Talent acquisition is a complicated field. In some instances, it’s a quantity game; you need to find a significant number of candidates and get them moving through your talent pipeline.
But at other times, it is all about quality. You need to find the perfect candidate at the right moment and present them with a worthwhile offer.
Because of the various outcomes, knowing if your efforts are as effective as possible can be challenging. Like any business function, some key performance indicators (KPIs)—in this case, talent acquisition metrics—can sort through the noise to give you valuable insights about your hiring process.
This article will explore the seven talent acquisition metrics you should be monitoring. These metrics will be useful starting points in your analysis and give you the data-driven insights you need to optimize your talent acquisition efforts.
What Are Talent Acquisition Metrics?
Talent acquisition metrics are numerical values that allow talent acquisition managers and HR professionals to measure, analyze, and improve their hiring process. These metrics can provide insights into various aspects of talent acquisition, from how long it takes to fill posts to which sourcing channel works best for you.
Without them, you’re left guessing at the effectiveness of your hiring practices, making decisions based on gut feelings rather than concrete data. They allow you to pinpoint possible improvement areas, help you make strategic hiring decisions, and ultimately help your business grow.
What Types of Talent Acquisition Metrics Should You Track?
You should track several critical metrics to get a holistic view of your recruitment process. Here are seven of the most important metrics for talent acquisition:
1. Time to hire
Time to hire represents the average duration to fill a vacant position from when the job opens until the candidate accepts the offer.
Let’s consider a hypothetical example: You opened a position on July 1, and your first-choice candidate accepted the offer on July 31. The time to hire for this position would be 30 days.
By averaging together all of the data, you can identify trends and potential bottlenecks in your hiring process. Improving this metric would mean decreasing the time it takes to fill a position, which translates to lower associated hiring costs and faster time to productivity for new hires.
However, it’s also imperative to strike a balance. Speeding up the process too much could lead to lower-quality hires. It’s important to refine your hiring process efficiently while maintaining the quality of candidates.
2. Cost per hire
This metric tells you how much money is spent on hiring a new employee, accounting for all relevant recruitment costs, such as advertising, agency fees, interviewing, onboarding, and so on.
For example, suppose your organization spent $2,000 on job advertisements, $1,500 on sourcing, $500 on interview expenses, and $3,000 on onboarding expenses to find three new software developers.
Your cost per hire for this role would be:
Cost per hire = Total hiring costs / Total hires
= ($2,000 + $1,500 + $500 + $3,000) / 3
You would then take an average across all of the roles you’ve hired for.
This number is important because it helps determine your overall recruiting budget. The lower the cost per hire, the more financially efficient your hiring process is.
However, similar to time to hire, it’s important to balance cost with quality. Attempting to excessively lower costs could negatively impact your talent pool and the quality of candidates.
3. Qualified candidates per opening
This metric calculates the average number of applicants who are qualified for the position.
A low rate can alert you to a problem with the job posting, your employer brand, or the sourcing channels you’re targeting.
For example, let’s say in a given period, you posted three roles and received 50 applications for each. After automatic resume screening, 17 of 50 candidates were deemed “qualified” for role A, 23 for role B, and 43 for role C.
The qualified candidate ratios for each would be:
Ratio of qualified candidates = Qualified candidates / Total candidates
Role A = 17 / 50
Role B = 23 / 50
Role C = 43 / 50
You can then generate the average for your three positions:
Qualified candidates per opening = (Role A + Role B + Role C) / Number of roles
= (0.34 + 0.46 + 0.86) / 3
This metric is central to understanding the effectiveness of your job postings and advertising efforts. In this scenario, your attention would immediately be drawn to the first role, as it is generating the most unqualified candidates for some reason.
Here are some tips to increase the number of qualified candidates for your open positions:
- Write clear job descriptions: Make sure your job descriptions are clear, concise, and accurately reflect the role and its duties. Use relevant keywords and phrases that prospective candidates will likely use in their job search.
- Leverage social media: Social media platforms, such as LinkedIn, Facebook, and Twitter, can be incredibly effective for reaching a wide pool of suitable candidates.
- Improve employer branding: Showcase your company culture, values, and benefits to attract the right talent. Remember, candidates are evaluating potential employers just as much as you are evaluating them.
- Referrals: Encourage existing employees to refer potential candidates. This is a low-cost method of recruiting ideal candidates who will likely be a good cultural fit within your organization.
- Streamline the application process: If your application process is cumbersome or confusing, you may lose out on high-quality candidates. Make the process as straightforward and user-friendly as possible.
Ensuring that your screening process accurately identifies qualified talent is critical, as perceived qualifications can differ from job performance.
4. Sourcing channel efficiency
This metric enables you to evaluate the effectiveness of different sourcing channels in attracting quality candidates. Sourcing channels could include online job boards, employee referrals, social media, career fairs, and recruiting agencies.
