In the fast-paced and competitive world of talent acquisition, measuring the right metrics can mean the difference between success and stagnation. As we approach 2024, it’s important to stay ahead of the curve by leveraging data-driven insights to optimize your recruiting strategy and guide your hiring process. But with so many measurements to choose from, which ones should you focus on?
In this article, we delve into the top five recruiting metrics that matter for hiring success in the coming year. From unwavering “North Star” metrics like offer acceptance rate to new concepts like pass-through rate by demographic and job non-compliance rate, we explore the key indicators that will help you make informed decisions and drive better results in what’s shaping up to be another demanding year for TA teams everywhere.
1. Offer acceptance rate
Offer acceptance rate, or OAR, is like a report card for the effectiveness of your end-to-end hiring process. Tracking your OAR helps validate whether or not all the different aspects of your process – from intake to interviews, candidate experience to compensation – are working together to efficiently bring in the talent you need.
What is offer acceptance rate?
OAR measures how successful your team is at turning job offers into actual hires. Simply put, it’s the number of hires made divided by the total number of job offers extended.
Why does offer acceptance rate matter?
Offer acceptance rate is a critical metric for recruiting teams because it serves as a comprehensive gauge of the effectiveness of the entire hiring process. OAR goes beyond mere numbers – it encapsulates the accuracy of job calibration, fairness of compensation practices, attractiveness of benefits and perks, candidate experience satisfaction, and the overall strength of your employer brand.
A high offer acceptance rate indicates that your recruiting process aligns with candidates’ expectations and presents a positive image of your organization. If your OAR is above 75% (and ideally around 85%), you’re succeeding at attracting and securing qualified candidates who fit well with your company’s needs, mission, and culture.
Moreover, offer acceptance rate has a direct impact on various aspects of your recruiting goals. It maximizes your budget by increasing the efficiency of the hiring process, reduces the time it takes to fill positions, and likely predicts quality of hire, since a high OAR means you’re closing your hiring teams’ most preferred candidates coming out of the assessment stage.
2. Time to hire
Not to be confused with time to fill (TTF), which indicates how long reqs stay open on average and shines light on the overall efficiency of your recruiting process, time to hire (TTH) is a candidate experience-related metric that shows how quickly you’re getting your most qualified candidates in the door.
What is time to hire?
Time to hire is the measure of how quickly (now-hired) candidates move through your hiring funnel, from the day they apply to the day they’re officially hired. In other words, it’s the time from when someone applies to when they accept your offer.
Why does time to hire matter?
Time to hire is a crucial metric for recruiting teams because it directly highlights the success of the hiring process and the experience of candidates. TTH measures how soon a job seeker transitions from an applicant to a member of your team!
Quick time to hire is essential for several reasons. First and foremost, it ensures that your organization can secure qualified candidates before your competitors do. In a tight labor market, a lengthy hiring process may result in losing the talent you want to other opportunities.
Additionally, a faster hiring process generally contributes to a positive candidate experience. Job seekers appreciate efficiency and responsiveness, and a streamlined hiring process reflects positively on your organization as an employer, making it more likely that candidates will accept their offers. (Greater candidate satisfaction also helps your employer brand, which helps you attract and win future talent. Talk about ROI!)
Time to hire also influences overall recruiting effectiveness. It directly affects time to fill, since the sooner you get hires in seats, the sooner you can close open roles. If your TTH is greater than 40 days, there’s a good chance you’re not only providing a sub-par candidate experience but jeopardizing your organizational staffing (and therefore business) goals.
3. Pass-through rate
On the surface, pass-through rate is a metric that shows the quality of your candidate pipeline. It illuminates whether you’re appropriately devoting time and budget to serious applicants who warrant those investments. But if you dig deeper, pass-through rate can also reveal process problems hindering your ability to draw in and retain qualified talent.
What is pass-through rate?
When talking about pass-through rate, you may be referring to pass-through rate by stage (e.g., screening, assessment, offer) or the overall pass-through rate of your entire hiring process. Each tells you something different, and both are important for understanding how well you’re attracting, prosecuting, and treating qualified candidates.
To calculate pass-through rate by stage, divide the number of candidates that have advanced from a stage by the number of resolved (i.e., no longer active) candidates that originally entered that stage. To find overall pass-through rate, divide total hires by total resolved applicants.
