The 8 Most Important Metrics HR Professionals Should Focus On

The 8 Most Important Metrics HR Professionals Should Focus On

As a Human Resources professional, if you and your team obsessed over all the metrics that every article on the web suggested you should measure to confirm whether you are running an effective recruitment process, you would end up spending most of your time measuring recruiting activities instead of actually hiring people into your organisation!

I’m certainly not saying that measuring your recruitment activities isn’t important. Trust me I know it is, but from having spent over two decades in the recruitment industry I can confidently tell you that there are 8 metrics you really need to focus on.

Keeping tabs on these metrics will ensure you are informed as to how your business is doing on the human capital front. I have also included some tips for how to simply and quickly implement these metrics within in your organisation, whether large or small.

1. Time to Hire

From the time you advertise your vacancy, how much time passes before the successful candidate starts? Not just before they accept your offer, but until they are actually on board?

Companies with strong talent management processes have faster hiring times than those without.

Of course, the exception is any market that is short of suitably talented candidates; if you have strict hiring standards, it may take longer to find the appropriate person.

Compare the time to hire across different roles and aim to lower the average as time goes on.

2. Sourcing Channel

It’s important to track where your candidates came from.

If you’re smart about your recruiting, you will have multiple channels from which to attract your potential candidates. You may choose to post an advertisement on a job board; you may prefer to trawl LinkedIn; you might have a strategy to source and engage passive candidates in order to build a live talent community.

For every single vacancy or requisition in your business, you need to know:

  • How many applicants came from each source;
  • How many qualified applications were garnered from each source;
  • Where the short listed applicants were sourced; and ultimately
  • Where the successful candidate first heard about the position.

These metrics need to be kept in a database that can be cross-referenced over periods of time. Keeping tabs of this metric will save you money in the long run as it will highlight the effectiveness of your various channels.

If one channel is proving to be ineffective, you have justification to shut it down. Similarly, if one channel seems to be producing a higher than expected ratio of qualified candidates, you can focus more resources in that direction.

3. Cost of Hire

It’s a no brainer that the cost of every hire should be measured but have you considered all costs involved in a hire? Recruiter fees, whether internal or external, are straightforward. But what about the time it took the manager to interview?

You should consider these factors when calculating the cost of hiring new employees:

  • Advertisements placed (if they are billed directly to you);
  • Setting up and maintaining social media accounts like Facebook and LinkedIn;
  • Time your hiring managers spend interviewing potential employees;
  • Sourcing tools;
  • Recruitment fees and
  • Any accounting and administrative costs involved in setting up a new employee (eg contracts, pay accounts, health benefits etc)

Calculating the cost of hire is straightforward. You simply add up all the costs (eg those outlined above) and divide by the number of hires made over a specific period of time.

4. Efficiency Ratio

Too many HR Managers become obsessed analysing the cost of hire, when what they should really be scrutinizing is the efficiency ratio – a measure not often included on the list of important metrics.

While the cost of hire is based on the number of hires made in the business, the efficiency ratio is based on the total dollar value of the salaries allocated to the new employees.

The reason it’s important to consider this is because different roles (in terms of seniority) may have been worked on over a particular period of time – some roles perhaps requiring additional dedicated resources.

Was the team dedicated to recruiting a number of customer service representatives each on $65K? Or were there a mixture of roles across the board from office support roles on $55K to C-Suite positions commanding salaries of +$250K?

Rather than simply dividing the total recruitment spend by the number of hires, consider focusing on the ratio between the total recruitment spend and the total salaries of those new hires. This will differ greatly depending on the nature of the requisitions over a specific time frame.

5. Retention

Now that you’re seeing the true extent of the costs involved in hiring a new employee, it’s important to look at your retention rates.

Thousands of dollars per year can be drained from your budget with high staff turnover rates. The costs don’t just come from direct expenses associated with hiring a new person but also in the loss of productivity around the resignation, rehiring and retraining processes.

Remember the cost of losing an employee can be as high as 3-4 times their salary. Retention rates are best looked at from a cross-sectioned perspective. In other words what is the turnover rate for a specific role?

Compare that to the turnover rate across specific departments. Try checking the turnover rate by pay grade. i.e how many resignations vs terminations has each department / role / pay grade had? A proper analysis of this metric should be performed every 3-6 months and graded across a period of time to show trends.

6. Open Vacancies vs Positions Filled

Larger organisations will need to keep track of the number of vacancies the organisation has vs the number of vacancies that have been filled.

This metric could be measured either per month or per quarter and the result should go alongside the ‘time to fill’ ratio.

A company managing their talent acquisition closely will have a low amount of open vacancies when compared to positions filled.

7. Offer: Acceptance Ratio

It’s great to be in a position to make an offer to a rock star candidate.

Unfortunately, if they then turn it down for something else, you are back to square one. This process costs you time and money, as well as morale, which is why this is such an important measure.

How many formal offers did you have to extend before you ultimately filled the role? This measure can go alongside your ‘cost of hire’ metrics.

8. Diversity and Gender Mix

Many studies have shown the benefit of a mixed gender team, from greater innovation to greater profits.

Think about placing a metric within your dashboard that measures the percentage balance of men and women on your team in three levels; front line, middle management and senior positions.

From time to time it’s good to step back and assess the gender mix within teams and within the organisation as a whole.

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If you are working within a large organisation, the clear way forward for easy collation of this information is a customized software application that gathers data from as many sources as possible and automatically populates a dashboard with figures and timelines.

You should consider sharing some of this information with your hiring managers as well.

The information should relate specifically to one particular team or department and compare them to averages from the rest of the company so they are aware of their own talent management capabilities.

If customized software is not a possibility in your budget right now, a simple excel spread sheet will do. Set up a regular interval to measure the metrics – eg every three months at a minimum – and request the information from your hiring managers at the appropriate time.

If you are a small operation, keeping tabs on these metrics as you go is the easiest way – updating the spread sheet each time a hire is made and comparing each one to the previous ones. When done right, metrics will save you time and money rather than sucking away precious resources into analysis.


Paul Slezak  Co-founder – RecruitLoop

Paul Slezak is a co-founder of RecruitLoop – a global marketplace of expert sourcers and recruiters available on-demand. With nearly 25 years in the recruitment industry and having worked for both an international publicly listed group as well as a global niche recruitment business, Paul has been a hands-on recruiter, manager, trainer, coach, mentor, and regular speaker for the recruitment industry and HR Tech space across Australia, the USA, Asia, and Europe.


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