LESSON 3

Human Resource Planning and Recruitment

3.1 Overview
Human resource managers are at the forefront of the worldwide war for competitive advantage.
Organizations need to find the best set of workers for meeting their strategic objectives, attract
those workers to their companies, and then get them to stay long enough to obtain some return
on their investment. There are advantages and disadvantages associated with different
workforces, and organizations that survive and thrive find the best match between the workers
they need and the strategy they employ to compete in the market.
There are three keys to effectively utilizing labor markets to one‘s competitive advantage. First,
companies must have a clear idea of their current configuration of human resources. They need
to know the strengths and weaknesses of their present stock of employees. Second,
organizations must know where they are going in the future and be aware of how their present
configuration of human resources relates to the configuration that will be needed. Third, where
there are discrepancies between the present configuration and the configuration required for the
future, organizations need programs that will address these discrepancies.

3.2 Learning Outcomes

At the end of this lesson, you should be able to:

 Discuss the advantages and disadvantages of various ways of eliminating a labor

surplus and avoiding a labor shortage.
 Describe the various recruitment policies that organizations adopt to make job vacancies
more attractive.
 List the various sources from which job applicants can be drawn, their relative
advantages and disadvantages, and the methods for evaluating them.
 Explain the recruiter‘s role in the recruitment process, the limits the recruiter faces, and
the opportunities available.
 Identify Recruitment Metrics and their application
3.3 Course Materials
Topic 1: The Human Resource Planning Process
An overview of human resource planning is depicted in Figure 5.1. The process consists of
forecasting, goal setting and strategic planning, and program implementation and evaluation.
FORECASTING
The attempts to determine the supply of and demand for various types of human resources to
predict areas within the organization where there will be future labor shortages or surpluses.
The first step in the planning process is forecasting, as shown in the top portion of Figure 5.1. In
personnel forecasting, the HR manager attempts to ascertain the supply of and demand for

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various types of human resources. The primary goal is to predict areas within the organization
where there will be future labor shortages or surpluses.

Determining Labor Demand

Typically, demand forecasts are developed around specific job categories or skill areas relevant
to the organization‘s current and future state. Once the job categories or skills are identified, the
planner needs to seek information that will help predict whether the need for people with those
skills or in that job category will increase or decrease in the future.
At the most sophisticated level, an organization might have statistical models that predict labor
demand for the next year given relatively objective statistics on leading indicators from the
previous year. A leading indicator is an objective measure that accurately predicts future labor
demand.
Determining Labor Supply
Once a company has projected labor demand, it needs to get an indicator of the firm‘s labor
supply. Determining the internal labor supply calls for a detailed analysis of how many people
are currently in various job categories (or who have specific skills) within the company. This
analysis is then modified to reflect changes in the near future caused by retirements,
promotions, transfers, voluntary turnover, and terminations. As in the case of labor demand,
projections for labor supply can be derived either from historical statistical models or through
judgmental techniques. One type of statistical procedure that can be employed for this purpose
involves Transitional Matrices, Matrix showing the proportion (or number) of employees in
different job categories at different times.
Matrices such as these are extremely useful for charting historical trends in the company‘s
supply of labor. More important, if conditions remain somewhat constant, they can also be used
to plan for the future. As with labor demand, historical precedents for labor supply may not
always be reliable indicators of future trends.

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Determining Labor Surplus or Shortage
Once forecasts for labor demand and supply are known, the planner can compare the figures to
ascertain whether there will be a labor shortage or labor surplus for the respective job
categories. When this is determined, the organization can determine what it is going to do about
these potential problems.
GOAL SETTING AND STRATEGIC PLANNING

The second step in human resource planning is goal setting and strategic planning, The
purpose of setting specific quantitative goals is to focus attention on the problem and provide a
benchmark for determining the relative success of any programs aimed at redressing a pending
labor shortage or surplus. The goals should come directly from the analysis of labor supply and
demand and should include a specific figure for what should happen with the job category or
skill area and a specific timetable for when results should be achieved.
This stage is critical because the many options available to the planner differ widely in
their expense, speed, effectiveness, amount of human suffering, and revocability (how easily
the change can be undone).

Unfortunately for many workers, in the past decade the typical organizational response to a
surplus of labor has been downsizing, which is fast but high in human suffering. The human
suffering caused by downsizing has both an immediate and a long-term element. In the short
term, the lack of pay, benefits, and meaningful work has negative implications for financial,
physical, and psychological aspects of individuals, causing bankruptcies, illnesses, and
depression.

