Establishing metrics that are clear, meaningful and easy to measure has always been a problem in recruiting. Cost per hire, time to hire and quality of hire all provoke much debate about their usefulness and their ability to be effectively measured.
Recruiting software provider SmartRecruiters have recently developed a methodology for hiring success metrics that are easy to measure but also robust enough to stand up to board or executive team scrutiny. To illustrate how these metrics work in practice they applied them to improve their own recruiting efforts. My guest this week is Sarah Wilson, SmartRecruiters’ Head of People, to talk us through and share learnings from that experience.
In the interview we discuss:
• The recruiting challenges at SmartRecruiters
• The importance of robust, understandable metrics
• Measuring cost
• Measuring speed
• Measuring quality
• How SmartRecruiters improved their recruiting results
Sarah also shares her advice for companies getting started with hiring success metrics and tells us what she and SmartRecruiters have planned for the future.
Why Traditional Hiring Metrics Need To Be Revamped (article and resources)
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Transcript:
Matt Alder [00:00:00]:
Support for this podcast comes from Smart Recruiters, the hiring success company Smart Recruiters is an enterprise grade talent acquisition suite designed for hiring success. Move beyond applicant tracking with a modern platform that provides everything you need to attract, select and hire the best talent. From candidate relationship management, sourcing and recruitment marketing to screening, selection and offer management experience. A talent acquisition suite with a user experience that candidates, hiring managers and recruiters all love. Companies from Kelly Services to Visa to Bosch leverage smart recruiters to achieve hiring success and expand their business. Visit smart recruiters@www.smartrecruiters.com to find out why companies across the globe consider them the number one ATS replacement.
Matt Alder [00:01:15]:
Hi everyone, this is Matt Alder. Welcome to episode 153 of the Recruiting Future podcast. Establishing metrics that are clear, meaningful and easy to measure has always been a problem in recruiting. Cost per hire, time to hire and quality of hire all provoke much debate about their usefulness and their ability to be effectively measured. Recruiting software provider Smart Recruiters recently devised a methodology for hiring success metrics that are designed to be easy to measure but robust enough to stand up to board or executive team scrutiny. To illustrate how they work in practice, they actually applied them to improve their own recruiting activity. My guest this week is Sarah Wilson, Smart Recruiters Head of People to talk us through their experience of doing this.
Matt Alder [00:02:11]:
Hi Sarah and welcome to the podcast.
Sarah Wilson [00:02:14]:
Thanks for having me.
Matt Alder [00:02:15]:
My absolute pleasure. Could you just introduce yourself and tell everyone what you do?
Sarah Wilson [00:02:20]:
Yeah, absolutely. So my name is Sarah Wilson and I am the head of people for Smart Recruiters which is a recruiting software company. My role is to run all of the HR function inclusive of the talent acquisition process for Smart recruiters across six countries.
Matt Alder [00:02:39]:
What kind of recruiting challenges do you.
Matt Alder [00:02:44]:
Do you have at Smart Recruiters?
Sarah Wilson [00:02:46]:
So other than being in the limelight all the time because as a recruiting software company you need to be really good at recruiting. Really the challenges have been around balancing speed, velocity and making sure that we have the right people in the right seats at the right time with ensuring that we have the top quality people. When your organization is in hyper growth, every role is a mission critical hire and there are very few that you can make a mistake on. So making sure that there’s a balance between speed and quality. It’s an age old problem in talent acquisition, but it’s very, very real for us.
Matt Alder [00:03:22]:
So a few weeks back I was at the excellent event that smart recruiters ran in ber you’re on stage with the CEO talking about the hiring success metrics that smart recruiters has developed. Could you sort of talk us through that and how it works?
