What if you had the power to identify and hire the perfect candidates quickly? The ones who would be an ideal fit for your open position, who would do a superb job and stick with your company, thus preventing the costly drain of employee turnover?
Maybe that sounds too much like having a magic crystal ball for recruiting! But until we can find a way to merge magic and HR, there are some steps you can take to produce similar results. That's where talent acquisition KPIs come in.
KPIs— or key performance indicators— can help you identify the best talent and simplify your recruiting process, empowering you to work smarter, not harder. This can significantly benefit your business in the long run because it's no secret that the recruitment process can be expensive. From the time you craft the perfect advertisement to the interviewing cycle, you've likely invested much time and money.
So, when you begin the onboarding process and, later, begin to evaluate that new hire's output, you're hoping for a positive return on that investment. But, in practice, you want the reassurance and satisfaction of hiring qualified candidates who will become excellent new employees.
This article will explore a few key benefits of integrating talent acquisition KPIs into your recruitment process.
How KPIs Help You Hire More Effectively
If your recruitment process continually results in unsatisfactory candidates or a high turnover rate, it's easy to assume that the problem lies with your applicant pool. After all, finding and acquiring top talent is getting more complicated these days! But there's another side to that coin that is less commonly considered.
Sure, it can be challenging to find your ideal candidates— but could that be a result of your recruitment process? IT recruiters are currently contending with a highly competitive market where time is of the essence. And if your recruitment process wastes time or falls short of delivering a great experience, it's quite likely that a competitor will snatch up your top talent.
Talent acquisition KPIs can help you identify and eliminate the weak spots in your recruitment processes. So, let's look at how that works in practical application.
Determine the effectiveness of hiring team
How long is your recruitment process from a job posting to a new hire? Are you experiencing bottlenecks that slow productivity and detract from your results? How are you measuring your source quality?
Each of these factors can significantly impact the effectiveness of your recruitment process. Therefore, talent acquisition KPIs are especially useful in this arena because they can help determine the overall effectiveness of your hiring team and spot areas for improvement.
More easily justify technology or people investments to shareholders
Since the recruitment process is an investment, it makes sense that you may be required to justify your people investments to your company's shareholders. Talent acquisition KPIs can maximize the efficacy of your justifications because you can provide your investors with real data that illustrate results.
For example, your applicant-to-interview ratios, the average time to hire, and cost per hire are all key performance indicators your shareholders will want to know. Therefore, optimizing your recruitment process and presenting stellar numbers can benefit shareholder meetings.
Improve candidate experience
It's easy to conceptualize your recruitment process solely regarding its impact on your search for top talent. But what about the candidate's experience? No one likes to be ghosted when they apply for a job, so leaving unsuccessful candidates with a positive impression of your recruitment process is important.
Top 9 Traditional Talent Acquisition KPIs
The previous section discussed how KPIs could help you optimize your recruitment process and deliver a stellar hiring experience. But now, let's dig deeper and explore some of the most common traditional KPIs.
1. Candidate NPS
Candidate Net Promoter Score (commonly abbreviated as CNPS) is a way to measure a candidate's overall impression of a brand, the hiring process, and what they would tell other prospective candidates.
CNPS can be measured by asking candidates to rate, on a scale of 1 to 10, how candidates like or dislike their experience with your organization during the application and recruitment process. It's based on a well-known Net Promoter Score (NPS) metric measuring customer experience.
2. Time to value
The "time to value" KPI reflects the candidate's ability to generate value from your recruitment investment. From the moment the candidate accepts the offer to the end of their probationary period as a new hire, how long does it take to add measurable value to your team?
This KPI can be measured in several ways: Surveys and feedback from that employee's manager and team members can offer valuable insights into the candidate's performance. Likewise, if the employee's role involves measurable data such as "closed won," this can also be used to measure time to value.
3. Replacement value
An employee's replacement value is determined by the cost of replacing an employee with someone qualified to take over that employee's role. Therefore, measuring an employee's replacement value can be vital for your recruitment process because it helps identify how much it costs to refill a certain role.
Calculating this value individually is important to identify the true cost of attrition. For example, replacement value typically starts at 50-60% of that employee's salary. But when factoring in the additional cost of the recruitment process, the overall replacement value can often range from 90-200%.
4. Quality of hire
No one wants to hire a new employee just to say the role is filled. The ideal end goal of the hiring process is to find a candidate who will do a stellar job in that role. And that's why measuring the quality of your hires is important.
This KPI can be determined by measuring a candidate's ability to complete their probation period and/or to generate positive feedback from those who work with them.
5. Employee turnover rate
It's no secret that employee turnover can be expensive. However, this KPI is also directly tied to employee replacement value, so it's important to identify your company's turnover rate and ask what this says about your overall recruitment process.
Are your employees unhappy? Are they the wrong fit for the job? If your turnover rate is high, it's likely an indicator of issues in your recruitment and onboarding process that must be addressed.
6. Sourcing channel efficiency
What are the best sources for finding candidates? And, most importantly, which sources will lead you to the top talent for the job? Identifying the strengths and weaknesses of your sourcing channels is crucial for answering these questions.