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Downsizing
The planned elimination of large numbers of personnel designed to enhance organizational
effectiveness. Although one tends to think of downsizing as something that a company turns to
in times of recession or when facing bouts of poor performance, in fact, many companies that
are doing quite well still downsize their workforce regularly for strategic reasons.
The key to a successful downsizing effort is to avoid indiscriminant across-the-board reductions,
and instead perform surgical strategic cuts that not only reduce costs, but also improve the
firm‘s competitive position.
Early Retirement Programs and Buyouts
Another popular means of reducing a labor surplus is to offer an early retirement program.
Several forces fuel the drawing out of older workers‘ careers. First, the improved health of older
people in general, in combination with the decreased physical labor. Second, this option is
attractive for many workers because they fear Social Security will be cut, and many have
skimpy employer-sponsored pensions that may not be able to cover their expenses. Third, age
discrimination legislation and the outlawing of mandatory retirement ages have created
constraints on organizations‘ ability to unilaterally deal with an aging workforce. Finally, many
employers are increasingly concerned about losing the wealth of experience that older workers
bring to their companies.
Although an older workforce has some clear advantages for employers in terms of experience
and stability, it also poses problems. First, older workers are sometimes more costly than
younger workers because of their higher seniority, higher medical costs, and higher pension
contributions.
Employing Temporary Workers
Whereas downsizing has been a popular method for reducing a labor surplus, hiring temporary
workers and outsourcing has been the most widespread means of eliminating a labor shortage.
Temporary employment afforded firms the flexibility needed to operate efficiently in the face of
swings in the demand for goods and services. In fact, a surge in temporary employment often
preceded a jump in permanent hiring, and was often a leading indicator that the economy was
expanding.
In addition to flexibility, hiring temporary workers offers several other advantages:
o The use of temporary workers frees the firm from many administrative tasks and
financial burdens associated with being the ―employer of record.‖
o Small companies that cannot afford their own testing programs often get
employees who have been tested by a temporary agency.
o Many temporary agencies train employees before sending them to employers,
which reduces training costs and eases the transition for both the temporary
worker and the company.
o Because the temporary worker has little experience in the host firm, the person
brings an objective perspective to the organization‘s problems and procedures
that is sometimes valuable.

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Certain disadvantages to employing temporary workers need to be overcome to effectively use
this source of labor. For example, in the service sector of the economy, low levels of
commitment to the organization and its customers on the part of temporary employees often
spills over and reduces the level of customer loyalty.
Outsourcing, Offshoring, and Immigration
Outsourcing -An organization‘s use of an outside organization for a broad set of services.

Outsourcing is a logical choice when a firm simply does not have certain expertise and is not
willing to invest time and effort into developing it. Ironically, companies increasingly outsource
many of their human resource management tasks to outside vendors who specialize in
efficiently performing many of the more routine administrative tasks associated with this
function.
Offshoring -A special case of outsourcing where the jobs that move actually leave one country
and go to another.
This kind of job migration has always taken place; however, rapid technological changes have
made the current trends in this area historically unprecedented. When making the decision to
offshore some product or service, organizations should consider several critical factors. Many
who failed to look before they leaped onto the offshoring bandwagon have been disappointed by
their results. Quality control problems, security violations, and poor customer service
experiences have in many cases wiped out all the cost savings attributed to lower wages and
more.
If one cannot take the work overseas, but still wishes to tap into less-expensive global talent to
fill a labor shortage, then one might simply bring foreign workers into the country. Immigration
has always been a vital part of the American economy, and many foreign workers are happy to
leave their home and pursue their own American dream. However, entrance of foreign workers
into the United States to fill jobs is federally regulated, so there are limits to what can be
accomplished here. Employers wishing to hire foreign workers need to help them secure work
visas and show that there are no qualified Americans who could do the same work.
Altering Pay and Hours
Companies facing a shortage of labor may be reluctant to hire new full-time or part-time
employees. Under some conditions, these firms may have the option of trying to garner more
hours out of the existing labor force. Also, for a short time at least, many workers enjoy the
added compensation. However, over extended periods, employees experience stress and
frustration from being overworked in this manner. In the face of a labor surplus, organizations
can sometimes avoid layoffs if they can get their employees to take pay cuts.
PROGRAM IMPLEMENTATION AND EVALUATION
The programs developed in the strategic-choice stage of the process are put into practice in the
program-implementation stage. A critical aspect of program implementation is to make sure that
some individual is held accountable for achieving the stated goals and has the necessary
authority and resources to accomplish this goal. It is also important to have regular progress
reports on the implementation to be sure that all programs are in place by specified times and
that the early returns from these programs are in line with projections. The final step in the
planning process is to evaluate the results.
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Topic 2: The Human Resource Recruitment Process
Human Resource Recruitment, The practice or activity carried on by the organization with the
primary purpose of identifying and attracting potential employees.
As the first half of this chapter shows, it is difficult to always anticipate exactly how many (if any)
new employees will have to be hired in a given year in a given job category. The role of human
resource recruitment is to build a supply of potential new hires that the organization can draw on
if the need arises.
The goal of the recruiting is not simply to generate large numbers of applicants. If the process
generates a sea of unqualified applicants, the organization will incur great expense in personnel
selection, but few vacancies will actually be filled. This problem of generating too many
applicants is often promulgated by the use of wide-reaching technologies like the Internet to
reach people.
PERSONNEL POLICIES
Personnel policies is a generic term we use to refer to organizational decisions that affect the
nature of the vacancies for which people are recruited. If the research on recruitment makes
one thing clear, it is that characteristics of the vacancy are more important than recruiters or
recruiting sources when it comes to predicting job choice.
Internal versus External Recruiting: Job Security

