Efficient hiring process is critical for success

Efficient hiring process is critical for success

Big challenge A cost and time-effective recruitment system in place will benefit organisation

The saying that something which is not measured cannot be controlled applies to recruitment process efficiency as well.

In recruitment, the popular wisdom among business process specialists goes somewhat like this ‘Get the recruitment process right, and you virtually eliminate the chances of ending up with hiring the wrong person. Get it wrong, you may not even attract applications from suitable candidates let alone hire the right talent.’ There is considerable truth in that perception. Recruitment, as someone aptly put it, is not just about finding bodies to fit available jobs.

You need to see recruitment as a process – and a measurable one. Having a cost- and time-effective recruitment and selection process in place can benefit your organisation in several ways – in terms of employee engagement, sustained job performance, employee retention and low turnover among others.  What’s more, when your customers, peers, competitors and prospective employees know that you follow a good recruitment process, your credibility and image as a professionally managed organisation will go up several notches.

Conversely, if your recruitment process is found wanting, people will talk - and what they might say is unlikely to come as music to your ears. If a job applicant, for instance, has had a rather unpleasant experience with your company at any point in the recruitment process, you can trust him or her to tell others about it.

Measurement of recruitment process is critical to identify and fill gaps in the process. Recruitment metrics are standards of measurement used to gather, analyse and present key information regarding the hiring process.

The metrics should not only provide the current operations status, but also help the organisations in making future predictions. This becomes more imperative in human capital intensive businesses where the organisation revenue is dependent upon the fulfillment of the positions.

The recruitment data and metrics should be able to provide you the futuristic predictions on how many positions can be fulfilled with right talent in how much time which eventually will lead to the revenue predictions. Moreover with good metrics in place, you could more easily distinguish between processes that work for you and needs to be further enhanced and those that don’t need to be modified or discarded.

Metrics also enable fact-based decision making. If you want to ensure that your recruiters are doing a good job, you need to track hiring metrics. Corporate recruiting departments of companies of repute make metrics a key part of their day-to-day operations and endeavor to optimise them over time to increase efficiency. Before they do that, they make sure that their recruiting metrics are aligned with their business needs and objectives.

Let’s briefly discuss the common recruitment metrics.

Position Fulfillment Capability: What this number indicates is the number of open positions for which candidates – both internal and external candidates - were hired against the open positions during a financial year. It includes also those who may have accepted the position in the current financial year, but would be joining in the following year.

This metric helps determine the organisation capability to fulfill the open positions.

Cost-per-Hire: How much is being spent to get a new employee on board? Which types of positions cost more to fill? In which specific areas in the recruitment process can you cut costs? This metric can help answer these questions. Cost-per-hire represents the costs associated with recruiting new hires, and these can be categorised under four heads: Sourcing, Screening, Interviewing, and Hiring.

Under Sourcing, you may incur costs on job advertising, online job posting boards, agency fees (if any outside recruitment agency is hired), and employee referral fee.

Under Screening, you need to calculate the time spent by your recruiters to screen through resumes received per job and the number of preliminary phone interviews conducted.

Under Interviewing, you need to get a fix on the time spent in scheduling interviews, the number of interviews conducted, the time spent in the actual interviews, the average cost of the interviewers’ time, etc. Finally, under Hiring, you will need to account for time spent on follow-ups with selected candidates, cost of background checks, signing bonus paid, and so on.

Sure you will not incur all of these expenses for every new hire. But it’s important that you first determine which recruitment costs you would like to track and then track them consistently for all hires. One very important point to note while calculating this metric is to include above cost even for reneged candidates. Even though the candidate did not join but all the recruitment effort was made in getting the candidate on board.

A point to note here is that it would be unfair, even wrong, to evaluate your recruiters’ performance from this metric alone because it does not account for quality of hire. And the quality of hire is one metric that matters a lot.

Time-to-Fill: Want to know how long it is taking to fill open positions? Time-to-fill metric is a fair indicator for hiring efficiency. It represents the number of days from when the job requisition was opened until the offer was accepted by the candidate. It is a popular metric because of the loss of revenue associated with positions that remain unfilled.

You would be totally off the mark though should you choose to use Time-to-fill as the sole metric to evaluate the performance of your recruiters.

And that is because a variety of factors could come into play to delay the hiring of a new employee: your hiring managers may well be taking their own sweet time to interview and make decisions thereby pushing up the time-to-fill metric, the pay and benefits package you offer may not be competitive enough to attract candidates as readily as that of firms who offer “juicier” packages, there may be conditions in the employment market that the recruiter has no control over, and so on.

Also, the emphasis in this metric is on ‘speed’ of hiring and not quality of hiring. If you set time-to-fill as the only consideration to evaluate recruiter performance, you might well find your recruiters focusing only on ‘easily gettable’ candidates – the low hanging fruits as it were – in order to fill positions faster without paying any consideration to the quality of hire. So, when it comes to evaluating recruiter performance it is advisable to track new-hire quality along with time-to-hire and cost-per-hire.

Recruitment Ratios: These ratios are the ones that help in determining the quality of hire. Some of the recruitment ratios that are to be tracked are Interview vs Submittals, Cleared vs Interviewed, Offered vs Cleared, and Offered vs Interviewed. Tracking these ratios per recruiter will help you determine which recruiter is able to provide the quality hire.

Based on these ratio metrics, we can also build prediction models for fulfillment of future positions such as how many submittals are required per position or how many interviews are to be conducted to clear how many candidates, etc.

The quality of hires can further be evaluated by conducting fixed interval surveys with the hiring manager regarding the performance of the employee hired against the job description based on which the employee was hired.

Annual Turnover Rate: Employee turnover refers to the rate at which employees leave jobs in a company and are replaced by new hires.

Simply put, it is the ratio of the number of employees that leave a company over a period of time compared with the average number of total employees over the same period. Obviously, the more loyal your employees are the lower will be your turnover rate.

Turnover can be on account of a variety of reasons but what is critical in today’s context is the rate of voluntary separations. You need to track that for sure. In fact many times the cost of hiring and training a new hire could be more than the cost of retaining the separating employee by offering them the salary desired by them.

In sum, the recruitment department of an organisation is tasked with recruiting the primary asset of the company – its workforce. It follows that for the recruitment department to be efficient and effective, it should put in place proper performance metrics.

While few firms would dispute the importance of recruitment metrics, not all companies have measurement processes actually in place. And again to restate the point right at beginning, something which is not measured cannot be controlled. Since quantitative metrics are easier to observe, track, calculate and analyse, companies would do well to make a beginning with them.

(The writer is Vice-President –Business Process Excellence, Arctern -- A Subsidiary of Volt Information Sciences, Inc)

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