How to Stay On Track with Your Hiring Efforts – Best Recruitment Formulas
Measuring the performance of your recruiting efforts is a difficult undertaking. In the digital era, there are a plethora of recruitment KPIs to measure and lots of data to pull from. However, more isn’t always better; it may be overwhelming! That’s why we’ve compiled a list of the top recruiting indicators you should be monitoring in order to improve your hiring process and expand your business.
The Vacancy Rate (Recruitment Formula)
The purpose of your vacancy rate is to illustrate how many available positions you have in comparison to how many current roles you have. This may tell you a lot about your company’s present status, but it can also help you compare it to industry trends.
How to Compute the Vacancy Rate:
The vacancy rate is calculated as the number of vacant positions divided by the total number of positions in the organisation or department multiplied by 100.
A restaurant now employs 25 front-of-house staff and 30 back-of-house employees, plus management, for a total of 55 people. They are looking to recruit four waiters, one bartender, and three cooks, totaling eight openings. To determine the vacancy rate, the restaurant would divide 8 by 55 to obtain 0.1454, then multiply this by 100 to reach 14.5 percent. Their vacancy rate is as follows.
Also Read: Best Ways to Improve Employee Morale
The Fill Rate (Recruitment Formula)
The fill rate compares how many positions you have filled during a particular period to how many jobs are open. In general, a high fill rate is a favourable indicator.
It signifies that your HR department is working hard to fill open positions. However, as with any KPI, there is always more to the story: a high fill rate is meaningless if your employee retention rate is low, indicating that you are not investing enough time during the interview process to ensure you are employing the appropriate individuals.
How to Calculate Fill Rate:
Fill Rate is the Total number of positions filled / total number of job opportunities multiplied by 100
A hotel has 42 employment opportunities at the start of QTR 1. They had filled 33 of these posts at the end of QTR 1. To calculate their fill rate, they would divide 33 by 42 to obtain 0.78, then multiply it by 100 to reach 78 percent.
Filling Time (Recruitment Formula)
Time to fill measures the moment it takes from the time a job request is authorized to the time a person is employed for that position. This assists you in identifying issues with your recruitment process. A long time to fill might suggest a variety of issues. Perhaps your HR department is understaffed, or your HR personnel is not aggressive enough. It might also signal a problem with the employment market, such as a scarcity of competent individuals in your region.
How to Calculate Fill Time:
Subtract the date an employee was employed from the date the job request was approved.
You get approval for a job request for a front desk attendant on June 3rd. You employ someone for this position on July 14. Determine the time elapsed between the two dates: in this case, 27 days in June and 14 days more in July, for a total “time to fill” of 41 days.
Cost Per Hire (Recruitment Formula)
The purpose of cost per hire, also known as cost to fill, is to show you how much you paid to hire one person. Cost per hire is an excellent approach to calculate the overall cost of your recruiting and hiring process so that you can subsequently optimize it and give more accurate forecasting and budgeting.
How to Calculate Cost per Hire:
Total internal expenses plus total external costs divided by the total number of hires equals the cost per hire.
During QTR 2, a premium retail store recruited eight staff. A manager sums up both internal and external expenditures from April to June to calculate cost per hire. Payroll and perks for the HR personnel are internal expenditures, whereas fees paid to online job boards, job fairs, and Facebook advertisements are external costs. They divide their entire expenditures ($20,000) by the total number of hires throughout that time period (8). Their hiring fee is $2,500.
Quality of Hiring (Recruitment Formula)
Quality of hiring is a rating system that considers a variety of elements to determine which of your new hires are the most helpful to your organisation. Use this KPI to compare employees and evaluate which ones contribute value to the company and which ones require further training or support.
How to Calculate Quality of Hire:
Use a 1-10 scale to grade your staff in each of the four categories below. When appropriate, include feedback from other team members in your evaluation of personnel.
A restaurant manager wishes to assess the hiring quality of her four new wait employees. She evaluates how much revenue each server brings in (job performance), how quickly each server completes training and is fully functional on the floor (time-to-productivity), how each server feels about their work and role at the restaurant (employee engagement), and how the rest of the team feels about the employee (team morale) (cultural fit).
For each of these criteria, she applies a simple 1-10 grading scale and comes up with the following results:
• Job performance (6 points)
• Time-to-productivity (8 points)
• Employee engagement (8 points)
• Cultural fit (9 points)
The ultimate “quality of hire” score is calculated by dividing the total by four: 7.75.
Source of Hire (Recruitment Formula)
The source of hire metric’s purpose is to show you where each of your recruits come from.
How to Figure Out Source of Hire:
Over the course of a year, a dentist’s office hired 13 additional employees. The hiring manager uses “source of hire” data to build a pie chart that shows which channels bring in the most employees, with their website accounting for 75% of all new hires. Next year, the recruiting manager chooses to devote more resources to improving their website in order to attract more prospects.
The Source Quality (Recruitment Formula)
The source quality KPI identifies which employment channel brought in the highest-quality candidates. While a KPI called yield ratio can be used to determine which channels bring in the most prospects, it is not the goal of this KPI. Source quality, on the other hand, strives to show you which channels connect you with the best applicants.
How to Determine the Source Quality:
A digital agency wants to know which the better hiring source is: LinkedIn or Monster.com. For both, they compare data.
