In this video, Maia Josebachvili, VP of People & Strategy at Greenhouse Software, discusses how HR professionals can create and track the right KPIs to measure recruiting impact and make more data-driven decisions.
Watch this on-demand webinar now to learn:
Scott: Joining us now is Maia Josebachvili, Vice President of People & Strategy at Greenhouse.
Maia: Thanks Scott, I really appreciate the intro. Welcome everyone to Noise vs. Insights: Developing KPIs for Recruiting.
I’m Maia, I’m the VP of Strategy & People here at Greenhouse. And I’ve been building and scaling teams for the last ten years. Before here, I was Director of New Initiatives at LivingSocial, where I built a team of 70 full time people and 700 part time people across the country in just six months. And before that I was the Founder and CEO of Urban Escapes, which was acquired by LivingSocial. I’ve been on Inc Magazine’s 30 Under 30. And I’m a self-proclaimed data dork. So I’m particularly excited for this conversation to happen today.
So we’re going to talk about recruiting KPIs and we’ll start with a little bit of background about why it’s so hard to measure recruiting. And then we’ll get into what actually makes a good KPI, and how are you going to create some for yourself and for your precedent [inaudible 00:01:11].
So, starting with the challenge of measuring recruiting, everyone knows recruiting should be more data driven. And yet we’re not quite there as an industry. And there’s really two main reasons for that. First, we’ve lacked a clear model of the right KPIs to track. So if you look at sales and marketing across different organizations, you’re generally looking at the same numbers. And we just haven’t had that as a recruiting industry, yet. Also, legacy tools don’t give you the ability to pull and provide meaningful data. So even if you know the KPIs you want track, most of the time teams haven’t been able to get those pieces of information.
So what happens is companies tend to do one of three things. They do nothing, “This is how my boss did it, so this is how I’m going to continue to do it.” They default to what’s easiest to measure, ” How many new applications are we getting every week?” Or sometimes executives will micromanage and just ask for a data dump of all activity, “How many interviews did you do, how many emails have you sent, and how many phone calls have you made?” None of that really tells you what you really want to know about measuring your recruiting performance.
The good news is that we’re getting there. So for the last year here at Greenhouse, we’ve been working with our hundreds of customers, sitting down with executives and heads of talent on a regular basis to come up with a framework for recruiting KPIs. And we’re really excited to share that information with you today.
So before we dive right in, it’s important to distinguish different types of data, what we call noise versus insights. Simply put, not all reports are created equal. We like to bucket things into two different categories, noise and insights. Noise is distracting and can give false signals. It’s really easy to build a lot of reports and produce analytics that take a lot of time and often times don’t actually tell you anything meaningful. But when data’s used well, it’s incredibly powerful and can be used to drive dramatic improvements in your business. And that’s what we call insights, or an insightful report.
So let’s look at an example. This report shows you total new applications per week by source. Now, at first glance this feels really helpful. But as you dig in further, this is actually a lot of noise and it’s not information you can really action. So for example, if you look at the week of April 20th, you see that, on average, your applications across the board are up almost 20%. At first you might say, “Well, that’s really helpful information.” But when you think about it, it doesn’t really tell you anything because your applications could be up for a number of reasons. You could have opened three more jobs that week and posted job ads for those jobs. Your company could have been mentioned in the news, driving traffic to your site that week. It could be that one of your recruiters started sourcing that week, or maybe just tied in a referral program. So without more context, this report would qualify as noise and not insights, because you can’t do anything with this data.
So that’s total new application. Let’s try a different way to try to see that. Let’s look at quality of application. So this is what we call a sourcing quality report. And it tells you per source how far candidates make it down the pipeline, in aggregate. And then we also calculate an overall quality score that summarizes that particular source. So here you can see that even though they don’t get a lot of referrals, in this case, six of them, they usually make it really far down the pipeline, generating a high quality score. The same goes for prospective candidates. But if you look up towards job ads, you can see that for this one, Craigslist didn’t really perform. We’ve got a fair number of applicants, but a low quality score. So this report tells you so much. From this report you can look at your historic data and use it to make a sourcing strategy for when you open a new requisition. So if I was running another search for a similar job, I would tell my team to focus on driving referrals and prospecting because those are much more quality leads. And we shouldn’t really spend a lot of time or money on the job boards that didn’t give us great candidates.