For instance, let’s say you hired 25 people over a 12-month span. When examining their sourcing information, you found:
- 11 came from LinkedIn
- 6 came from Indeed
- 5 came from employee referrals
- 3 came from a career fair
Your sourcing channel efficiency for each channel is calculated as follows:
LinkedIn Efficiency = (LinkedIn hires / Total hires) * 100
= (11 / 25) * 100
You’d carry out similar calculations for each channel. This breakdown lets you know which sourcing channels are resulting in the most hires and gives you a clue on where your recruitment marketing strategy is most effective.
If a certain channel brings in a high percentage of candidates, it may be worth investing more resources into that platform. Conversely, underperforming channels may need re-evaluation.
5. Quality of hire
This metric measures the overall value that new employees bring to the company after onboarding. It considers factors such as the employee’s job performance, cultural fit within the organization, turnover or retention rates, and contribution to their team or the company.
There are many ways to assign or track this metric, but here’s one simple method to give you a better idea of how it works:
Quality of hire = (Job performance + Retention + Cultural fit) / 3
To get the performance score, you could use performance appraisal ratings on a scale of 1-5, with 5 being the highest. For retention, you could simply score 5 if they are still with the company after a certain period (say one year) and 0 if they left within that period.
Cultural fit could be assessed through feedback from their peers and managers.
Consider an example where an employee has a performance score of 4, is still with the company after a year (retention score of 5), but has a cultural fit score of 2.
Quality of hire = (4 + 5 + 2) / 3 = 3.67
The closer this score is to the maximum (in this case, 5), the better the quality of the hire.
It can be quite subjective depending on how you define each component, but when used consistently, it will offer significant insights into the effectiveness of your hiring process.
6. Offer acceptance rate
This metric measures the percentage of candidates who accept a job offer. It indicates how effectively the organization is making attractive offers to candidates.
The simple formula to calculate it is:
Offer acceptance rate = Number of acceptances / Number of offers made
For example, if you make job offers to 10 candidates over a certain period and 8 accept, the offer acceptance rate would be:
Offer acceptance rate = 8 / 10 = 0.8 or 80%
A higher rate indicates that you’re effectively selling the roles and your company to candidates and that your compensation packages are competitive.
Low offer acceptance rates may mean that your offers aren’t as competitive or that candidates may not perceive your company as an attractive workplace, which might mean you need to create more effective employer branding.
7. Satisfaction rate
This metric measures the satisfaction of both hiring managers and candidates with the hiring process. It’s an essential metric to understand your hiring process’s overall efficiency and effectiveness.
Feedback surveys are typically sent to candidates and hiring managers (or maybe your whole recruitment team) to obtain data. This survey can ask questions about things like:
- The overall hiring experience
- Candidate experience during interview stages
- Clarity of communication
- Duration of the process
- Perception of the company and role
You will want to ask participants to rate their satisfaction on a scale (e.g., 1–5 or 1–10) and then average the results into an overall rate.
Here’s the formula:
Satisfaction rate = (Total satisfaction score / Maximum possible score)
For instance, if feedback was collected from 10 individuals with a maximum score of 5 for each, the maximum possible score would be 50 (10 x 5). If the total satisfaction score received from all individuals summed up to 35, then the satisfaction rate would be:
Satisfaction rate = (35 / 50) = 0.7 or 70%
A satisfaction rate close to or at 100% shows that both candidates and hiring managers are pleased with the process, whereas a lower rate indicates room for improvement. You can also easily break down the scores to individually see manager satisfaction and positive candidate experience or have a combined score.
How To Use These Talent Acquisition Metrics
Tracking data isn’t enough. Interpreting and using the data effectively is what makes a real difference in your talent acquisition process.
Here are four steps to use these key metrics properly:
Choose the right metrics
Select metrics aligning with your company’s goals, industry, and budget. It’s critical to use a variety of metrics to ensure a holistic understanding of your talent acquisition process.
The seven types listed above can be a useful starting point, and you can adjust or add to these based on your organization’s unique needs.
Collect and track data
Once you have identified the metrics you want to track, you need to develop consistent methods for data collection. Talent acquisition software can automate this process and provide a more error-free method than manual tracking.
Analyze the data
With the data in hand, use specific statistical methods to identify trends, notable data points, and areas needing improvement. Ask yourself questions like:
- What does this number tell me about our recruiting process?
- Is this number higher or lower than we expected?
- What could be contributing to this trend?
Remember, the ultimate goal is to understand not just what is happening but why and what can be done about it. Data only becomes valuable when you translate it into actionable insights and strategies.
The purpose of tracking and analyzing these metrics is to eventually make data-driven decisions about improvements to your talent acquisition process. This could involve changes to your recruiting strategy, sourcing methods, or onboarding process.
Be strategic about these changes and monitor their effects closely to see if they have the desired impact on your recruiting metrics.
Talent acquisition metrics provide crucial insights that help shape an effective hiring strategy.
By choosing the right indicators, consistently collecting and tracking data, analyzing trends, and making strategic improvements, you can optimize your talent acquisition strategy to ensure it supports your company’s growth.
Check out our complete guide to learn more about talent acquisition and its effect on your business. It walks you through the importance of a comprehensive strategy, how to build a talent acquisition team, and some tips for success.