- They received 40 job applications and four hires through LinkedIn. The source quality for LinkedIn is 0.1 when you divide 4 by 40. (Or 10 percent when expressed as a percentage).
- They had 6 hires and 62 applications on Monster.com, for a source quality of.09 (or 9 percent).
Because LinkedIn has a higher source quality rating, it’s a somewhat more profitable hiring channel.
Also Read: How to Calculate Shrinkage & Attrition?
Application Time (Recruitment Formula)
This KPI is used to track how long it takes for a position to be advertised and for someone to apply for it. This KPI can be used to estimate how long it will take to fill an available position.
You can also get an average application time by adding the time spans for each application you received and dividing by the total number of applications you received.
On August 10th, at 8:00 a.m., a manager publishes a job. He keeps track of the time between posting a job and receiving five applications:
- Time 1: 8 hours
- Time 2: 24 hours
- Time 3: 29 hours
- Time 4: 31 hours
- Time 5: 40 hours
He sums all of these up to obtain 132 hours, then divides by the number of applications (5) to get 26.4 hours as an average application time.
Pass-Through Rate (Recruitment Formula)
The pass-through rate indicates how many candidates get to the next step of the recruitment process. This KPI is important for analyzing and identifying issues with your hiring process.
How To Calculate Pass-Through Rate:
A hiring manager wishes to evaluate pass-through rates from application to interview, interview to offer, and offer to hire. There are 56 candidates who apply, 20 candidates who are interviewed, four candidates who are offered jobs, and three candidates who take the job. These are the pass-through rates for these three steps, calculated using the formula above:
- About 35% of applicants are invited to an interview
- Offer contingent on interview: 20%
- Offer of employment: 75%
Also Read: How to Compute Training & Development Budget
Offer Acceptance Rate (Recruitment Formula)
The purpose of the offer acceptance rate is to show you how many people accept your employment offers. If your offer acceptance rate is poor, you may have an issue with your offers and need to improve your compensation or perks.
How to Calculate the Offer Acceptance Rate:
A cafe manager makes seven employment offers to potential employees, five of which are accepted. He calculates an offer acceptance rate of 0.71 by dividing accepted offers by total offers (or 71 percent).
Application Drop-Off Rate (Recruitment Formula)
The purpose of this rate is to compare how many applicants started (but didn’t finish) an application to those who finished it. This KPI can help you figure out whether you need to simplify your applications or make them more challenging in order to reduce your candidate pool.
How to Calculate Application Drop-Off Rate:
An applicant monitoring system alerts a manager when a candidate begins the application process. She notices that 87 people began to fill out applications, but only 34 finished them. She calculates her application drop-off rate as 0.39 using this rate (or 39 percent).
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Candidate Experience Score (Recruitment Formula)
Candidate experience assesses how happy your candidates were with the hiring process and how likely they are to suggest your company to their friends and colleagues.
How to Determine a Candidate Experience Score:
Make a basic survey with questions that allow candidates to rank various criteria on a scale of 1 to 10 on a scale of 1 to 10. Questions like “the interview process was efficient” or “I would suggest this brand to my friends” could be included as agree/disagree options. Add up all of the scores and divide that amount by the total number of survey respondents once you’ve gathered data from a selection of candidates. This is the level of experience you have as a candidate.
Early Turnover Rate (Recruitment Formula)
The purpose of the early turnover rate is to determine how many employees leave your company early in their careers. This KPI is useful because it shows whether you’re selecting strong fits for new hires.
How to Figure Out Your Early Turnover Rate:
A recreation centre, suspects that its early turnover rate is excessive, resulting in wasteful recruiting costs. They had 89 new hires quit or were fired during the first month of their employment. During the same time span, they only hired 125 new people. They validate their concerns using this calculation, determining that their early turnover rate is 0.71. (Or 71 percent).
Employees Retention Rate (Recruitment Formula)
The purpose of the employee retention rate is to show you how many of your new workers stay on your team over time. One of the most widely used KPIs for assessing the overall success of your recruitment and hiring activities is this.
How to Calculate Employees Retention Rate:
A hotel chain calculates their employee retention rate to see how successful their HR strategy was the previous year. They hired 272 new staff in a year. 249 of them employees remained with the organisation during that year. They calculate their retention rate by dividing 249 by 272, which is 91 percent.
Hiring diversity (Recruitment Formula)
Hiring diversity is a KPI for determining whether you’re hiring a diverse group of people. Teams made up of people from varied ethnic, ideological, and socioeconomic backgrounds are now well-known for being more creative and having a beneficial impact on work culture.
How to Figure Out Hiring Diversity:
There is no single formula for determining recruiting diversity, but having your staff fill out optional personality and background surveys is an excellent place to start. Establish a chart with this data to see how diverse your workforce is, and make a plan to hire people from underrepresented groups.
What Are The Most Critical Recruitment Formulas or KPI`s To Monitor?
Your industry and business goals are one-of-a-kind. However, your KPIs should provide you with a balanced picture of:
- the cost-effectiveness of your hiring process
- the speed of your hiring process
- the quality of the individuals you hire
What Is The Most Effective Way To Track My Recruitment Efforts?
While paper applications and offline recruiting strategies may still be used in some industries, it is significantly easier to track your recruiting process when it is digitized. Consider using a CRM (customer relationship management) or ATS (applicant tracking system) software. These tools will not only track vital KPIs automatically, but they will also make it much easier to prepare reports and make sense of your data.