There are various Key performance indicators in the recruitment industry to measure the efficiency.

4 Key performance indicators every talent leader should care about the most are as follows:

  • Time to Fill (TTF)
  • Efficiency Indicators
  • Recruiting Cost Ratio
  • Turnover Rate

Perhaps the most critical question companies ask of their HR leaders is how long does it take to fill an open position? Also called Turnaround Time and Time to Offer, this KPI is calculated as the days that pass from the date a position opens till the date a candidate accepts an offer (including weekends and holidays) for the same.

How does tracking TTF help?

Every day a position is left unfilled, a particular business need is left unserved or the company is not growing as fast as it should be. But, specifically, tracking this metric on a regular basis helps hiring teams achieve three things:

  • Identify positions hardest to fill, detect bottlenecks and improve the process
  • Evaluate overall hiring efficiency and timeliness by benchmarking against industry averages;
  • Efficiently manage work by redistributing to existing employees until someone is hired.

How can you reduce your TTF?

  • Identifying and reaching out to relevant candidates who are potentially open to new opportunities. It enables recruiters to identify and engage candidates who are most likely to be ready for their next job.
  • Ensuring your first communication is designed for response.
  • Coordinating with hiring managers to get their reviews on candidate interviews quickly.
  • Feedback after the interview of the candidates. Capture reason for the non-selection of the candidate and filter other candidates accordingly.

These are ratios obtained by comparing the number of people across various stages in your hiring pipeline, number of people who are shortlisted, interviewed, offered the job, and who accepted and joined.

How does it help?

  • Gives you an immediate overview of your pipeline health.
  • Helps identify at which stage the maximum drop-offs are happening(bottlenecks).
  • Hence helps hypothesize and gain insights into where the process could use improvements.

Here are the three most tracked efficiency indicators:

  • Sourcing to Interview ratios: It is the ratio of number of people ready for interview from the sourced profiles. It indicates the quality of the data and profiles you have. If you have data which is not very old then this ratios can be at higher side.
  • Interview to offer ratios: Number of people who were interviewed, regardless if they made it to only the first round or final round, versus the number of people who were offered a position. Higher ratios indicate relevant and quality sourcing and initial screening of the candidates.
  • Offer to Acceptance Ratio: It is the ratio of number of offers made to the number of offers accepted. A low ratio could be attributed to a number of reasons like low compensation, job market fluctuations, poor benefits etc. but the best practice is to ask the candidate so their responses can be used to identify issues and improve.
  • To increase the efficiency of the whole process, it is indispensable to have a robust system which can capture reasons for each rejection and delay.

The Recruiting Cost Ratio is a simple yet direct indicator of the efficiency and productivity of your recruiting function. It helps you determine your average spend on recruiting activities in relation to the compensation being offered to your new hires. The calculation is as follows:

Total Recruiting Cost = External Costs + Internal Costs

Recruiting Cost Ratio

  • External costs = everything spent outside the organization towards recruitment like third-party agencies, marketing or advertising, etc.
  • Internal costs = the costs required to maintain the hiring team (including salaries, recruitment software), employee referral bonuses, etc.
  • Total Compensation Recruited = the sum of base annual compensation of all external positions filled.

If your RCR percentage is low as compare to the industry, it indicates an efficient recruitment process.

Turnover rate is the percentage of people leaving the company within a given period of time. It is usually calculated annually, but if you are just building the company, it is good practice to compute it month on month.
The calculation is as follows:

A comparison against the industry average turnover can help identify where a company stands. A lower turnover rate indicates a high probability of well-fit, well-adjusted employee recruits. Turnover rate can be calculated for the company overall and the individual teams. A comparison of these numbers will answers questions like:

  • Is my hiring process bringing in people with the best fitment for my company?
  • How happy/engaged are my employees?
  • Which month/year had the highest turnover and why did it happen?
  • Which teams have the highest and lowest rate of attrition?

In summary, it is natural for your team to be pressed for time, given the functions they handle and the information they process. But tracking these fundamental indicators will empower any recruiting team to make better decisions. After all, the end goal is to build more than an efficient, smooth process that runs independently. It is to build an organization that outdoes itself every day.