Dear Workforce

Q: How Can We Measure Our Recruiting Costs

A:

Q

Dear Workforce:

I am trying to put together a new statistic showing how well our companyattracts new employees and the costs associated with recruiting. Should thedenominator of this ratio include the sum total of all offers made (rejectedplus accepted) or just the total of the accepted offers/hires?

-- Trying to be fair, program manager, manufacturing, Fort Worth, Texas.

A Dear Trying:

I have seen many organizations develop various metrics to measure theirrecruiting effectiveness. Regardless of which metric you use, the most importantthing is consistency -- tracking the same information over time. Let's take alook at your example.

To answer your question, the denominator should include all offers made (bothaccepted and rejected) and the numerator should include only those accepted (orhired). Hired may actually be better as some accepted offers never show orchange their minds.

If in the first quarter you made 100 offers and 50 were accepted (50/100 =.5), your ratio would be .5. Then in the second quarter, you made 100 offers andonly 25 were accepted (25/100); the resulting "recruitmenteffectiveness" ratio would be .25. The costs associated with making the 100offers in either example would have been the same but the net result would belower, thus the lower ratio.

So the higher the ratio, the more effective (and cost effective) yourrecruitment organization really is. The lower the ratio, the less effective theorganization is. When you are less effective, it is also more expensive andraises your overall cost per hire.

The best way to improve the ratio would be to increase the numerator, i.e.the number of people who accept your offers. The denominator is probably notunder your control, given your organization's changing needs and resources. Thebest way to increase the numerator (offers accepted) is to ensure that qualitycandidates are being sourced, interviewed, and treated properly. A qualitycandidate will reject an offer if they feel the organization is not truly up tostandards. An effective sourcing organization may increase the denominator(offers made) but it is truly up to the recruiters, the hiring managers and theoverall organization to increase the numerator.

SOURCE: Christopher DeFoe, recruitment automation practice lead,Cedar,Baltimore, Maryland., May 18, 2001.

LEARN MORE: See "10 Measures of HumanCapital Management"

The information contained in this article is intended to provide usefulinformation on the topic covered, but should not be construed as legal advice ora legal opinion. Also remember that state laws may differ from the federal law.

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