KPIs in In House Recruitment: A Case Study review

Having recently joined a new position as a Recruitment Coordinator, I have casually been thinking about KPIs to measure the performance of a Recruitment department and the Coordinators individually. Through this article I want to generate a discussion about KPIs and how they can add value to Recruitment, so any views and comments will be positively received! To exemplify the situations in which KPIs can be helpful and the results they can deliver for a team or indeed an organisation, I have created a fictitious case study for each KPI. In my view, there are three KPIs that an organisation should care about to keep tabs on performance from the recruitment/talent acquisition front.

1.      Time to hire – Let’s suppose that the average time to hire in Company X for a role in Customer Service is 30 days. However, this does not match with the industry benchmark of 19 days for businesses recruiting for the same role. Therefore, Company X must consider reducing time to hire. To do this, they should examine reasons for this time lag. One potential reason could be that a particular stage in the hiring process is taking longer than expected. Let’s assume that Company X has 6 stages in the pipeline and it takes a certain amount of time for candidates to move forward from one stage to another. The stages are sourcing, shortlisting, phone screening, assessment, interview and offer. In this scenario, candidates are getting stuck in the phone screening stage, where it takes 15 days for successful candidates to be invited to an assessment. This means that the company must review their manpower needs in the recruitment/talent acquisition department – i.e. consider recruiting more people in the team or divert resources from elsewhere such as creating opportunities for internal secondments.

Another reason why a particular stage may take longer than usual may not be down to the recruitment team, it could be because of an obvious time lag in another team or department. Let’s assume that resumes have been sitting with the hiring manager for days and despite constant reminders from the Recruitment team haven’t been processed. In this case, Recruitment will need to stress the importance of quick decision making, because good candidates will not wait for a long time. So it’s absolutely essential, that all teams having a role in hiring for a particular position endeavour to reduce the time lag as much as possible.

2.      Cost per hire – is another important metric which is calculated using the formula: internal recruiting costs + external recruiting costs/ total number of hires. It is a useful measure to find out whether companies are adhering to their budget on per hire basis. Let’s assume that the talent acquisition budget to hire a mid-ranking official such as a HR Advisor is between ￡25,000- ￡30,000. However, the team exceeds the budget and it is costing them around ￡35,000 to recruit for this role. So the company will need to review their external and internal costs to see where they are exceeding the budget and reduce costs accordingly. It could be Company X has used agencies to recruit for the role because they haven’t been successful in finding the right candidate. One way to avoid the agency cost to conduct an internal review of the recruiting process and consider making improvements – for instance: consider revamping the job description and role to attract good candidates. Other costs that can also drive up the cost per hire is job board posting, the cost of engaging drug-test/background check providers and relocation expenses if the candidate doesn’t live locally. Therefore, company X should look for the best possible deal that is both effective and cost efficient.

3.      Retention rate of new hires – is an incredibly important way to measure the cost of losing an employee. Let’s assume that Company X has an annual turnover of 15%. This means that at least 15 employees are leaving the organisation every year. The annual salary of each employee was ￡20,000. So, for 15 employees this cost would be ￡300k. The cost of losing these employees will be treble this figure which will be around ￡600k per annum because it involves repeating the hiring and training process. To tackle this issue, company X should conduct an analysis of this metric on a half yearly basis to reveal trends. They should create a break - down of terminations according to departments, roles and pay grade.

These metrics demonstrate how key performance indicators have the ability to improve the performance of individual departments and an organisation as a whole. Without KPIs, it would be impossible for a business to keep departmental performance in check. It may be that you have a different view on the subject. Either way, I would very much welcome your thoughts and look forward to a vibrant discussion!