Measuring Success In Recruitment

The terms “successful recruitment” are used with some vigour in business manuals, but how do you actually go about measuring whether a recruitment decision has been successful or not?

Success can be measured in various ways, and it is important to consider your own business goals, culture and strategies when answering what success means to you! One of the easiest ways to measure success is to look at two statistics: the retention rate and the turnover rate. While these are both important, the third measurement of success is vital: how well does this person perform compared to the average employee?

The retention and turnover statistics are quick and easy ways to report on staff movements within the organization. The turnover rate is calculated by looking at the number of people who have left the organization over a set period of time compared to the total employee numbers. For example, if I have 100 employees and during the last quarter 5 people have left the organization, then my turnover rate is 5% per quarter or (extrapolated) 20% per annum.

The retention rate is a measure of how long a successful applicant stays with an organization. The relevant time frame must be relevant to the business: for example, a café employing predominantly working-holiday visa holders can expect a low retention rate whereas a law firm would be interested in their new employees remaining with the company for many years. In terms of recruitment, a period of one year is a useful measure for most organizations. To calculate retention, compare the number of people hired in the last twelve months to the number of current employees who have twelve months or less service.

An example of a retention calculation is as follows: Over the last twelve months, I have hired 30 new staff. Of my 100 current employees, 15 have 12 months or less service. Therefore, my retention rate is 50%. In other words, half of the people that I employ leave before twelve months! This is not a good indicator of successful recruitment.

Looking at these two figures in tandem, it also becomes apparent that 15 of the 20 employees who leave each year are my new employees that I have just spent time and money finding, hiring and training. If I assume that in my industry, the average turnover rate is 20% than I should expect a retention rate of 80% or higher to indicate a successful recruitment decision.

The third measure of successful recruitment looks at how the new employee actually performs. To measure this, identify one or more objective (measurable) aspects of the role, preferably ones which add to the bottom line of the business. In a call centre, this might be the average number of calls made per hour or in a retail environment the average value of a sale. Compare all your employees in this role, if there are only a few then look at historical figures to see what past employees were able to achieve. Once the average figure is known, it is easy to compare the new employee’s performance to that of the group. One word of warning!! New hires do need time to adjust to the work environment and get used to operating procedures, so begin to compare performance after training has finished, generally between one and three months into the new role.

As you can see, this last measure is a vital one in determining recruitment success – it is not good enough in today’s environment to accept anyone who can do the basics of the job. To get ahead in business, everyone in the organization must be able to add to and improve the bottom line. But performance alone is not sufficient if those same people leave after 4 months and you must start the recruitment process again!

About the Author

Natasha Wainwright is an experienced employee relations professional with over 10 years experience in the private and public sectors. Natasha has held roles specialising in recruitment, industrial relations, and human resource management. She holds a BA Commerce (Human Resource Management and Industrial Relations) and a Graduate Certificate in Management.