So in summary, insightful reports should be used to answer at least one of these five key criteria. They should help you understand the health of your business, they should communicate progress, they should be used to diagnose bottlenecks, they’re very helpful for driving behavior change, and they’re very good for predicting future performance.
So, that’s noise versus insights. Now let’s dive into the KPIs.
What makes a good KPI? Well, let’s start with a definition. A KPI is a key performance indicator. Good KPIs are key, they focus on the most important metrics. So we’re not going to hit everything with your KPIs, but we will get the most important stuff. They’re performance related, which means they should be tied to business objectives. And they’re indicators. So they’re headlines, but not the whole story. They’re meant to give you a high level view and from there you can dig in to find out nuances and specifics.
So how do you measure performance? Well, it depends who you ask and how often you ask them. For example, if you go to your CEO, she probably once a quarter wants to know, “Are we finding the best talent out there? Because we really want to win and the way we’re going to beat the competition is by getting the best people in the door.” So she has those kinds of questions. But similarly, and I’m sure you’ve all felt this, your VP of engineering is probably knocking on your door every week saying, “How are we doing? Are we tracking to fill my role this quarter? Because I’ve got to double my team or I will not hit my deliverables.” So two different people, very important people in your organization, have very different questions and needs that they want to know about recruiting performance. The summary is, do not try to create a one-size-fits-all suite of KPIs because different stakeholders have different questions and different priorities.
So how do we develop good KPIs for recruiting? Well, it’s always good to start with questions. The two questions we think you should ask are, one, who is interested in understanding recruiting performance, who’s your audience? And two, how often do they want insights, what’s the cadence of the reports that they want to see? So audience and cadence. For recruiting, there’s a lot of stakeholders, but the main ones are your executives, your hiring managers, the head of talent, all of your recruiters etc. And on cadence, obviously, there’s lots of different ways to place [SP] this, but some of the most helpful time periods are weekly, monthly, and quarterly.
So you can make a lot of different combinations of reports, but here’s a good starting point for a set of KPI based reports. You can create reports for executives that you show them quarterly. Now, you’ll notice that we have hiring managers and recruiters put together. That’s because hiring managers and recruiters should be looking at the same KPIs because that’s the best way to align those recruiters with the overall business objective. And so hiring managers and recruiters have a certain set of information that they want to see on a monthly basis. But they also have different information that’s helpful on a weekly basis. So those should actually be different reports that serve different KPIs and different metrics. Then your head of talent likely wants to see different bits of information on a monthly level. But similarly, they also want to see data and metrics and KPI on a weekly level so they can performance manage their team.
Now, that’s audience and cadence.
For metrics, they really fall under five main categories. So we can think about metrics in a few different ways. There’s sourcing. Sourcing is all about bringing people into the process. So these reports should help you understand where your best candidates are coming from and they should help you figure out where to invest the most effort and spend.
And interviewing is basically everything that happens between when candidates come into the process and when you make a decision on them. So under interviewing you have qualitative and quantitative information. For qualitative, you want to be thinking about all of your stakeholders, so your candidates, your hiring managers, and your interviewers, and you want to make sure they’re having positive experiences. On the quantitative side, you should also be thinking about measures around efficiency and effectiveness. That means hiring speed, cost of interviewer’s time etc.
For hiring, this one’s pretty self-explanatory. It’s really all around offers, offer acceptance rates, hires, and goals.
So across all of these you also have these activity and effort metrics. These are less about insights in and of themselves, and they’re more useful for when you’re doing capacity planning or prediction analysis. So for example, you can look at the total number of HR screens you’ve done and do some funnel math to figure out how likely you are to have one of those turn into an offer based on an historical pass rate.
And then lastly, we have what we call team performance management. The performance management cuts across all of these different categories. This one is really helpful for heads of talent to get a sense of the overall paid success. Under performance management you look at things like average sales time [SP] time per candidate and you filter that by coordinator to see if your coordinators are actioning candidates quickly.
So those are the five categories where your metrics will fall under for your different audiences and cadences.
So let’s dive in. We’re going to pick for today the quarterly executive KPIs and go through what a good set of reports looks like and what you can glean from that data.
So I want to start with this slide again. This is the one we showed at the beginning that shows the difference between noise and insight. So insightful reports and, similarly, your executive quarterly KPIs should hit on at least one of these criteria for each one. This should help you understand the health of your business, it should help you communicate progress, they’ll be used to diagnose bottlenecks, they’re incredibly helpful for driving behavior change, and these are the reports you’ll be using to predict future performance.
