This KPI measures the money spent by your recruitment team for hiring a talent. The objective is to see which source of hire is more cost-effective without compromising on the quality of hire. Cost per hire is one of the ways to check how effectively your recruitment budget is being utilized. You may realize that your team is spending more amount on external agencies, but most of your qualified candidates may come through employee referrals or from Social Media for many roles.

Average Cost per Hire = (Total External Recruiting expenses + Total Internal Recruiting expenses) / Total Number of Hires

External costs are the cost spent in hiring external agencies, posting an advertisement on job portals, News Paper, LinkedIn, Social Media, Job fair and campus Recruiting costs, background verification and drug tests

Internal costs usually include all internal spending for recruitment agents (usually excludes management costs however some companies do include this as well), fixed assets such as laptop/desktop/phone costs by agents, Referral amount given for employee referrals etc.

Note: Cost per hire is a short-term investment and before taking any decision based on this KPI, don’t forget to check the quality of hire metrics from different hiring sources.

This metric gives us the number of days taken since the date final approval of the position received until an offer being accepted by the candidate (Don’t confuse with the date of joining). This allows you to check how fast or slow your team moves with the CV shortlisting, interview workflow etc. to provide final offer letter to a suitable candidate. We usually have little control over notice period, however, this is the area if improved, candidates can be on-boarded faster.

This KPI gives us the average number of days between the first interaction with the best suitable candidate and the formal offer acceptance by the candidate. This helps us understand how soon your organization makes decisions to give offer post a right candidate enters into the pipeline.

For example, if your position was open on March, 1st of the year and Recruiter manager to give you the best candidate by 15th. Post all the interview, negotiation candidate accepts the offer on 30th March same year. Your time to hire would be 30-15=15.

*n=total number of offers accepted

This KPI allows the leaders to understand wrong hiring (Culture or role misfit). In many organizations, voluntary turnover within 90 days are considered under recruitment/HR and does not go against business. You can also compare the results with tenured attrition to check the quality of hires.

YTD Attrition Rate (%) = (Total Employees exited within 90 days during n month/ Average headcount of employees with tenure bucket of 90 days)

Annualized Attrition Rate (%) = (Total Employees exited within 90 days/ Average headcount of employees with tenure bucket of 90 days) *(12/number of months)

Recruitment team uses all effort to find suitable candidates through various sourcing channel. However, it is important to keep track to understand which sourcing channel is more effective for the specific role, level and Industry type. For example, If you are looking for entry level profile then probably LinkedIn is not the right option for you. Sometimes local job sites are more popular in a country than an internationally known name.  This not only benefits the organization in getting candidates on time but also gives the option to choose best from the pool of available candidates.

This KPI can be easily calculated based on % of offer success at each major recruiting channels.

I highly recommend this KPI to all the leaders, since it gives a clear view of the satisfaction for both candidate and Manager. Does new hire fit well into the culture and work of your organization as desired? Did you as a manager provided enough support to the candidate to get established into the role? If the survey outcome is not as desired then you may work on candidate’s expectation, bringing more clarity to the job description, culture transformation, dedicated training plan etc.

All such information can be gathered through the survey conducted by HR Analytics Team. Refer to the article “Redefine Your Employee Survey for better HR Analytics” to know more on this subject.