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Strategic Human Resource Metrics: Recruitment & Hiring

Strategic Human Resource Metrics: Recruitment & Hiring
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  • 0:02 Human Resource Metrics
  • 0:54 Cost-Per-Hire &…
  • 3:01 Ratios & Referral Rates
  • 5:25 Quality-of-Hire &…
  • 7:03 Hire Rate & Turnover
  • 8:42 Lesson Summary
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Lesson Transcript
Instructor: Amber Dejmal
In this lesson, you'll learn about recruitment and hiring metrics in the human resources field. Explore the different metrics and when you are through, answer a few quiz questions to test your comprehension.

Human Resource Metrics

There are several reasons to create, track, and analyze recruitment and hiring metrics. One benefit metrics has is that it enables HR to speak to senior management in the language of business. CEOs, CFOs, and other executives are business-focused, so speaking their language and presenting data to back up your issues, needs, or ideas is important. Numbers tell a powerful story, and using metrics, you can prove that your HR department is a valuable strategic partner in running the organization.

In this lesson, you'll learn about key metrics that can be used to benefit HR, including cost-per-hire, quality of hire, and employee referral rates. You will learn how the recruitment and hiring metrics are calculated by looking at how John, a hiring manager, uses each metric in his HR position.

Cost-Per-Hire & Time-To-Fill Metric

Cost Per Hire Metric

Cost-per-hire (CPH) is a metric that measures the costs related to recruiting and hiring employees.

CPH = (external costs + internal costs) / total number of hires in a time period

External costs are things like recruitment-related spending that is directed outside of the organization, such as advertising, recruiting agency fees, and travel costs. Internal costs are the use of internal resources, such as salaries and benefits as well as the technology costs. The total number of hires is the number of hires completed during the measured period.

John is a hiring manager at a large organization that hires dozens of new employees a week. The cost-per-hire metric allows hiring managers, such as John, to link their recruitment to cost savings for the company. By utilizing this metric, it allows the company to monitor the costs spent for each new hire and allows the company to see exactly where they can save money in the future. For example, the company might notice that it spends thousands of dollars flying in potential candidates. In order to cut costs, John decides to only interview candidates in close proximity to the company.

Time-To-Fill Metric

Time-to-fill (TTF) is calculated by the number of days from when an employee quits their job until an offer is accepted by a new candidate for that job. The basic metric used to calculate TTF is:

TTF = total number of days of opened jobs / total number of jobs

The number of days open is calculated using calendar days, including weekends and holidays.

John just hired 12 new employees and used the time-to-fill metric to see how many days, on average, it took him to hire them. By knowing the time-to-fill metric, it allows the company John works at to gain insight into a realistic time to hire new employees. It helps managers plan on how they can alleviate the strain on productivity levels by redistributing work to existing employees while the position is open. It also allows the company to enable resource and budget planning for the recruitment process.

Ratios and Referral Rates

Recruitment Yield Ratio

The recruitment yield ratio (RYR) is the ratio of applicants that found the job posting from different advertisements. This comes from the section on a job application that asks an applicant where they found the job. This ratio can help a company figure out the proportion of successful candidates resulting from a specific source that make it to the next stage of the interview.

In order to find the yield ratio, you would first add up all the applicants from each source. Then determine the number of applicants from each section that made it through to the next round of recruitment. Finally, divide the number of applicants who made it through to the next round by the original number of applicants received from each source.

John uses the yield ratio to show him where he might want to put his recruitment effort in the future. For example, John noticed that an online job board was the most effective. In the future, he'll post more jobs on job boards and spend less time and money putting an ad in the newspaper.

Interview-to-Offer Ratio

The interview-to-offer ratio is the number of candidates interviewed for the position to the number of employees actually hired for a position. This is good for a company to know so they have an idea of how much time is spent interviewing for one position. The ratio helps HR departments achieve desired hires and evaluate recruitment performance.

John noticed that his ratio is around 3:1 - three employees interviewed to one employee hired - which is a good ratio. If John would have noticed that his ratio was 10:1, then he might look into a more effective way to screen potential candidates.

Employee Referral Rates

An employee referral program has a goal of attracting and retaining qualified employees by encouraging current staff to recruit potential employees. Employee referral rates are the rates that current employees refer people to the company they work for. Different companies use different metrics to evaluate an employee referral program, such as ROI (return on investment), employee satisfaction, turnaround, retention of referral hires, cost-per-hire, and many other metrics.

Tracking actual referrals gives John insight into employee satisfaction in each area of his business. John considers rewards, retention rates, recruitment costs, and length of vacancies when he evaluates his employee referral program. However, John does have many options when deciding how he wants to evaluate his employee referral program, so he chooses the one that best fits his company.

Quality-Of-Hire & Recruiting Source

Quality-of-Hire

Quality-of-hire (QoH) refers to the average quality of new hires, which can be measured by things like performance ratings or speed of promotion. There is no single way to derive this metric, and the definition of quality is difficult to define. Many staffing professionals cannot seem to figure out how to measure the quality-of-hire, which causes a problem with having a universal calculation.

John uses this metric to index performance ratings and compare them to the recruiting source, while other HR hiring managers might prioritize low turnover. John also considers retention rates, manager satisfaction, employee satisfaction, and cost of hire to assist him in measuring the quality of his new hires.

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