Sarah Wilson [00:03:45]:
Yeah, for sure. So there are three key metrics. One of the things that we wanted to make sure we did when we were thinking about building out metrics for talent acquisition is making sure that they were measures that a CEO or a board of directors or an executive team would first of all understand, and second of all, really, really care. There are so many measures in talent acquisition that are really designed for a recruiting function, and they become sort of internal measures, but they don’t really pack a punch when you’re in the boardroom. So we broke it down into three main categories. They are spend, speed and quality. And I’ll give you a bit of an overview of each one and sort of how we measure them. So the first is your hiring budget. So that is how much you spend on your talent acquisition function annually. And the way that we calculate it is it’s a percentage of your new hire payroll. So take your entire talent acquisition budget, process, systems, tools, people, the whole nine yards, and then take your annual new hire payroll for the year, divide one against the other, and it gives you a percentage. So that’s how we’re calculating spend. The reason why we took that measure, as opposed to, say, a cost per hire or one of the other more traditional metrics in spend that when you ask a CEO about what they’re spending on recruiting, they think executive search. Right. So they think, well, between 25 and 35% of that person’s new hire salary is what we would spend if we hired an agency. So they already have a bit of a frame of reference as opposed to thinking about something in terms of your budget and the way you’re budgeted from the finance department. So that’s the budget number. The second number is around speed or velocity. And so time to hire is the traditional measure. How many days does it take for you to fill a position? And it’s usually an average. Right. We decided instead to take hiring velocity, which is what percentage of your roles are filled on time. And there are a few reasons for that. One, being that when you take an average, if your organization hires a high volume of entry level roles one month, and then they hire a high volume of executives another month, your average time to hire is going to skew heavily one direction or the other. And so the number doesn’t mean a lot unless you’re taking huge aggregate Numbers over long, long periods of time. And you’re really just using it for trending data. Whereas hiring velocity shows you of the, of the target start dates of these roles. So the times when you need these people in seat, what percentage of them are you actually filling on that, on or before that date? And then the third measure, which is typically the most nebulous in the talent acquisition world, is all around quality of hire. And I have worked for many different companies and many different places and all of them have measured this differently. And so the way that we built the quality metric is it’s very similar to a net promoter scores, which is traditionally a marketing measure. We call it the net hiring score. And it’s really simple. It’s a one question survey that goes to the hiring managers and it goes to the new hires at about, we do it at about 90 days of hire because that’s usually right around when the honeymoon phase wears off and the two people are both taking like a true hard look at one another to make sure that it’s a fit. And the single question we ask the hiring manager is on a scale of 1 to 10, how perfect is this new hire for the job? And then conversely for the new hire, on a scale of 1 to 10, how perfect is this job for you? And just like a net promoter score, we take away it’s a negative point for everything six and less. You get a positive point for every nine and 10. You get no points for seven and eight. And it gives you an overall promote promoter score, essentially based on the quality of the hire that you’ve made. So those are the three measures. They’re all super easy to measure, don’t require an advanced degree in mathematics, and I anyway have seen them be relatively meaningful for the executive team.
Matt Alder [00:07:49]:
Now I know that one of the first things you did was apply those measures to your own talent acquisition. What did you find and what did you feel you had to improve?
Sarah Wilson [00:08:02]:
Yeah, great question. Overall, I think we were doing okay. Like if I were giving us a measure like a score out of 10, we were probably like a six or seven out of 10. We were doing all right from a quality perspective. We were in the positive. So net hiring score to be a positive number, sort of positive 10 or better, generally speaking is a decent number. It’s obvious that the measure is on a scale of negative 100 to positive 100. Right. So once you’re in the positives, you’re doing relatively well. And we were a positive of 22. So of the hires we were making, we were Making pretty good quality hires. We were spending very little money, so our hiring budget was very low. So we were 4.5% overall in terms of budget, which, to be fair, we got a fairly deep discount on our talent acquisition software, considering that we created it. But our budget was pretty solid. So I don’t think we were overspending in any case. But we weren’t spending necessarily in the right places. So we still had a significant amount of spend in external search firms that I think was probably the result of just not having the right processes in place and not having the right team to support the organization. And then where we were really hurting was in Velocity. So we were only hiring on time 25% of the time. So in terms of sort of overall diagnosis, I would say we were taking our sweet time in making decisions. We weren’t spending a ton of money on process and sourcing and systems, but we were still hitting a net positive quality score. So speed was important without compromising quality. And in order to do that, I think we needed to spend just a little bit more money.
Matt Alder [00:09:49]:
I was going to say my next question was, what did you, you know, what did you do to. What did you do to sort of.
Matt Alder [00:09:54]:
I was going to say fix the situation, but that’s probably the wrong.
Matt Alder [00:09:56]:
The wrong phrase to what did you do to improve the situation?
Speaker B [00:10:00]:
Perfect.
