How to measure recruitment effectiveness

In this posting, I thought of writing about how to measure the recruitment effectiveness more effectively.

As you know, recruitment is one of the most important functions.  To put it into perspective, if you don’t get the right person and on time, it’s likely that it can affect your project delivery, new project’s bidding, customer’s satisfaction and eventually the business. As the famous saying goes, if you hire average employees, your organization will also be an organization of average employees.

How do we measure the effectiveness?

There are three criteria that are most commonly used to measure the recruitment effectiveness. But, would it reflect the effectiveness in the real sense?

First, let us look at what those parameter are and then let us try to answer this question.

1. TAT or SLA – It just means the total window period within which the right talent needs to be identified and offer letter should be given. It does not include the time taken for the selected candidate to join. For most of the recruitment positions that you get to work, it’s for yesterday’s requirement and hence you need to act on every position on war-footing. Hence, this criteria is important and with this, you can measure if the positions are closed on time or delayed. If delayed, what is the percentage of deviation?

2. Conversion ratio: It just refers to ratio between total no. candidates screened vs no of candidates selected and offered. To give an example, if you have screened 100 candidates and selected 10 candidates, the conversion ratio is 10%.  Higher the conversion ratio, lesser the recruitment efforts and lesser the conversion ratio, higher the recruitment efforts which is time consuming and it may not help achieve your TAT.

As per the current industry trend, 10% is considered to be a decent conversion at the entry level in India.  India, as a country, has less employability index and hence this turns out to be contributing factor for lesser conversion ratio. The conversion ratio would vary at Junior, middle and sr. levels.

3. Offer – rejection ratio: If refers to the ratio of no of candidates selected (no of offer letters given) and no. of candidates who have refused to join. For example, if you have selected and given offers to 100 candidates and 80 have joined and 20 have not joined, the offer rejection ratio is 20%. Ie., 80 candidates have joined and 20 have declined the offer. 10-20% offer rejection in considered to be a decent ration and anything more than that needs a review of hiring process etc.,

So can we go back to the question that I asked in the beginning ie., Would these 3 criteria show the recruitment effectiveness in the real sense from Business perspective?

The chances of measuring the real effectiveness with these 3 criteria alone are less. So what more, do we need?

I can think of 2 more criteria and it does help. Let us look at them.

1. Performance level. I mean the performance level of the candidates hired. If you have on-boarded a batch of 25 candidates, what is the performance level of each of the candidate after 6 months or 1 year? How many exceptional performers are there and how many are in “below expectation” category. You don’t necessarily have to have all of them in exceptional category but you should not have too many in “Below expectation” category. 

The point is, as a recruiter or talent acquisition team, have you contributed to building a high performance organization by hiring high performers?

Challenges: It will be easy to track the performance of new hires if they are on-boarded as batches like fresher. When you on-board laterals, they get to join on various dates. However, it’s certainly doable to track their performance levels.

2. Retention: The meaning is self-explanatory and to put is simply, how long the new hires have worked with you or the tenure from their joining. As a recruiter, you need to understand your culture and assess if the new hire would be a suitable fit or square peg in a round hole. You need to look at their career track in terms of how long they worked in each of the organizations in the past.

You don’t hire someone to lose in short-term. You need to hire candidates who would stick for a decent tenure( I think this makes more sense in today’s context) if not a very long-term career.

Why should we look at these two parameters?

Recruitment has, unfortunately, become number game. You have 50 positions to close, you have closed 40 and you need to close another 10 in a weeks’ time and how do you reach my target? This certainly has a negative effect on the quality of hiring process. 

With performance and retention as criteria to assess the effectiveness of the recruitment process, there will certainly bring in a paradigm shift in terms of how one should look at their recruitment target and the importance of hiring the right candidate on board. As you a recruiter or TAG, you are not just responsible for SLA, Conversion ratio and offer-rejection ratio. You are going to be held responsible for getting employees who are high performers and employees who would stick for a decent stint.

Are these two criteria relevant for the recruiters?

You may argue that the performance and retention factors depend on various other factors that are dynamic and the recruiter has a very less say on that. And in spite of one’s best efforts, not all hires are good hires. That’s true. Not all hires have to be high performers and should stay longer. 

However there are many factors that can be controlled right in the upstream and wrong hires can be weeded out. TAG has to work closely with the Data analytics team or Post recruitment team to understand attrition related insights.  Some of those insights can be controllable and hence useful for TAG. For example, if you see high attrition amongst laterals from particular organization, you need to introspect on the cultural compatibility and need to be cautious if you are again hiring anyone from that particular organization. If you are hiring fresher and you see high attrition from a particular background (particular subject or degree), you need to avoid or be cautious about hiring them again.

So, in this context, what you need to look at is how much of your hires are high performers and what is the average tenure of all your hires. Can you try to keep increasing this nos year on year. For example, 15% of my hires were rated as average performer in the last year and can you bring it down to less than 5% this year. 35% of the new hires (fresher) have left in the first 5-6 months and can you bring it down to less than 10%.

Remember, in recruitment, every hiring decision is a Business critical decision. That’s how every recruiter or TAG should look at it. If you really do so, you’ve understood your business and you know how you are part of the bigger picture.  

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