Countless articles have been written about the high costs of a bad hire. It doesn’t take a specific study for you to see that sinking resources into filling new positions only for the employee to quickly quit or be fired is costly and inefficient.
The costs of inefficient hiring processes are especially high in the tech industry. Your engineering teams are moving so quickly to meet market demands and they can’t afford to face constant delays due to hiring missteps.
While there are plenty of stats about the average costs of a bad hire, you need more than just subjective insight into whether or not new employees are working out months down the road. Using the following 5 metrics to monitor the ROI of your hiring processes can help you get a deeper insight into what’s working and what could be improved.
1. Time to Fill
Time to fill might be the most common recruiting metric, giving you insight into how long it takes to go from posting a new job opening to hiring a candidate for the position. While minimizing time to fill is a priority for all recruiters, it’s especially challenging when trying to hire technical talent.
In addition to the sourcing and interviewing processes other industries work through, you likely also conduct skills assessments to evaluate candidates. This inevitably adds to your time to fill—to the point that some teams take months to fill a position.
If your time to fill is longer than you’d like, it’s important to find ways to streamline processes without sacrificing the quality of candidate evaluations. Can you screen candidates with a skills assessment rather than a phone call? Can you get to a point where you only need one day of in-person interviews? Can you go remote with your hiring processes?
2. Source of Hire
Another important metric that helps track the ROI of your hiring processes is quality of source. In the digital age of hiring, we’ve fallen into this trap of high-volume recruitment tactics. Hiring teams use online platforms to blast their job postings across a wide range of websites in an effort to fill the top of the hiring funnel. While having a deeper pool of talent to work with could help find the best candidates, it’s hardly the most efficient way to manage your hiring processes.
When volume is your focus, you’ll have plenty of leads but low source quality. Increasing the quality of the source will help limit your pool of candidates to only those that are right for the job. This keeps your hiring managers from wasting time reviewing applications for candidates that just aren’t a fit for the position.
One thing to focus on when trying to improve the quality of the source is your ratio of passive to active candidates. How can you improve your employer brand to get talented engineers actively applying to your positions?
3. First Year Attrition
It takes time for a new hire to become a fully productive member of an engineering team. At the very least, you likely have an onboarding process before the new hire is thrown into the fire of daily tasks. But even once the new engineer is contributing to their team, it’s common for it to take about a year for them to deliver their best work.
This is why first-year attrition is such a valuable recruiting metric. If your candidates leave before they ever make it to the 1-year mark, you’ll be continuously filling your teams with employees who aren’t maximizing productivity and output. The inefficiency adds to your hiring costs and limits overall business performance.
There are two key things that can lead to higher first-year attrition—miscommunicated expectations and poor performance. When candidates are met with unrealistic expectations, it’s more likely they’ll quit the position within a year. And when you hire the wrong candidate for the job, performance will suffer and you may have to fire the employee.
Minimizing first-year attrition requires hiring processes that clearly communicate expectations and maximize the quality of hire by ensuring your manager selects the best possible candidates for open positions.
4. Candidate Satisfaction
You don’t have to wait for first-year attrition to kick in to determine how a new hire’s early days are going. Checking in on your candidate’s job satisfaction after they’ve started can give you valuable insight into the effectiveness of your hiring processes. Is the candidate meeting early expectations? Are they satisfied with the role based on the expectations you set? Answering these questions can help you optimize your approach for future openings.
It’s also important to track candidate satisfaction during the hiring process. Any insight you can get into where there’s friction in your approach can help you make changes that make your employer brand more attractive to top talent.
5. Cost Per Hire
Perhaps the clearest indication of recruiting ROI is the overall cost per hire. This means taking into account all of the advertising costs, candidate expenses, training costs, time spent by recruiters/hiring managers, and more. Ultimately, you want to do whatever it takes to hire the best talent possible for your open roles. But if your hiring processes are draining company resources and taking far too long, it’s likely that you need to rethink your approach to filling open positions.
The metrics listed here are far from the only recruiting KPIs to help you understand the ROI of good hiring processes. There’s always room for improvement when it comes to hiring technical talent, whether that means speeding up the process or cutting costs along the way.
If you want to learn more about the best practices for hiring technical talent, check out our guide, The Art of Hiring Developers.