The Hiring Metrics Every Startup Recruiter Should Measure
“In small companies, resources are scarce, and hiring usually involves removing someone from their core competency in order to focus on getting people in the door.” – Matt Branton, CoinLock
Startups face several challenges in their seminal years, from finding the right product-market fit to developing a business model, to raising funds in order to scale quickly. But one aspect that’s often treated with a bit less priority is a recruiting strategy to bring in the right people.
For business owners, hiring the right people is fundamental to growth. Without a process in place, many young startups see low performance values and high first-year attrition rates. Candidates who appear perfect on paper may perform poorly or fail to cope with the demands of scaling.
So, what can early-to-mid-stage startups and their recruiters do to hire the right talent?
Setting up a comprehensive recruitment process takes time and money, both of which are not freely available when you’re bootstrapped. Instead of investing heavily in an overstaffed human resources team or spending too much time screening candidates, you might be better off adopting a data-driven system that will help you evaluate (and improve) your recruitment process, as well as gauge whether you are hiring the right people.
What are hiring metrics?
Hiring metrics are a vital part of data-driven recruitment analytics, providing invaluable insights to optimize the way you acquire talent. Tracking a few key metrics can help identify the problems in your talent acquisition process, leaving you free to then fix them without delay.
But where to start? For one thing, tracking everything is always helpful, but it’s not always possible for startups to deploy enterprise software or hire an army of data scientists. Try to focus on a few key areas that have the most significant impact on your hiring process.
Source of Hire
Do you know your best recruiting channels? Measuring source of hire can help you identify how much your sourcing channels are contributing to your pool of applicants. While all channels won’t perform equally, data analysis can help you ascertain the sources that are worth investing in – and the ones you’re better off without.
By splicing the source by department or level of experience, you can also identify which channels are most useful to discover specific types of candidates. You might discover that WayUp is ideal for finding interns or recent grads for junior roles, but LinkedIn could be better if you need a more seasoned professional.
Determining the efficacy of a source of hire is simple. Just count the number of candidates generated during a given time frame and see which one is turning out the most results. To measure quality, divide the number of qualified candidates by that previous total.
All that’s left is to continue investing in the channels with the best percentages – or find new ones.
Time to Hire
Time to hire measures how long it takes to hire a candidate for a role. It’s calculated from the moment you open a job requisition until a candidate accepts their offer, usually in business days. Keeping an eye on this key metric helps you discover whether you’re taking too long to hire a candidate.
No company can be faulted for taking the time to make sure they’re hiring the right person, but today’s highly competitive market requires decisiveness. The longer you delay or dawdle on a hiring decision, the longer candidates have to shop around for better offers.
Besides, if you don’t move quickly someone else will, possibly a direct competitor. Then not only have you lost a great candidate, but you’re back at square one and have to start all over.
Quality of Hire
Quality of hire – a measure of the value a candidate brings to your company – is vital to knowing if you’ve been making the right decisions.
High-performing candidates are indicative of hiring success (and vice versa), but did you know that a single bad hire can cost a company thousands of dollars? Conversely, hiring quality employees will only boost your organization’s productivity as well as reduce churn rate. By continuously measuring the quality of your hires, you can optimize any recruitment process to ideal levels.
The parameters for this metric are different for each company, depending on such varied factors as size, revenue, work culture and mission. A good place to start is by putting together a list of what makes a quality hire at your company, followed by assessing new hire performance at predetermined intervals.
Cost Per Hire
Cost per hire is one of the most talked-about metrics in recruiting, and with good reason. It’s a measure of the total spend to recruit candidates – job boards, software, hourly cost of recruiters and interviewers, travel expenses, background checks, and more – divided by number of hires.
This metric helps recruiters at startups determine the ideal spend per candidate that will ensure a balance between quality and return on investment. Keep in mind that senior and executive roles will naturally cost more to fill, but an excessively high average might be indicative of the need to restructure your process.
Alternatively, you might want to deploy an infinitely scalable, error-free AI assistant to help with the grunt work, speed things up and help you save bigger bucks down the line.
It’s all about finding the right fit.
The best startups are fashioned from the image of their founders, not unlike a fingerprint. That’s why no two are alike. What works for other companies may not be right for yours, which is why every recruiting process has to be individually tailored.
You can avoid costly hiring mistakes and measure the effectiveness of your recruiting program by tracking key metrics like quality of hire and cost per hire. While only a first step to refining your hiring process and reducing costs to an optimal level, it’s a good way to start improving productivity in recruiting.
At the end of the day, it’s all about hiring the right people. The rest is just numbers and details.