The Science of Hiring: 3 KPIs You Should Master, Contributor, Dec 18 2017

In any organization, all departments have set expectations and targets when it comes to what they are meant to achieve. For instance, the sales department needs to hit certain sales targets and key performance indicators (or KPIs). As an HR professional, you should have set KPIs as well.

A KPI is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets.

As an HR professional, it is your role to search for, interview, and hire the right employees who will drive the organization’s success. Using KPIs will help demonstrate your goals and objectives, show how effectively you are achieving them, and keep a record of what’s working in your recruitment efforts and how you can constantly improve your current performance.

1. Yield ratio

Yield ratio indicates how many candidates you end up with throughout the various steps in your recruitment process in comparison to the total number of candidates considered for a certain vacancy. Let’s demonstrate with an example:

Let’s say Z-Tek, an SME based in Dubai, is hiring three Web Developers. They advertise their job and source candidates. Z-Tek ends up receiving 90 applicants for this position. Of these, 65 CVs match the opening requirements, and are moved onto the “phone interview stage”. Of those, 25 are sent assignments to complete as further screening, and of those, seven were called in for interviews. Z-Tek ended up with five applicants to choose from, and offered the position to two.

Here’s where the yield ratio comes in: you can calculate it at each stage separately and choose which stages you want to compare, or even calculate the total ratio. The way to do so is by dividing the number of candidates in one stage over the number of applicants in the previous stage, and multiplying the quotient by 100%. 

By using the yield ratio, you can track many different KPIs, such as “qualified candidates per opening” which is directly related to “interview costs”.

Of course, you need to optimize you recruitment process and improve your yield ratio. Luckily, there are tools that help, such as’s advanced filtration, screen-out box, and prescreening tests that are available in both job postings and CV search. The first tool gives you the option to search for candidates according to your specific criteria, the second automatically filters out applicants who apply for your job but do not meet specific criteria set by you, and the third gives you the ability to add an automatic screening questionnaire to every job you advertise.

By using these tools, you automatically eliminate candidates who do not have the skill set you are looking for. Each option improves your qualified candidate per opening ratio, increases relevancy, lowers recruitment costs, decreases interview time, and improves your overall yield ratio.

2. Salary Competitiveness Ratio

Did you know that 66% of employees state that a low base salary is their main reason for leaving a job? ( Job Satisfaction in the MENA Region - 2015). Over the years, employers have come to realize this fact, too, evidenced in the same survey showed where 83% of employers find it important to research market salaries when offering jobs. Therefore, the second KPI is your organisation’s salary competitiveness ratio. This KPI evaluates the competitiveness of the salary you offer your employees and potential candidates compared to other companies in your industry and field.

SCR (Salary Competitiveness Ratio) = Avg. company salary/Avg. Competitors salary * 100

By calculating your salary competitiveness ratio, you maintain your attractiveness to candidates, as well as your ability to retain your current employees, while ensuring healthy compensation within your specific market. Indeed, acquiring information about average salaries in your industry, especially those offered by competition, is not an easy task. This is where tools like Payscale Analysis Report comes in; it offers customized and detailed breakdowns of salaries for specific job titles, industries, and locations. This way, you’ll be able to maintain a healthy “average salary”, and can build your own pay scale within the parameters of the average salaries offered by your competition.  

3. Offer Acceptance Rate

Another KPI, which you should definitely track, is your offer acceptance rate. This basically shows you a percentage of how many offers were accepted compared to the total number of offers extended.

Offer acceptance rate = Number of accepted offer/Number of extended offers * 100

The higher the acceptance rate, the less effort and money you’ve wasted on trying to recruit candidates. For your offer acceptance rate, you need to look at how many job offers you extended in any month, quarter, or year. How many of those accepted the offer and ended up joining your workforce?

To track your offer acceptance rate, you divide the number of accepted offers, over the number of extended offers, and multiply by 100%. The higher the percentage, the more efficient your recruitment has been.

To improve your offer acceptance rate and lower your overall hiring costs, we need to look at the factors that affect the offer acceptance rate: 

  1. Career growth opportunities - Job seekers are not just concerned with getting a job today, they also think ahead in terms of how a job will help them advance their career.
  2. Job responsibilities - This point can be tied directly to career growth opportunities. If a job seeker doesn’t feel that their job responsibilities will cater to their career growth aspirations, they are most likely going to turn down your offer.
  3. Salary - The financial aspect of a job offer is always an important one. Therefore, you’ll need to focus on your SCR KPI when studying your offer acceptance rate to make sure they complement each other.

On a final note, and what the majority of HR professionals consider to be the most important, is the cost and time spent per hire. This is the sum of all of the above and is directly related to the success of all stages of the recruitment process. Hiring new employees must be done within a given timeframe and a specified budget.


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