So whenever you want to think about structuring your KPIs, you really want to start with questions, what business question am I solving with data? So executives themselves aren’t as concerned with the activity metrics or the team performance metrics. So you’ll notice for these they have just questions around sourcing, interviewing, and hiring. And you’ll also notice that here we only have six questions. Now, back to the definition of KPI, certainly six metrics do not give you a full, comprehensive view of your recruiting performance. But these are the key metrics that will help you give an overall snapshot of how your team is performing. So if your start with these questions on sourcing, are we focusing our sourcing efforts in the right places? And interviewing, do we have a positive candidate experience? Are we being efficient with our interviewer’s time? Are we moving people through the process quickly. And hiring, are we closing candidates? And are we hitting our hiring goals? You can answer each one of these questions with one clear metric and KPI.
And here they are.
And we’re going to dive into each one of these in a minute, but I just want to give you a high level overview. So for focusing sourcing efforts, you really want to be looking at the percent of your hires that are coming from referrals and prospects. When you think about your candidate experience, the most logical place to find out is to ask the candidate themselves how their experience went. When you look at efficiency metrics about interviewer’s time, it’s really about understanding total interviews needed to get one hire. And hiring speed should be pretty obvious, but it’s hiring speed. And then on the hiring side, offer acceptance rate gives you visibility into how well you’re closing your candidates. And hires to goal will tell you how you’re tracking to hit your goals.
So let’s dive into each one of these.
First on sourcing, are we focusing our sourcing efforts well? So as we said, the KPI here is your percent of hires, prospects, and referrals. What you see in this report is you see for each . . . we normally have it by week, but you could structure this by month or by quarter. For each time period, what percentage of your total hires come from prospects and what percentage comes from referrals and what’s the aggregate? So here at Greenhouse, we have a goal of at least 50% of total hires from prospects and referrals because we know that those tend to be our best performing sources and usually the best quality candidates. So what you’re looking for with this report is consistency across time. Now, this one shows that you’re pretty consistent. But if you saw a big dip or trend over a long period of time, that could tell you that you’re not being as effective, potentially, in your referral campaign, or maybe your sourcing team is under resourced and you should think about expanding that team. So that’s what this report will tell you and it really does give you insight into whether you’re focusing your sourcing efforts in the right places.
On the next one, do we have a good candidate experience? So the KPI for this one is really around your candidate survey results. Now, for every candidate you hire there are usually about 60 to 100 candidates that you don’t hire, but still have touch points with your company and with your brand. So making sure they all had a good experience, not just the ones you hire, is really important. Here at Greenhouse we found that candidate surveys are really insightful. Our customers consistently tell us that they learn a lot from their results. Now, there’s a lot of questions you can and should ask in your candidate surveys. Like, did you feel like your interviewers were well prepared? Or did you have enough communication leading up to your interview? Now, as we’ve talked about, KPIs just give you a high level overview, so one overall experience question is a good indicator for the whole process for your executive KPIs.
Now, in this report you can see the results from the question, was my interview experience a positive one? And you can see what percentage of candidates said they agree, strongly agree, disagree, strongly disagree, or neutral. It’s also interesting to filter reports like this one by different departments, because then you can see a difference in how candidates experience your company depending on which group they interact with. And you hope they have positive experiences across the board. But in the cases that they don’t, you can go to your hiring managers and your interviewing team with data about their department versus other departments. We also think this is a great one to benchmark across other companies. So if you use a third party software like ours, you can actually see how you stack rank on candidate experience across different companies.
I like this one a lot, so this is the one that addresses how efficient we’re being with our interviewer’s time. And the KPI here is your total interview to hire ratio, the concept being that you take one hire and you figure out how many total interviews for that person and everyone else you didn’t hire, you need to get that person in the door. Now, the key with this one is you don’t want the number to be too low because you actually want to know you’re assessing enough candidates for the role. But you also don’t want it to be too high because you want to be efficient with people’s time. And you can see in this report that engineering has about 50% more interviews than say a sales and marketing role. Now, that makes sense because they have a lot more stages in the process, they have co-challenges, technical screens etc. But you can also see that marketing’s interview to hire ratio has crept up over time. Now, this is a great place to start the conversation with a hiring manager to figure out why this is happening, because it could be a number of reasons. It could be that time has grown and you’ll want to make sure that a lot of the team gets to meet the candidate and so it’s an increase in the total number of interviews. Or maybe it could be that they’re not testing for key skills early on and have to add ad hoc interviews later. So you won’t get the whole story with this report, but you do get some pretty insightful information that then you can go share with the team and say, “Hey, this KPI is trending up, let’s figure out why.”
