In businesses with high turnover – think, food or retail – managers spend a good portion of their time on hiring. The more efficiently and effectively they can hire, the less money and time they’ll spend, and the lower their turnover will be.
Here are the five key metrics I encourage employers to track to make sure their hiring processes are as efficient and effective as possible.
- Conversion rate from each stage of hiring to the next (candidate review, interview, hire, offer acceptance, onboarding). It’s important for hiring managers to understand the shape of their candidate funnel and where there may be leakage. If very few candidates are even making it to the interview stage, is it because candidates are slipping away while waiting for hiring managers to respond? Are a lot of candidates getting interviews but very few actually getting hired? Are a lot of candidates ghosting at the interview stage? There are ways to address all of these issues, from auto-response tools to better candidate vetting to auto-calendaring tools. If you can boost your hiring rate from 1 in 10 candidates interviewed to 1 in 3, you’ll save a tremendous amount of time and not waste resources interviewing candidates who aren’t a good fit.
- Time-to-respond to candidates (via call, SMS text message, email). Food and retail hiring in particular move extremely quickly and the market is competitive. Hires happen in days, not weeks. Landed data shows that hiring managers who respond to candidates within a day will see 3x more responses to their messages. However, industry average time-to-response is closer to four days, and Landed’s own data has found that 20 percent of candidates never receive a response from a hiring manager at all. A tool that automates engagement can help here.
- Time-to-hire. From the moment a candidate submits their interest, how quickly does it take for them to accept a job offer? Adjacent to this is time-to-fill, which is used to track the total amount of time company positions remain unfilled. Time-to-fill is more relevant for supervisor roles and above, where this metric can stretch out over weeks.
- Store staffing rate. This will help you get ahead of and proactively address any potential labor shortage issues in each of your locations. Many retail and food businesses strive to keep their stores staffed at 120 percent, on average, in order to have a cushion against staff turnover. Average turnover rate for restaurant and retail is 130 percent, though I’ve seen it as high as 220 percent.
- Cost per hire. This is challenging to calculate because it’s a combination of monetary cost as well as time spent by managers on hiring. The easy calculation on monetary cost can be online and physical advertisements, applicant tracking systems, and the cost of any other tools. Then you have to add on the time value of each staff member who is involved in sourcing, vetting, engaging, interviewing and hiring candidates. A manager’s time can be worth upwards of $20/hour, so spending even 10 hours a week on hiring adds up to $900/month. That’s not to include the detractory cost and strain put on the existing team and level of service delivered to your customers when staff shortages and bad hires happen. The cost of hiring an hourly employee can be upwards of $2,000 when you factor in the entire process.
It’s essential for corporate headquarters groups (HR, Talent Acquisition Managers and Directors) to establish baselines for each of these metrics, and then develop targets, share targets with field and store-level teams, and review them periodically using dashboards. Where there are gaps between goals and actual performance, corporate and local teams can work together to formulate a plan to close them, including equipping managers with tools that can help them automate the process of finding, vetting and communicating with candidates, to help accelerate the process, and identify and focus on the best-fit candidates.
As the US economy improves, hiring will become both more necessary and more competitive. Measuring your success against these metrics will help businesses quickly identify areas for improvement and fine-tune their hiring practices in order to find and hire the best candidates quickly.