The Hiring Manager Guide: How are Your Recruiters Performing?

This year I decided one of my New Year’s Resolutions was to reevaluate the vendors and services that I have done business with that, over the years, have fallen into the set it and forget it mindset. I decided to make a list and evaluate each service and vendor asking two questions, “Am I really pleased with this service. Are there any better options available?” The first area that was tackled was finances, starting with our bank accounts. Overall I have been pleased with each of the banks we do business with, but for our savings account, there was a better option available. When I had originally set up the account, Everbank had the best APR among high yield savings. While researching other banks I have found that they are no longer even in the top five. Next came reallocating my Vanguard mutual funds, reviewing both of my daughters’ college savings accounts, and then my wife’s Roth IRA account. After finances came other services providers. I started asking myself, “Can I get a better rate for insurance? Are there better TV/internet/phone providers? Is Verizon’s cell phone service worth the high cost compared to their competitors?” The list went on and on. Some changes were made, such as changing banks and reallocating funds, while I found that I was quite happy with others. Sure, I might be able to save a little money here and there, but the savings would be at the cost of poorer service and future frustration. In the end, I was able to make worthwhile changes while maintaining confidence that the services I decided to keep status quo were still the best choice for my family and me.

I am not alone in my journey of reevaluation. This time of year is a popular time for businesses to crunch their number and make changes for the New Year. The end of the year brings year-end reviews while the beginning of the year is a time to evaluate last year’s spend to maximize this year’s return on investments (ROIs). Employee annual reviews keep their performance in check, while any decent line manager will actively identify and and work to fix problems throughout the year. Evaluating services and providers are a little more difficult as they are monitored less closely on a day to day basis. If you are relatively happy with a service or vendor, it is easy to fall into the mindset of set it and forget it without realizing that the original criteria that let you to choose them in the first place may have changed over time. Until you go through the exercise of evaluation, you can only assume that you are continuing to invest in the best options available. Throughout your evaluations you may find that there are new companies offering bettering or more cost efficient services, or you may strengthen your relationships with your current providers, continuing to get the best bang for your buck.

When it comes to talent acquisition, it is important to evaluate both your internal staffing team along with your external partners on an ongoing basis. Attracting top candidates is a constant battle, one that both you and your competitors are facing each and every day. Both they and you are targeting the same talent, trying to attract and actively persuade the best of the best to join your teams. The goal of any recruiting team is to identify and attract talent quicker and more efficiently than their competitors, giving them the advantage. When the going gets tough, external recruiting support can be the difference between winning the war and being stuck in the mud, but only if they are able to save you time and provide quality candidates.  

Some might think that quantity is the key to success. The larger the army, the easier the battle, right? Not necessarily as overseeing vendors or training new internal recruiters can be time consuming and not without its potential faults. Having too many recruiters searching for the same position(s) can be overwhelming to candidates. Candidates get turned off by being reached out to by multiple recruiters for the same position. Furthermore, people start stepping on one another’s toes which cause redundant efforts and wasted efforts, efforts that could be more useful spent on other things. There has to be a balance of the size of the army and the quality of their skills. The principals of running a public company is very similar to the best practices of running successful staffing efforts. You need to be as profitable as possible with the least amount of headcount. In other words, you have to place the most qualified candidates with the least amount of resources in order to be efficient. If you hire too many internal recruiters, they are going to be twiddling their thumbs for work once work slows down. Hire too many staffing agencies and you will spend your day managing vendors. Neither is efficient.

Start Your Evaluation by Measuring KPIs

As mentioned, the beginning of the year is a popular time to complete both internal and external evaluations. It is also a popular time for companies to make changes to their vendor list based on finding better options. When it comes to evaluating the performance of both internal and external recruiters, key performance indicators (KPIs) help make the determination of whether or not changes need to be made or to reconfirm that you are running as efficiently as possible.

There are two types of KPIs, ones that are directly measurable while others whose worth is more subjective and harder to measure. Below, I will detail a list of both measurable and subjective KPIs. Taking things one step further, I am also going to assign each a grade for their overall usefulness in maximizing ROI. This grade is meant to add weight to the effectiveness of projecting future successes by analyzing previous experiences and is based on the “average” feedback I have received over the years, supporting a plethora of clients. Some of my clients may have placed more or less weight (and you may as well after today), but the grades below are meant to serve as an average base level.