Here’s another really good KPI and one that I think most people are measuring today. This one’s around hiring speed. And it’s an important metric to track because it can really impact your success. Specifically, low hiring speeds can be tied to a high candidate dropout rate and it’s also a less efficient use of your recruiting team’s time. So on this chart, you can see the hiring speed broken up by department from January through December. Tracking it over time, like all the other reports, is really important because it allows you to see spike, bumps, and trends. So for example, we see here that while speed has been relatively consistent throughout the year, so what’s appearing in March and May where the average number of days bumps up from around 19 to 25 to 27.
So here’s the thing, KPIs are interrelated and should be because different aspects of the recruiting process are related to each other.
So if we go to this next report, which is our offer acceptance rate, this one answers, are we closing candidates? And what you see here is you see the purple line above is total offers and the blue line below that is accepted offers or total hires. So what this does is it gives you a really nice visual of your offer acceptance rate, one of the most important metrics you can be tracking. And what you see in this report here is that in that March to May period, you see a pretty big dip in offer acceptance rate, meaning that for all the offers you’re making a lot more are not getting accepted than other times of the year. Now, this is a pretty telling metric because if you have a lot of candidates who make it all the way through your interviewing process but don’t accept your offer, that’s a signal that something else is amiss. It could be telling you that your comp has fallen below market or maybe you’re not doing a good enough job of selling candidates on the front end. Now, in this case you see that the dip in offer acceptance rate is actually quite correlated to – and I’ll go back up for a second – this spike in hiring speed. So you’re not going to walk away and say this is 100% why this is happening. But it could be a pretty good indication and correlation that maybe your drop in acceptance rate has something to do with the fact that you were a lot slower with your candidates that month.
And last but not least, here we have hires to goal. As we talked about, and as we all know, business objectives are really dependent on having the right team in place. And hiring goals are a great way to track whether you’re aligned with the business team. Now, like all the other ones, it’s really important to track hiring goals over time because sometimes you can be under goal, but that’s over your goal the following month because you just had one candidate start or accept a little bit later. So this report in particular is really about having a holistic view of how you’re tracking to your goals.
So now what?
We’ve talked about why it’s been so hard to measure these recruiting KPIs and we dove into what makes really good KPIs and, specifically, what should you be showing your executives? But how do you take that framework and actually put it into action?
Well, here’s some five easy steps, but let’s talk it through. First, you want to propose a cadence and a set of KPIs for each stakeholder. So, still go right to your VP of engineering and say, “What do you want to know?” because you’ll open the floodgates. What you really want to do is you want to have an idea of what you want to share and then when you go have that conversation, you start with, “Here’s the framework I think that answers the business questions that you have, what’s your feedback, what do you think?”
Before you do that though is number two, identify the process for generating the desired report. Make sure that your APS and your team is able to pull the data that you want to show, because the last thing you want to do is get your stakeholders really excited about data but then you can’t go and produce.
Then you go review the proposal of your stakeholders to ensure alignment. They’ll probably have some feedback, but they’ll be really impressed you came to them with such a thoughtful process and such thoughtful metrics.
And once you have everyone on the same page about the right metrics, you want to operationalize that, how you generate the data and how you distribute it. So it’s not just about sending reports one time, but it’s about getting into that regular cadence and having people looking at the same data across different parts of the org at the same time periods.
And last but not least, you want to use the insights. So you just put all of this time into understanding your recruiting process and to ensuring alignment with the different stakeholders and to becoming a strategic driver of the business. And now take all of that information and actually use it to make your process better.
So guys, we really appreciate you taking the time to talk with us today. I know we just went through a lot of stuff. And so if you want to learn more, please feel free to check out our blog at greenhouse.io/blog. We’re also going to be compiling all of these KPIs, like stakeholder audience, and posting them on our website in the next few weeks.
Now, I know we’ve just talked through a lot of stuff, so if you have any questions feel free to tweet at me @Josebachvili or tweet at us @Greenhouse, and use the #TalentInsights so we can track it all.
Thanks so much for listening and have a great day.