One desirable feature of a vacancy is that it provides ample opportunity for advancement and
promotion. One organizational policy that affects this is the degree to which the company
―promotes from within‖—that is, recruits for upper-level vacancies internally rather than
externally.
In addition to employing promote from within and internal recruiting sources, perceptions of job
security and long-term commitment to the organization are also promoted by ―due process
policies.‖ Employment-at-Will Policies, Policies which state that either an employer or an
employee can terminate the employment relationship at any time, regardless of cause.
Companies that do not have employment-at-will provisions typically have extensive due process
policies. Due process policies, Policies by which a company formally lays out the steps an
employee can take to appeal a termination decision.
Extrinsic and Intrinsic Rewards

Because pay is an important job characteristic for almost all applicants, companies that take a
―lead-the-market‖ approach to pay—that is, a policy of paying higher-than-current-market
wages—have a distinct advantage in recruiting.
Pay can also make up for a job‘s less desirable features—for example, paying higher wages to
employees who have to work midnight shifts. These kinds of specific shift differentials and other
forms of more generic compensating differentials will be discussed in more detail in later
chapters that focus on compensation strategies. We merely note here that ―lead‖ policies make
any given vacancy more attractive to applicants.
Image Advertising

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Organizations often advertise specific vacancies (discussed next in the section ―Recruitment
Sources‖). Sometimes, however, organizations advertise just to promote themselves as a good
place to work in general. Image advertising is particularly important for companies in highly
competitive labor markets that perceive themselves as having a bad image. Indeed, research
evidence suggests that the impact of company image on applicant reactions ranks second only
to the nature of the work itself.
RECRUITMENT SOURCES
The sources from which a company recruits potential employees are a critical aspect of
its overall recruitment strategy. The type of person who is likely to respond to a job advertised
on the Internet may be different from the type of person who responds to an ad in the classified
section of a local newspaper. In this section we examine the different sources from which
recruits can be drawn, highlighting the advantages and disadvantages of each.
Internal versus External Sources
We discussed internal versus external sources of recruits earlier in this chapter and focused on
the positive effects that internal recruiting can have on recruits‘ perceptions of job security.
In general, relying on internal sources offers a company several advantages. First, it generates
a sample of applicants who are well known to the firm. Second, these applicants are relatively
knowledgeable about the company‘s vacancies, which minimizes the possibility of inflated
expectations about the job. Third, it is generally cheaper and faster to fill vacancies internally.
Finally, inside hires often outperform outsiders, especially when it comes to filling jobs at the top
end of the hierarchy.
With all these advantages, you might ask why any organization would ever employ external
recruiting methods. There are several good reasons why organizations might decide to recruit
externally. First, for entry-level positions and perhaps even for some specialized upper-level
positions, there may not be any internal recruits from which to draw. Second, bringing in
outsiders may expose the organization to new ideas or new ways of doing business. Using only
internal recruitment can result in a workforce whose members all think alike and who therefore
may be poorly suited to innovation.
Finally, recruiting from outside sources is a good way to strengthen one‘s own company and
weaken one‘s competitors at the same time. This strategy seems to be particularly effective
during bad economic times, where ―counter cyclical hiring‖ policies create once-in-a-lifetime
opportunities for acquiring talent.
Direct Applicants and Referrals
Direct Applicants are people who apply for a job vacancy without prompting from the
organization. Referrals are people who are prompted to apply for a job by someone within the
organization.
First, many direct applicants are to some extent already ―sold‖ on the organization. Most of them
have done some homework and concluded that there is enough fit between themselves and the
vacancy to warrant their submitting an application. This process is called self-selection. A form
of aided self-selection occurs with referrals. Many job seekers look to friends, relatives, and
acquaintances to help find employment, and evoking these social networks can greatly aid the
job search process for both the job seeker and the organization. Current employees (who are
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knowledgeable of both the vacancy and the person they are referring) do their homework and
conclude that there is a fit between the person and the vacancy; they then sell the person on the
job. These kinds of ―word-of-mouth‖ endorsements from credible sources seem to have a
particularly strong effect early in the recruitment process when people are still unfocused in their
search process.
Advertisements in Newspapers and Periodicals