Measurable KPIs

1. Time to Submission- The average amount of time it takes for the recruiter or agency to submit a candidates once a position is assigned.

Grade: C 

Why: The quicker a candidate is submitted, the quicker the team can fill the position; however, the quality of the submission and the nature of the position greatly impact this metric. There are no benefits from a recruiter submitting poorly qualified candidates quickly. Similarly, difficult or niche vacancies may take longer to identify top talent. The first responders, or the “low hanging fruit”, are not usually, generally speaking, the best candidates. Those who are first to respond are generally very active in their search while more passive talent needs to be actively recruited away from a position in which they are already excelling. Time to submission is a middle of the road KPI as the longer it takes to get candidates, the longer the time to fill, and the more expensive the search becomes (in both recruiting time, but also the cost of not having someone in the role). On the other end of the spectrum, the available candidate pool and the type of position need to be considered. To best measure time to submission, it is suggested to break down positions by their ease to fill, or in other words, the size of the candidate pool to pull from. For example, it should be easier to quickly find associate level candidates than executives because more are available and they are generally easier to connect with. 

2. Submissions per Requisition- The average number of candidates submitted per requisition (aka- job opening).

Grade: B 

Why: The key to successful hiring is to fill the position with the best available candidate. The only way to find the best candidates is to compare them against their peers. I have some clients that will wait until they interview three candidates before making a decision, some want to review five CVs before setting up phone interviews, while others say they will hire the first person that knocks their socks off, but still like to interview a few additional people just to make sure they are making the right decision. Identifying multiple candidates for a position gives the hiring team the opportunity to do their research, similar to when I was researching high yield savings accounts, to help make the best informed decision. In the extreme, having too many candidates is a detriment and should be avoided. Recruiters should only be presenting the best of the best in order to save the rest of the team’s time from having to review and interview candidates. Plus, interviewing too many candidates slows down the interview process, allowing your competitors to sneak away with the best candidates. Just like time to submission, the quality of submissions per requisition is much more important than sheer number of candidates. 

3. Submission to Interview Ratio- The percentage of candidates submitted to interviews requested.

Grade: A 

Why: This is the first KPI that involves measuring quality, and is rightfully deserves an A rating. The only candidates that matter to the hiring team are the ones who move onto the interview stage. In a perfect world, a recruiter will be able to identify multiple candidates quickly, all of whom will make it to the next step. However, the recruiting world is hardly perfect and at the end of the day quality always trumps quantity. Think of efficiency as a simple equation where Max Efficiency = [Time to Submission + Number of candidates submitted] x [Submission to Interview Ratio]. Quality will always have the biggest impact on the equation (except when there are no candidates submitted). I would rather see a recruiter submit two candidates, both of which are interviewed rather than submit nine to only have two interviewed. The better the submission ratio, the more efficient the process. 

4. Interview to Hire Ratio- The average number of interviews per hire.

Grade: B

Why: The interview to hire ratio is a two-handed metric. On the one hand, it is the recruiter’s job to keep qualified candidates interested in the job while liaising between the candidate and hiring team to keep both up to date on one another’s status and availability. On the surface, you might wonder why this didn’t get an A rating as less interviews and more hires clearly seems to maximize efficiently. However, the second part of the metric is based on factors outside of the recruiter’s control. The hiring team needs to woo over the candidate just as much as the candidate needs to win the team’s affections. If the hiring team isn’t holding up their end of the bargain the recruiter’s stats are going to be negatively affected. The same is true of hiring managers who tend to do a lot of interviewing and not a lot of hiring. If candidates are consistently being turned down after an interview, either the recruiter needs to better screen the candidate prior to submission or the team needs to reconvene to make sure they are not being overly picky or driving candidates away.

