RFL: Which Recruiting Metrics Matter?

With employers across the United States tightening their belts, more and more HR and Recruiting professionals are focused on the value of their talent acquisition practices. Recently, the largest job boards in New England posted a micropoll for employers, asking them which recruiting metrics they were analyzing...

The following poll results were aggregated from JobsInMA, JobsInME, JobsInNH, JobsInRI, and JobsInVT. This poll and other information can be found in their monthly newsletters, which you can view by clicking the following links:
MA Recruiting Review | ME Recruiting Review | NH Recruiting Review | RI Recruiting Review | VT Recruiting Review

I don't think it's a surprise to anyone that Cost Per Hire is the most commonly analyzed recruiting metric. What we see from this graph, in my opinion, is that most people are looking at the metrics which are most easily measured. It's very easy to count the number of applicants and hires you get per advertising source. It's also a relatively easy process to calculate how many advertising dollars were spent to fill a position.

Unfortunately, those are second level metrics, focused on the actual process itself, which don't actually reflect the value of your recruitment advertising. First level metrics, which measure the results of the processes, provide a much more accurate analysis. As is the case in many situations, the more valuable information is generally the harder to capture. When the success or failure of recruitment advertising is boiled down to a dollar amount or a number of hires, you are left with a very short-sighted analysis.

A truer indicator of the value of recruitment advertising is how valuable the hires are to the business, given their prospective roles. To understand this value, you have to look at how long it takes for this person to become productive, and how long they stay with your company. Employee retention affects quality of the work being done by your company and your turnover costs.

For example, let's assume that an entry level position at your company earns $25,000 in wages, and has an average annual turnover of 30%. While the costs related to turnover vary greatly, a conservative estimate is approximately 1.5 times the employees salary. Therefore, each time you have to fill that entry level job, it costs the company $37,500, when all is said and done. If you can reduce your turnover to 15% annually by attracting better candidates, then the potential value of your recruitment advertising is significant. In a department of ten of these entry level positions, you're reducing your average annual turnover costs from $112,500 to $56,250.

I include this example as an illustration of the importance of recruitment advertising to your bottom line. Defining the success of recruitment advertising is an important first step to developing more effective strategies for talent acquisition. Ensuring that you're attracting the best person for your company for all your job openings is absolutely critical to your long term success, particularly when employers are forced to do more with less.

In 2009, I fear that more employers will be too focused on bottom line or second level metrics. Through this strategy, businesses will end up sacrificing future growth opportunities as they focus on costs only. The most successful companies, however, will refuse to compromise their long term goals for short term gains, and will continue to analyze and invest in their recruitment advertising, adhering to the principles that great businesses are built by great people.