How to Evaluate a Company's Recruiting Efforts
A waiting room full of job applicants and thousands of online applications for every job opening aren't always good measurements of recruiting efforts. Your business needs qualitative and as well as quantitative measurements to gauge where you excel and where you need to improve in finding the best job candidates. Evaluating recruiting efforts requires measuring hiring processes as well as employee turnover.
Assess the expertise of the recruiting staff. Determine if they are well-versed in traditional recruiting techniques as well as recruiting supported by technology. Employers can assess recruiters' expertise by reviewing their accomplishments, knowledge base and success. For example, some recruiters might equate expertise and success with the number of candidates they place or the percentage of job requisitions they fill within a certain period. The number of years a recruiter has been working is also an indicator of expertise because companies don't usually retain recruiters who aren't performing well.
Calculate the company's cost-per-hire (CPH), or the cost to fill a job vacancy. CPH includes staff time involved in sourcing candidates, creating job postings, conducting preliminary screening and interviews, coordinating schedules for candidates' interviews with hiring managers and participating in panel interviews. Post-offer expenses include fees for background checks, pre-employment drug tests and employment assessments. The National Association of Colleges and Employers' 2011 Recruiting Benchmarks Survey indicates the average CPH is slightly above $5,000. The NACE suggests that costs for large organizations are lower than for small businesses. A November 2001 article in the "The Wall Street Journal" reports that multinational employers with more than 10,000 workers pay just under $2,000 for bringing each new employee on-board. Small companies pay nearly $3,700.
Measure whether the company is spending too much on recruiting. Add the average CPH to amounts budgeted for employee compensation and benefits. When recruiting costs max out the HR budget, it might seem like a simplistic measure to determine whether recruiting efforts are effective. However, if the company's recruiting costs cause HR to reallocate money for training and other workforce costs to recruiting, there could be a problem with excessive costs to hire new employees.
Determine the cost of employee turnover. This includes wages for temporary workers to fill in until a replacement employee is hired, training costs for replacement workers, and lost productivity for the time during which a job is vacant. Add the CPH and turnover costs together to get a broader perspective of what it costs your business to fulfill the life cycle of recruiting from employee termination to placement of a new employee. For example, suppose it costs your business an extra $1,000 to hire a temporary worker in addition to a typical wage rate, and the position is vacant for two weeks while the temporary employee is trained to take on the job duties. The ensuing expense compounds your cost per hire. CPH and turnover costs can bankrupt a small business if they're not closely monitored. Extremely high CPHs are indicative of less-than-effective recruiting efforts.
Survey applicants during the application process to determine which mediums and sources are most effective. For example, many application tracking systems ask applicants to say how they learned of the job opening. Choices typically include employee referrals, social and professional networking sites, company websites and job fairs. Calculating the number of applicants from each source can help recruiters determine the sources that work best in attracting good candidates.
Poll hiring managers to get their perspective on the recruitment and selection process. Conduct employee opinion surveys to evaluate the effectiveness of the organization's in-house promotion and transfer processes and whether employees have positive feedback about internal recruiting. Analyze exit interviews -- especially employees who resign within their first 30 to 90 days -- to get their impressions of whether they believe job openings were fairly and accurately represented during the hiring process.