You can measure the efficiency of your sourcing channels by dividing the total number of applicants for each channel by the total number of hires from each channel. If some sources result in zero successful candidates and others continually produce problematic candidates, these are good indicators that those channels aren't working for you.
7. Submissions per job
Few things are more frustrating than receiving multiple applications from candidates not remotely qualified. And if you regularly find yourself culling inadequate submissions, it may be time to measure the efficacy of submissions per job.
This KPI can be measured by assessing the percentage of qualified applicants in relation to the number of people who applied for the job overall. If these amounts are severely disproportionate, sifting through unqualified applicants may slow recruitment and indicate a need for improvements in your overall recruitment process.
8. Time to hire
How long does it take candidates to move through your entire recruitment pipeline? From the moment they apply to the moment you make a hiring decision, how long does that process take?
This can be measured by assessing the total number of days per each phase in your hiring process. If this measurement identifies delays or bottlenecks in your recruitment process, it's time to switch things up!
9. Cost per quality applicant
Lastly, assessing the cost of each quality applicant is essential for optimizing your recruitment budget. This KPI may be a bit more abstract than others because the definition of "quality" will differ for every organization.
Individual measurements for this KPI will be up to you and may be assessed via supervisor feedback, self-assessment forms, and performance reviews.
But even though this definition will vary from one company to the next, it's important to identify the factors that define a quality candidate for you and the cost of recruiting, hiring, and onboarding a quality applicant.
Defining A New Way to Make Decisions
Until your recruitment process is informed and optimized by the right performance analytics, it can feel like you're playing a video game in hard mode with no hope of it getting easier. In the past, it was assumed that relying on the traditional KPIs we already explored could help you avoid that issue.
But as we move forward into an ever-evolving workforce, it's time to ask if those KPIs are due for an update. Of course, KPIs can and have been helpful in recruitment analytics. Still, when best practices in company culture and business strategy are being improved and redefined, it stands to reason that there might also be a better way to predict and analyze employee performance.
So, what does that look like in practical application? For starters, MSH aims to define a new wave of KPIs that challenges us to look at performance analytics in a bold new light. Historically, KPIs have been used to measure things that happened in the past as a way of anticipating performance in the future.
But that can only be so effective. What if, instead of constantly re-reading the past, we find a more effective way to see the future? MSH posits that next-generation people metrics can offer that solution by taking a different approach.
KPI stands for "key performance indicators," but what if we could start to evaluate through PPAs— predictive people analytics?
How to use predictive people analytics to improve your TA strategy
Have you never heard of Predictive People Analytics?
You're not alone.
Many people leaders and HR managers alike are used to only using KPIs to measure success across various initiatives, but less so when it comes to PPAs.
Predictive People Analytics is the application of statistical modeling and machine learning to identify the probability of future outcomes in employees and job candidates.
PPAs can work for you when you read these measurements through the lens of company culture. Company culture is vital because it demonstrates the correlation between performance and the environment. Studies repeatedly confirm that employee performance is optimized when people are happy with their company culture. When workers feel supported, valued, coached, and encouraged, they will be their best selves and bring their A-game to work.
As employees begin to recognize the power of positive company culture, we need a new generation of performance measurements that can provide accurate data about the relationship between your company's culture and your employees' success.
This is where KPIs fail us today.
Traditional KPIs attempt to evaluate and predict performance based on past indicators without considering the connection between culture and performance. For example, standard KPIs might tell you that an employee is underperforming during their probationary period. As a result, you might tweak your recruitment process in an attempt to find someone who is more motivated or more ambitious.
But what that KPI might not tell you is that the employee could be neurodivergent and feels unsupported at work. Similarly, they might be a single parent struggling to balance a full-time job and childcare. Unfortunately, traditional KPIs often fail to factor in issues like these or ask how your company culture could improve.
Examples of predictive people analytics use cases
1. Reducing employee churn by understanding the reasons that lead them to quit.
2. Identifying core traits of high-performing employees and applying the data to recruiting strategies.
3. Testing out hypotheses and collecting data on reasons behind lack of productivity, then creating strategies to address these findings, and flag unproductive traits in candidates.
The recruitment process is a big investment expected to pay off by generating top talent for your company. But if you don't have the right tools, it's easy for the recruitment pipeline to be clogged up by costly bottlenecks and inefficiency.
Talent acquisition KPIs have traditionally been used to combat these difficulties by attempting to assess employee performance. But as professional best practices evolve, KPIs are no longer the gold-standard solution for optimizing your recruitment process.
Instead, studies show that company culture and employee performance are inextricably linked. Put simply, when employees feel supported at work, they soar to their full potential. And when employees are at their best, the company succeeds. That means that company culture is closely linked to financial success.
Implementing a new generation of performance analytics can give you a more accurate read on the strengths and weaknesses of your employees and your company as a whole.
By utilizing KPIs in tandem with predictive people analytics (PPAs), you can unlock a new way to measure success.
To learn more about PPAs or to get help with defining the right success metrics for your organization, check out our talent and RPO solutions, or get in touch. We'd love to hear from you.