and the quality of your recruitment process. Generally speaking, a high candidate experience would be a satisfaction rate of 70%+. Below 40% or so, should be the threshold where you start digging in to see what is going wrong.
To improve your performance on candidate experience:
- you can try to improve the communication and transparency of the recruitment process. For example, you can try to provide regular updates to candidates on the status of their application
- you can try to provide feedback to candidates who are not selected for further consideration on why and how the decision was made.
- reduce the number of steps in your interview process and the time it takes in each step
- audit whether every step in the interview process is serving the company's needs
Conclusion
There are an endless number of metrics you can track to determine the performance of your recruiting team. This blog covers the 8 most important metrics that you should care about to ensure that your talent and recruiting team is firing on all cylinders!
About Rocket
Rocket pairs talented recruiters with advanced AI to help companies hit their hiring goals and knows technology recruiting inside out. Rocket is headquartered in the heart of Silicon Valley but has recruiters all over the US & Canada serving the needs of our growing client base across engineering, product management, data science and more.