5. Time to Fill- The average time it takes to fill a position.

Grade: A-

Why: Time to fill is one of the most important KPIs in cutting costs. As they say, time is money. The longer it takes to fill a position, the more man hours it takes to source and interview candidates, meaning more of both the recruiter’s and hiring team’s time. More importantly, every day a vacancy goes unfilled the company isn’t operating at 100% and every day the company isn’t operating at 100% they are running inefficiently and losing potential revenue. Every employee and every contractor contributes to the profitability of the company. If there is no value in adding someone to the team, then there is no reason for the position to be available in the first place. The only reason why time to fill didn’t get an A rating is because of outside factors, mainly the limitations of the availability of the interviewers along with the nature of the job opening. If the team is looking for a needle in a haystack or if the interview process is going to include multiple face to face interviews over a course of a couple of months, the ratio will be skewed due to factors outside of the recruiter’s control. It is also important to note that executive level positions generally take longer to fill than lower level positions, therefore, executive level recruiters will most likely have lower time to fill ratios due to the nature of their requisitions.

6. Fill Rate- The percentage of positions assigned to the recruiter/agency that they filled. 

Grade: B+

Why: Maximizing efficiency means getting the most out of your recruiters and agencies. The more positions they are able to fill, the better. That said, the difficulty of the requisitions, the ability of the hiring team to sell the candidate on the position, requisitions that are put on hold or closed without being filled, and competition from other sources all play into these calculations. For example, if a candidate was offered the position, but turned it down for a better offer with another company, is the recruiter to blame? That being said, top recruiters should have enough candidates to make the law of averages work in their favor. Depending on your company’s staffing policies, you may want expect more or less from each recruiter and agency. For example, sometimes internal recruiters specialize in managing the recruitment process while they prefer to have their agencies find and submit candidates, giving their agencies both easy and hard to fill positions. Other companies will only utilize agency support after the position has been opened for a period of time without being filled, leaving the harder to fill positions to their agencies. There is no right or wrong method, but the fill ratio is going to be dependent on many factors, mainly the availability of candidates and difficulty to fill. A steady dose of hard to fill positions will skew the numbers.

7. Retention Rate of New Hires- The new hire turnover rate within a given time period, either because the employee resigns or terminated due the company’s lack of satisfaction of performance.

Grade: D

Why: Long term retention is usually far out of the recruiter’s control. The recruiter’s job is to identify, qualify, and present candidates to the hiring team while managing the interview process including extending and closing offers. Once the team decides to put forth an offer and a candidate accepts, the overall happiness of the employee and their quality of work is out of their hands. If a certain recruiter or staffing agency has low retention rates, the fault usually lies somewhere in the company or the hiring team. Either the recruiter needs to be coached on how to properly vet candidates to work in difficult environments or the company needs to work on keeping their employees happy. As a recruiter, high attrition is a red flag. If a client is dealing with a high level of attrition, I need to evaluate whether or not I want to keep working with them as I don’t want to be the guy who leads them to a non-fulfilling placement.  

Setting Targets and Measuring Performance

I specifically left out target metrics for each KPI because each company is going to have their own way of measuring success. The best way to select targets is by measuring each of these KPIs annually with your current recruiting staff and agencies. By taking a look at actual data, you can better set targets going forward and compare and contrast both your recruiters and your agencies with one another. Otherwise, you may be expecting the unachievable or accepting mediocrity. Comparing the data year by year will allow you to customize your targets each year as business needs shift. You may also put more or less weight on a specific KPIs pending trends that you are seeing. If you are getting a ton of qualified candidates, but none are accepting offers, it might be time to assess the interview to fill ratio. If you find that that submissions per requisition have dropped, it might be time to invest in new sourcing methods, hire another recruiter, or engage in agency support.  

