Key Performance Indicators (KPIs) are the critical (key) indicators of progress toward an intended result. KPIs provide a focus for strategic and operational improvement, create an analytical basis for decision making and help focus attention on what matters most. As Peter Drucker famously said, “What gets measured gets done.”
Managing with the use of KPIs includes setting targets (the desired level of performance) and tracking progress against that target. Managing with KPIs often means working to improve leading indicators that will later drive lagging benefits. Leading indicators are precursors of future success; lagging indicators show how successful the organization was at achieving results in the past. The anatomy of a structured KPI includes:
A Measure – Every KPI must have a measure. The best KPIs have more expressive measures.
A Target – Every KPI needs to have a target that matches your measure and the time period of your goal. These are generally a numeric value you’re seeking to achieve.
A Data Source – Every KPI needs to have a clearly defined data source so there is no gray area in how each is being measured and tracked.
Reporting Frequency – Different KPIs may have different reporting needs, but a good rule to follow is to report on them at least monthly.
Recruiting KPIs
Recruiting KPIs are specific metrics that help you measure the effectiveness of your hiring process and your recruiting team.
- Qualified candidates per opening
This KPI is pretty self-explanatory. The ratio of qualified candidates per opening tells you what share of people applying for each open position is actually qualified for that role. A good way to tell if a candidate is “qualified” is if you invite them to move beyond the first stage of your hiring process.
- Application completion rate
It’s not uncommon to see applicants start to fill out a job application and then stop. People get busy or they self-eliminate and decide they’re not right for the position. To find your application completion rate, take the number of submitted applications divided by the total number of candidates who started an application.
- Source quality
Measuring source quality can help you ensure you’re only investing in the best sources for your recruitment process. This helps you build a healthy and reliable pipeline to improve your recruitment process as a whole.
- Offer acceptance rate
Offer acceptance rate is another self-descriptive KPI. It tells you how many offers are accepted. Just divide the number of offers accepted by the total number of offers extended. Recruitment is a two-way process and sometimes the candidate we give an offer to doesn’t accept the position.
- Candidate satisfaction
Having a great experience when interviewing with a company can leave a lasting impression. You can measure candidate satisfaction by sending out a simple survey. Just asking your candidates if they’re having a positive or negative experience during the interview process can usually give you enough information to identify patterns and draw conclusions.
- Turnover rate
High company turnover is expensive for companies. After you’ve spent all this time and money investing in recruiting, you don’t want to have to turn around and do it all again. You can calculate the first-year turnover rate by dividing the number of employees who leave after less than a year of employment by the total number of employees who left. This lets you see how many people moving on from your company hadn’t been there for a full year.
