In the realm of recruitment, sourcing the right individuals for a position is an ongoing challenge. Simply outlining job criteria, establishing a hiring procedure, and providing a positive candidate experience may not suffice. Sometimes, despite your best efforts, the ideal candidate remains elusive. This is where utilizing Key Performance Indicators (KPIs) becomes valuable. KPIs assist us in navigating the recruitment process more efficiently, highlighting areas of strength and areas for improvement.

Before proceeding, it is crucial to grasp the stage and context of our company, as these factors significantly influence how candidates respond to our endeavors. Our company, TradeLink, is a remote-first Series A start-up headquartered in Germany. TradeLink offers a SaaS B2B solution that strives to create truly collaborative and frictionless supply chains.

In a fast-paced company like ours, recruitment holds significant importance. This article delves into the recruitment Key Performance Indicators (KPIs) adopted at TradeLink and the insights gained from them. Prior to diving into data analysis, the initial crucial step is to create and upkeep accurate data. Utilizing an Application Tracking System (ATS), entering precise data, and keeping it up to date are vital. We are using Lever as an ATS.

Let's now delve into the details of our recruitment process and our learnings so far.

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Capacity and Hires over Time  

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Understanding the workload volume, outcomes, and team capacity is essential. We assessed the number of recruiters in our team and considered involvement from hiring managers or external agencies. This analysis can enhance your ability to forecast future results based on team size.

A straightforward table, like the one below, can offer valuable insights.

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Key Metrics for the Funnel

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Looking beyond the surface figures, we delve into the intricacies of our recruitment procedure. In an ideal scenario, this analysis should be conducted on a departmental or team basis. However, as we are a relatively small company with a moderate hiring volume, we had to categorize between GTM (Go-to-Market or Business roles) and R&D (Research & Development or Tech roles) instead of focusing on specific teams.

We examined:

• the number of candidates who respond to our outreach
• conversion rates through the funnel
• the number of candidates who accept our job offers

This method assists us in identifying our strengths and areas for enhancement. Nonetheless, a major drawback is the lack of comparable or recurring roles. Simply dividing between GTM and R&D may not suffice to draw accurate conclusions, given that seniority levels and departmental differences can significantly influence these metrics.

However, our outreach endeavors usually yield positive responses, yet promoting our name has been challenging due to our small size. For instance, in 2023, we achieved a 27% response rate in our outreach, surpassing the Ashby market benchmark of 25%. To attain this rate, we incorporated various materials in our outreach, such as personalized videos made by hiring managers in our virtual office “Gather-town” or relevant blog articles, which made a significant impact.‍

Conversion rates have been crucial in gauging the effort invested in interviews and the quality of our assessments. This topic significantly impacts hiring managers, considering their time is factored in. Nonetheless, we have encountered a lack of benchmarks tailored to our company's size and stage. As a result, we will persist in our analysis and compare our own data to make informed decisions.

A basic overview may appear as follows:

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Time to hire

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Another crucial Key Performance Indicator is the time to hire. Companies have various approaches to consider when analysing this metric.

To begin with, we focus on Time to Fill a Position, which refers to the number of days it takes from confirming and aligning on a new role to signing a contract with the hired candidate. In 2023, the average was 73 days. This Ashby article presented an average of 79 days for time to fill a position.

Additionally, we examined the Time to Hire per Candidate, which is the number of days it takes us from when a candidate applies (for direct applications) or from when we receive a positive response (for sourced candidates) until the hired candidate signs the contract. In 2023, the average duration was 31 days. We were able to benchmark this number with the Ashby numbers that averaged 38 days as time to hire a candidate.

It is crucial to clearly define your KPIs precisely. For instance, when onboarding a new role, briefing may take some time. Therefore, it is essential to determine whether you want this time to be included in your KPI or not.

While our figures did not raise immediate concern when compared to external data, we carefully assessed each role against them. Since this is an average, certain roles experienced extended time-to-fill or time-to-hire periods. It is important to investigate the underlying causes, such as initial profile misalignment, changing requirements, absences of candidates or interviewers, excessive interviews in the process, and high workload for recruiters.