Why does pass-through rate matter?
Your pass-through rates (both overall and from stage to stage) are crucial indicators of the effectiveness and efficiency of your hiring process. A lower pass-through rate could imply quality issues with your pipeline if such a small percentage of your candidates are actually fit to advance. It could also imply that process bottlenecks – say, delayed decisions from hiring teams or overly burdensome assessments – are prompting candidate drop-off, prolonging time to hire, compromising recruiter capacity, and increasing costs.
Meanwhile, a high pass-through rate signifies that a larger proportion of candidates are successfully progressing through stages, resulting in quicker hires and potentially lower costs. It also shows strong alignment on openings both internally and externally – recruiters and hiring managers are on the exact same page regarding their expectations of candidates, and these expectations are clearly communicated to job seekers in the initial job post or outreach and throughout the whole process.
4. Pass-through rate by demographic
High or low, your pass-through rates overall and by stage should be roughly the same for candidates of all backgrounds. (Of course, different job types and levels may have different pass-throughs, but for similar jobs, candidates of every ethnicity, age group, gender, and so on should progress at the same rate.) Measuring pass-through rate by demographic helps ensure fairness in your recruiting process.
What is pass-through rate by demographic?
Pass-through rate by demographic is the rate at which candidates from a specific background move through the hiring process. It’s determined using the exact same calculation as general pass-through rate (advanced or hired candidates divided by total resolved candidates), but only including data from candidates of one particular population.
For example, if you want to understand how male and female applicants progress through your screening stage, divide females who advance to assessment by total female applicants and males who advance by total male applicants. Then, compare these two rates to check for potential inequity in your process.
But watch out: self-reported demographic survey data tends to be incomplete and inaccurate – if not entirely unavailable depending on your location and its regulations. Consider augmenting self-reported data with highly credible inference models like the gender inference model offered in Datapeople Insights.
Why does pass-through rate by demographic matter?
Pass-through rates for different demographics are key metrics for recruiting teams because they highlight fairness and inclusivity (or lack thereof) in your hiring process. When pass-through rates for various groups generally mirror one another, it suggests your process is free of systemic barriers that might prevent candidates of certain backgrounds from advancing or getting hired.
By paying attention to pass-through rate by demographic, you can identify and address potential biases or disadvantages that may be limiting the success of specific groups. This not only aligns with the principles of fairness and equal opportunity – it contributes to building a more diverse workforce, a stronger talent brand, and a more productive hiring process.
5. Job non-compliance rate
In our roller-coaster environment of proliferating rules and regulations, job non-compliance rate is a necessary hygiene check for recruiting teams. It measures how well job posts across your organization follow the rules, and it’s crucial for a healthy and credible hiring process (that, you know, doesn’t get you in trouble with the law).
What is job non-compliance rate?
Job non-compliance rate is simply the percentage of your published jobs that don’t comply with regulations, such as pay transparency laws. The math for this one is easy – if your non-compliance rate is anything higher than 0%, your company faces both reputational and legal (and therefore financial) risk.
Why does job non-compliance rate matter?
It’s probably obvious why you need to stay on top of your out-of-compliance job ads. Quickly spotting and fixing non-compliant jobs safeguards against potential fines and legal complications.
But the significance of job non-compliance rate goes beyond just following the rules; it directly impacts your employer brand. Non-compliant job posts (which are almost always non-inclusive job posts, since they tend to be missing a diversity statement, accommodation statement, or salary range) can deter candidates from applying and lead to a tarnished image, making it challenging to attract talent. By prioritizing compliance, you build trust with both job seekers and regulatory bodies.
Master the recruiting metrics that matter
If there’s one thing all five of these metrics have in common, it’s that there’s so much more to each than immediately meets the eye, as Datapeople’s CEO & Co-founder Amit Bhatia and Director of Customer Enablement & Support Jen Angell discussed in our recent webinar. (Which is why monitoring and optimizing every one of them is essential for both meeting your current hiring goals and powering your brand, talent strategy, and business success years into the future.)
Something else these key indicators all share? They can be challenging to keep track of! That’s why we’ve developed the ultimate recruiting metrics cheat sheet for 2024. For each of the five recruiting metrics that matter most, the cheat sheet includes handy formulas, watch-outs, benchmarks, and more. Download it now for a strong start to the new year.
