Ten years after the disastrous financial crisis of 2007, we find ourselves back in a job seeker’s market where unemployment is at an all-time low and companies struggle to attract and retain the best candidates. As a business leader, you have so many things on your plate. Sifting through hundreds of resumes and interviewing dozens of candidates is time consuming and in the interest of time, there is a temptation by many leaders to hurry up and “fill the seats” as quickly as possible.
But what happens when you make a job offer and the candidate turns you down? Do you know how many candidates have declined offers? Do you know how many candidates may have self-selected to “opt out” of your selection process before even getting to an offer stage?
Understanding what to measure is the key to getting a better return on investment (ROI) from your recruiting and selection process. By measuring interview conversion rates (or the percentage of how many interviewees actually go on to become new hires), you can take an in-depth look at your current recruiting processes to identify what you’re doing well, and where your strategy can be improved. For example, you may find that despite extending offers to top candidates, a greater than usual number don’t accept. This may mean the interview and job offer process is taking too long, and star candidates are getting new offers or pursuing other opportunities while waiting to hear back from you. Or it could mean that your employment offer isn’t competitive within your industry, market, or geographical location. Are the candidates aware of all the benefits and perks that come with your job offer?
At the same time, if conversion rates are too high it indicates a different kind of problem, that you’re advancing too many candidates further into the interviewing process. The hiring process should work like a funnel: you get a lot of applicants, you phone interview some of them, you meet with a few of them, you hire the one who you think fits best in the role. The efficiency of this process is your guarantee that you’re not wasting your or candidates’ time.
The right approach is one in which conversation rates decrease as candidates move through your funnel continually thinning the pool for each position, ensuring your focus is only on the most qualified. If too many candidates advanced into the later stages, then interviewers are likely being too light and progressing individuals who aren’t completely qualified. If that’s the case, you can provide development to ensure interviewers ask the right questions, gain the needed insight and put only the best candidates forward.
Conversion rates also let you look far beyond the typical measure of how many job offers are accepted. This information is worthless without supporting data into how you got there especially information about the candidates who weren’t selected. A successful strategy is to look at all elements of the recruiting lifecycle and see how they impact the interview process and candidate experience at each stage.
Website visitor to applicants: 11%
- If your conversion rate is more than 11%, you are doing great; you probably have an exceptional brand and a killer career website.
- If your conversion rate is less than 11%, you are below the benchmark, so you should prioritize improving your employer brand and optimizing your career website.
Average number of applications per open requisition: 59
- In the last 5 years this number increased from an average of 34 applications per open requisition in 2011 to around 59 in 2014. The theory is that there is a positive correlation between this metric and the health of the economy.
- If your number is above 59 and you get good quality candidates, you are in good shape.
- If your number is below 59 it doesn’t mean that you are doing something wrong. It could just mean that you represent a smaller size company or the specific requisition requires a unique skills set.
Application to Interview: 12%
- The conversion rate from applicants to scheduled interview has increased in the last 5 years from an average of 6% in 2009 to 12% in 2014, for every 8 applicants companies on average choose to interview only 1 candidate.
- The theory here is simple: the economy is doing well, unemployment is down, interviewing technology is improving, there is a war for talent and companies are simply being more selective.
Interview to offer conversion: 17%
- In the last 3 years, this number consistently jumps between 19% to 16%. Today the average number of applicants per job is around 59 – only 17% reach the interview stage, while only 1 person typically gets an offer.
Offers accepted conversion: 89% (steady over the years)
- There is no significant change in this number over the last 8 years.
- This number measures top-to-bottom funnel efficiency. You need have around 500 job description impressions to make 1 hire.
- If your top-to-bottom funnel conversion is above 0.2%, it means that your funnel is extremely efficient across all different stages.
- If you’re top-to-bottom funnel conversion is below 0.2%, you need to identify your funnel leakages and improve it.
Time-to-hire: 43 Days
- The time to hire overall trend is decreasing especially in large metropolitan areas. This is most likely due to the health of the economy and improvements in recruiting technology.
As hiring top talent continues to become more and more competitive, a streamlined process for moving candidates along is key ensuring the best individuals move forward and don’t opt-out. At the same time, the ability to narrow that candidate pool to put only those most qualified in front of you is essential to making the right decisions and avoiding costly bad hires. To get the insight needed to shape and continually fine-tune your recruitment process, measuring conversion rates must be a priority.
If you’re interested in learning more about using strategy, research and data to improve your recruiting performance, contact your Peoplescape Consultant today.