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Quality of Hires

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Finding the perfect fit goes beyond simply assigning roles – it's even more than matching the right individuals with the right positions. What happens after the candidates start is also important. Assessing the quality of hire can be a multifaceted key performance indicator. Various definitions exist, with each company measuring it differently. This metric is closely linked to attrition rates, so distinguishing between voluntary and involuntary attrition is crucial.

We decided to assess the quality of hires per source by considering individuals who stayed with us for more than six months. Since recruiting sources can incur high costs, monitoring their effectiveness is crucial. It goes beyond the quantity of candidates or hires they provide to also include the quality of those hires.

In our situation, the hires made through direct outreach were of high quality. Although outreach requires significant effort, it allows for precise targeting of the desired profiles. Conversely, we encountered two platforms that yielded unsatisfactory results. Hence, we are exploring if these platforms were the main reason of a low quality hire or if there were more  reasons behind these outcomes.

Below is a table that can assist in analysing the quality of your hires based on the source. It is vital to group the sources accordingly. For instance, our categories included Outreach, Inbound, Platform-paid, Agency, Referral, Network-unpaid, Internal, and Social Media.

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Costs per hire

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A business cannot function without costs, which is why expenses play a crucial role in recruitment. Understanding the amount and purpose of your expenditures is vital. However, tracking this KPI can be complex due to the multitude of factors involved in calculating the total cost.

In this analysis, we considered the following costs:

• Recruiters**
• The time spent by colleagues who served as "recruiters"
• The tools used (such as our ATS, Lever, and recruiter accounts on LinkedIn)
• Job platforms
• Referral incentives
• Agency costs

We encountered limitations by not factoring in the hiring managers' time and faced challenges estimating the recruiting time for those who were not full-time recruiters. Additionally, determining the cost of the recruiting team is intricate, as it involves considering employee expenses beyond just their salaries.

Typically, obtaining an exact number can be challenging in this scenario. However, by consistently applying the same logic each year, you will be able to determine whether your costs are increasing or decreasing in relation to the output (number of hires).

**As part of the the costs of the recruiters, one has to consider their gross salaries, the additional taxes the company pays, as well as other benefits (such as remote setup expenses, travel, offsites, growth budgets, tools, etc.)

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Rejection Reasons  

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While numbers matter, they lack depth without context. Thus, it's crucial to approach candidates the same way you would approach customers. Asking a basic question such as "why do you want to withdraw from the process?" can yield a wealth of information. By documenting these responses and examining the reasons within the recruitment funnel, valuable insights can be gained.

All together, we collected  qualitative feedback from sources such as:

• Adding rejection reasons in Lever
• Ask for withdrawal reasons
• Motivates employees and candidates to give on platforms like Glassdoor and Kununu and track this
• Establish a feedback survey within Lever

These reasons differ from company to company, but in general one has to pay attention to the difference between hard and soft skill, seniority, interest of candidate, salary expectations, language requirements, location.

For example, it can be alarming if you find out that the salary expectations don’t meet your budget only in the final round, or that you find out that a candidate doesn’t fit your culture only in the last interview.

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Summary

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At TradeLink, our focus is leveraging data to enhance decision-making. Through monitoring vital metrics and actively listening to candidates, we continually improve our recruitment procedures to attract top talent to our team. While we encounter challenges, such as limited access to relevant data due to our small size, we view this as a journey.

Despite being a small company, there is always valuable insight to gain from your data. To achieve this, one should:

• Clearly outline your objectives and what needs to be tracked; remember that tracking everything from the beginning may not be necessary.
• Establish guidelines for maintaining clean data that will be analyzed later.
• Seek out benchmarks to use as reference points for comparing your outcomes.
• Develop actionable steps from your insights and ensure to follow up on their implementation.

We will definitely conduct another analysis by the end of 2024 to assess our progress compared to last year. If you're interested in learning more about us, feel free to visit our "About Us" and "Careers" pages.

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External benchmarks mentioned: 

Talent Trends Report | Candidate Sourcing by Ashby

2023 Trends Reports | Trends in Recruiter Productivity by Ashby

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