The 5 metrics that matter in staffing
Following on the theme of higher performance in hiring, here's 5 easy metrics that will change your business and were highlighted in my recent webinar
There are metrics everywhere you look. And they will all tell their own story, but like statistics, they’re not always pointing you in the right direction.
The majority of metrics that people watch are based on activity volume. STOP. Activity volume is only useful in identifying something that you should automate, and this is not about managing peoples activity.
It’s everywhere. The number of times I’ve seen people on activity leaderboards because they made the most calls that resulted in voicemail or failed connect entries on a CRM is embarrassing. They do have their place though in managing people and in their own way are useful. But that’s not what drives the staffing business.
These metrics, the ones that matter, in this context are the levers that drive the operational business model of Staffing and Recruiting to success. These are not sales metrics - other authors have much more to say about those. - but one thing they’ll all agree on is that delivery
Take it from the top
Metric 1 : Cost per qualified candidate (CQC)
What is a qualified candidate? Interested in the role on offer, meets the criteria, is content with the terms of engagement and available. For clarity it’s best to exclude background check costs. Any client that wants this before submission should probably be jettisoned from the entire industry (the last instance I saw of this, a data leak proved that on average every candidate was being checked 3 times by 3 different agencies for the same role at the same time). This may be worth a separate article, calling for transparency from clients or BG check providers)
What’s in this?
Cost per Click, which depending on conversion rates direcly impacts cost per Apply. The bigger difference between Cost Per Click and Cost per apply, the greater the opportunity to adjust your advertising text and targeting.
Cost per Apply - don’t be drawn in too much by this, it’s important, but increasing number of applies could be as simple as leaving out the pay rate or location. In addition, with so much automation (including automatic applications on behalf of candidates that don’t know they’ve applied) Conversion rate from Apply to responsive or engaged is critical.
Apply Conversion rate, is as described, how many of the applicants that “applied” actually respond and engage when you reach out. For those without AI like GLYDE, expect your results to be poor, unless you'‘re manipulating what you measure.
And once you’ve found an engaged candidate, only after that critical pre-screen will you know if they’re interested and qualified, which is The Money!
Every other applicant you’ve invested in that don’t result in a Qualified Interested and Engaged candidate will mostly provide 0 (zero) ROI.
Spoiler Alert - The candidates that you drop into your database, they’ll have to go through all of the above again to provide any value (saving you on Cost Per Click but not much else)
Lets, not forget though, if you want to quantify this Cost Per Qualified Candidate, you’ve got to add in the advertising cost AND human cost (missed calls, unresponsive, scheduling tennis, screening conversations etc) for all applicants, not just the successful ones. Rule of Thumb - recruiters have screening conversations with 9-12 applicants per day per recruiter, and only some become qualified.
Cost per Qualified Candidate = (Number of screened, qualified and interested candidates) divided by (Cost of all applications, cost of all human effort across all applicants)
Less is more
Metric 2 : Qualified to Hire Ratio
I prefer this over Qualified to Start Ratio as a properly qualified candidate should be one who is highly likely to show on day one. When only one person can fill each position having to many qualified candidates to work and choose from
Fewer candidates = higher productivity.
Recruitment and Staffing is at it’s most efficient where the candidates are loyal and continue to return for placements. There will always be a level of positive natural churn, and growth.
The Old School puts this usually at 4:1 - so you don’t need huge numbers of candidates to fill a position.
In The Money
Metric 3 : Gross Profit Per Hire
Not Gross profit per hour or other distractions.
Your Cost Per Hire is the combination of CQC (Cost Per Qualified Candidate) and other associated direct costs such as background checks or screenings for all of the Qualified Candidates (see Qualified to Hire Ratio) you worked to fill this position.
Once hired, you’ll expect to make a profit on every hour the associate works for, however you only start making Gross Profit Per Hire once the candidate has worked enough hours to cover the Cost Per Hire. If not, you’d have been more profitable not taking the order in the first place (and less strain on cashflow).
Retention and average tenure is key here, but directly relates to the Cost Per Hire. The better you manage CQC and Qualified to Hire Ratio, the shorter the tenure needed for profitability, and the more likely you are to have profitable business.
It’s important to track this so you know when to turn away bad, unprofitable business.
Rinse and Repeat
Metric 4 : Redeployment Rate
Redeployment rate is probably the best way to measure loyalty between recruiter and candidate, it cuts both ways. If you treat good candidates as abunndant, then it’s likely the level of loyalty from them is returned and your redeployment rate is low.
Redeployment rates have declined as more automation tools have been deployed over the years in trying to play “a numbers game”. I have had the good fortune to see what technology can do when applied properly through what we did for clients with TempBuddy.
Average redeployment rates for staffing agencies that adopted TempBuddy were 70% - more than 3 times the rest of the industry which is usually under 20%.
A higher redeployment rate reduces your cost and increases your Gross Profit Per Hire.
Double Down
For those direct hire and contingent permanent recruiters, Old School numbers are still the yardstick to use here
Jobs at first interview Ratio
Its a ratio, not a number. Having 10 Jobs at first interview is only good so long as you didn’t accept 100 jobs to get there.
Interviews Per Job
Don’t ever forget the rule of thumb - if you’ve 3 in at interview with a hiring manager you’re 80% chance of getting the placement fee. If you’ve 1 at interview, your chances are 10-20%.
Oops - did I leave that money there?
Metric 5 : Unfilled Order Value
Let’s face it, if you’re filling everything you’re probably not charging enough! There will always be those orders that go unfilled. Depending on your business you need to decide whether you classify partially filled orders in this number or not.
This number is like alcohol, it evaporates fast. Its a measure of how much potential business you’ve landed, but it’s not showing on your P&L until its filled.
Time to Hire…Elephant in the room
Time to hire has more than doubled since the advent of email and internet.
Recruiters can do a lot to improve their efficiency, however if the hiring managers reaction and response times continue to slow, more applicants will be needed and increasing numbers will continue to be left disillusioned by the hiring process.
You may be delivering a world class service to applicants and candidates on behalf of your clients, but the cost of slow response times from them will impact your business. This is not a metric that needs measuring, but perhaps consider tracking response times from your clients, but the clients that are slow will cost you and may not be such good business. Lost candidates, recruiter time invested in sourcing, nurturing and maintaining active engagemetn while a hiring manager, fearful of missing the unicorn hire, procrastinates at every step.
Ask your clients to provide you with an SLA for response times.
Your candidates will appreciate it and fill rates will improve.