Sarah Wilson [00:10:01]:
I was about to say I’d say improve, not fix, because it wasn’t totally broken, but definitely needed some. Definitely needed some improvement. We want to be poster children for the best recruiting process out there, right. As a recruiting software company. So there was definitely some room for improvement. So there were a few things. So the first was a really frank conversation with our CEO around budget and spend and what we could get if we spent a little bit more money. So if you give me another half a point or another point of the new hire payroll, here’s what I can deliver to you is sort of the way that I framed the conversation with him. And really the things that as a team we focused on were, well, first of all, building a team. So making sure we had the right recruiters, focused on the right. On the right parts of our business, making sure that our technical hires and engineering hires were being hired by engineering talent, that the sales teams were being hired by people who understood sales, that kind of thing. And then so that we could rationalize some of the agency spend and use it by bringing. Bringing a lot of that function in house. But the other big thing that we did, so we’re internally a very small team, and I Don’t love the concept of building an army. I would love to be able to do really, really great work without having a huge number of people reporting into me doing really basic fat tasks. So one of the things that was really important in the, in the change or the migration for us was distributing. We could sort of call it sharing the recruiter love, but it was really distributing the work of the recruiting portfolio across the entire hiring team. So an example of this would be rather than having the recruiter sit and screen resumes for four hours every morning or three hours every morning, that task is assigned to the individual contributors who are members of the hiring team. So for a product manager search, the other product managers are the people who actually complete the resume screening. So it allows us to have the recruiters focusing on some of the higher value work like conducting face to face interviews or market mapping and doing some really deep sourcing.
Matt Alder [00:12:17]:
And I mean, do you find that the, you know, are these sort of metrics, you know, is it possible to improve all of them at the same time or are there inevitably some, you know, some trade offs between speed and quality? You know, that, that kind of thing.
Sarah Wilson [00:12:36]:
It’s interesting. So my opinion on this is you can improve speed and quality at the same time, but it’s unlikely you’ll be able to do both of those things and spend less money. You’re, you’re likely to need a little bit more cash if you want to maintain your speed or improve your speed while maintaining or improving your quality. But it is definitely not impossible to sort of 2 out of 3 improve at the same time. And it all depends on how you define improvement. Because sometimes spending a little bit more money isn’t necessarily a bad thing. You have to spend money to make money, right? I think that’s the phrase. So two out of three. Absolutely. There’s definitely a risk if you regressively go after increasing speed that you could compromise on quality. Unless you have, unless you’re really keeping sort of a laser focused eye on your quality measure, it’s definitely a risk for sure.
Matt Alder [00:13:30]:
So what would your advice be to an employer who wanted to start this kind of process and really embrace these kind of metrics in their own recruiting?
Sarah Wilson [00:13:40]:
Yeah, great, great question. So I think first of all, I would make sure you start with a benchmark so understand where you’re at today. Sometimes benchmarking is scary, right, because you don’t want to really lift up the rug and see what’s underneath. But having a clear benchmark of the three measures is important. And like I said they are not complex to calculate, very straightforward, and you don’t need a lot of fancy tooling to be able to get the metrics in place. So having a benchmark is your first step. And then thinking about of the three measures, which is the most important to your business and focusing on one as a starting point rather than trying to improve all three at the same time. I think over time you can certainly improve all three. But focus on the one thing that you think will make the biggest difference in your organization. It’s usually a hot button for your executive team. Either quality or speed usually is one or the other. It’s unlikely that the key measure you want to focus on right away is spend and instead using the spend component as a negotiation tactic.
Matt Alder [00:14:44]:
So, final question. What’s next? What are you sort of focusing on the next sort of 12 to 18 months?
Sarah Wilson [00:14:53]:
Yeah, so we’re about to launch our CRM product. So my big focus for the next three to six months is build the best damn CRM strategy talent acquisitions ever seen so that by this time next year I’m sitting on stage talking about all the amazing things we did with CRM is the big thing for me. In the short term, 12 to 18 months from now, I think we are in a pretty rapid expansion. So over the next year to year and a half, we’re going to see some really explosive growth and making sure that what we’re building from a talent acquisitions perspective scales really well without, like I said in the beginning, having to build an army. It’s not my not my style. So making sure we’re sharing the love and distributing the work in a way that allows us to continue to scale without having to grow the team by 4 or 5x. So those are the two big things.
Matt Alder [00:15:41]:
Sarah, thank you very much for talking to me.
Sarah Wilson [00:15:43]:
Yeah, this is great. Thanks so much for having me.
Matt Alder [00:15:46]:
My thanks to Sarah Wilson. You can subscribe to this podcast in Apple Podcasts or via your podcasting app of choice. The show also has its own dedicated app, which you can find by searching for Recruiting Future in your App store. If you’re a Spotify user, you can also find the show there. You can find all the past episodes@www.on that site. You can subscribe to the mailing list and find out more about working with me. Thanks very much for listening. I’ll be back next week and I hope you’ll join me.