Subjective KPIs

1. Candidate Experience- How do candidates enjoy working with the recruiter/agency?

Grade: A-

Why: Recruiters are usually the first person that a candidate speaks with, which means they are likely to set the first impression of the company they represent. A recruiter who believes in their company’s or client’s brand is more likely to consistently leave candidates with a positive impression compared to a cold, overworked recruiter who lacks passion. If a recruiter isn’t excited to work at their company or support their client, why should a candidate be excited about the job opportunity? A positive recruiter experience will lead to bettering your reputation amongst competitors while increasing referrals. A company can help better their candidate experience by further educating their recruiters and agencies on the company and the positions they are handling. The more information the recruiter has (including non-public information), the more knowledgeable they become, and they become better able to find candidates who fit into the company’s culture. Candidate experience is also affected by the hiring process and the personalities of the hiring team. If the interview process is overkill (too many interviews or lack of feedback) or if there is a nasty hiring manager, a poor candidate experience will likely be due to factors outside of the recruiter’s grasp and need to be addressed accordingly. 

2. Branding- The recruiters ability to support the company’s brand during their sourcing efforts and interactions with candidates.

Grade: B+

Why: Every email, every voicemail, and every conversation with a candidate expands the company’s reach. Every time a candidate sees your logo, is pushed to your website, or talks to a recruiter regarding your company, your brand continues to grow. In many ways, speaking with a recruiter is one of the most meaningful marketing ploys. It gives the candidate an opportunity to have a one on one conversation with a representative of the company, which is an opportunity to learn more about the organization and their mission. In a society that is constantly being subjected to commercials, billboards, and web advertisements on nearly every page you visit, a personal conversation goes further than merely being subjected to the brand. The candidates are actually being engaged with the brand. The further the recruiter’s reach and the better they are able to sell your brand, the more value they bring to your organization’s branding efforts.

3. Database Building- The impact of the recruiter in maintaining and growing your candidate database.

Grade: B

Why: Company databases are usually the first source to search when it comes to identifying potential candidates and the candidate database needs to be updated and added to daily. Each company has their own database, which is exclusively accessed by their current employees. Every online application, every employee referral, and every actively recruited candidate has a profile that lives in the system. Each profile is updated whenever there is outreach and is updated as information changes. Part of a recruiter’s ROI is their ability to continue keeping the data clean, up-to-date and to add new records. The better your database, the quicker you can identify candidates, the quicker the team can interview, and the quicker the position can be filled. Although building and maintaining the database is important we need to circle back to quality over quantity. Having a database full of candidates that you will never hire is useless and any time spent adding or updating their records are wasted efforts. Quality beats quantity every time. Think of it this way, would it make sense for you to parse in every CV from Monster and Careerbuilder or would that just junk up your database? Although this metric is hard to physically measure as profiles are being added and updated by various sources, it is directly correlated to two measurable KPIs: submission per requisition and submission to interview ratio.

4. Client/Hiring Manager Experience- How does your team like working with the recruiter?

Grade: A+

Why: When given the opportunity, we choose to work with people that we like. When it comes to staffing, if you like working with a recruiter or agency there must be a reason. Maybe they are pleasant to work with, are prompt and responsive, are available after hours or on weekend when needed, produce quality candidates, or there is a level of trust and a bond that has grown throughout years of working together. There is no right reason to enjoy the relationship. The only thing that matters is that your gut feeling leads you to believe the relationship is pleasant and beneficial. If there is no motivation for change, then there is no need to fabricate one. I would rather spend more time with someone I like who is slightly underperforming rather than someone I can’t stand. 

Setting Targets and Measuring Performance

Since these KPIs are subjective, it is hard to set measurable targets. The best thing to do is to identify how much weight each carries to your company and make your decision based on the estimated value. If you already have a fantastic database, you may not need a recruiter who can add to it, you need someone that can utilize it more efficiently. If you are working with an outside agency that has a great candidate and client/manager experience, yet they aren’t filling any positions, you don’t need to end the relationship, but you may want to look into reviewing the measurable KPIs to see where they are falling flat in order to have a conversation about improving performance.

Regardless of how you slice and dice the number, how much weight you put into each KPI, or how you interpret the data, the important thing to remember is the value added of going through the exercise of evaluation. Either you will be happy and committed to your current plan or you might find room for better alternatives. After all, I doubled my APR on my savings account this year.

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For any suggestions on future topics either connect with me on LinkedIn (www.dhirubhai.net/in/alexbenjamin) or email: [email protected]

Next Week’s Topic: Best Practices: How to Prepare Interview Presentations and Samples

Tags: Hiring Managers, General