Advertisements to recruit personnel are ubiquitous, even though they typically generate less
desirable recruits than direct applications or referrals—and do so at greater expense. However,
because few employers can fill all their vacancies with direct applications and referrals, some
form of advertising is usually needed. Moreover, an employer can take many steps to increase
the effectiveness of this recruitment method.
The two most important questions to ask in designing a job advertisement are, what do we need
to say? And To whom do we need to say it? With respect to the first question, many
organizations fail to adequately communicate the specifics of the vacancy.
Electronic Recruiting
One of the easiest ways to get into ―e-cruiting‖ is to simply use the organization‘s own web page
to solicit applications. By using their own web page, organizations can highly tune their
recruitment message and focus in on specific people. As with any new and developing
technology, all of these approaches present some unique challenges. From an employer‘s
perspective, the interactive, dynamic, and unpredictable nature of blogs and social networking
sites means that sometimes people who have negative things to say about the organization join
in on the conversations, and this can be difficult to control.
The biggest liability from the applicant‘s perspective is the need to protect his or her identity,
because this medium has also been a haven for identity thieves, who post false openings in the
hope of getting some applicant to provide personal information.
Public and Private Employment Agencies

Employers can register their job vacancies with their local state employment office, and the
agency will attempt to find someone suitable using its computerized inventory of local
unemployed individuals.
The agency makes referrals to the organization at no charge, and these individuals can be
interviewed or tested by the employer for potential vacancies. Public employment agencies
serve primarily the blue-collar labor market; private employment agencies perform much the
same service for the white-collar labor market. Unlike public agencies, however, private
employment agencies charge the organization for the referrals. Another difference between
private and public employment agencies is that one doesn‘t have to be unemployed to use a
private employment agency.
Colleges and Universities
Most colleges and universities have placement services that seek to help their graduates obtain
employment. Indeed, on-campus interviewing is the most important source of recruits for entry-
level professional and managerial vacancies. Organizations tend to focus especially on colleges

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that have strong reputations in areas for which they have critical needs (chemical engineering,
public accounting, or the like).
Many employers have found that to effectively compete for the best students, they need to do
more than just sign prospective graduates up for interview slots. One of the best ways to
establish a stronger presence on a campus is with a college internship program. Another way of
increasing one‘s presence on campus is to participate in university job fairs. In general, a job fair
is a place where many employers gather for a short time to meet large numbers of potential job
applicants.
Evaluating the Quality of a Source
Because there are few rules about the quality of a given source for a given vacancy, it is
generally a good idea for employers to monitor the quality of all their recruitment sources. One
means of accomplishing this is to develop and compare yield ratios for each source. Yield ratios
express the percentage of applicants who successfully move from one stage of the recruitment
and selection process to the next. Comparing yield ratios for different sources helps determine
which is best or most efficient for the type of vacancy being investigated.
Table 5.4 shows hypothetical yield ratios and cost-per-hire data for five recruitment sources. For
the job vacancies generated by this company, the best two sources of recruits are local
universities and employee referral programs. Newspaper ads generate the largest number of
recruits, but relatively few of these are qualified for the position. Recruiting at nationally
renowned universities generates highly qualified applicants, but relatively few of them ultimately
accept positions. Finally, executive search firms generate a small list of highly qualified,
interested applicants, but this is an expensive source compared with other alternatives.

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RECRUITERS
Knowing that it is the recruiter‘s job to sell them on a vacancy, some applicants may discount
what the recruiter says relative to what they have heard from other sources (like friends,
magazine articles, and professors). For these and other reasons, recruiters‘ characteristics and
behaviors seem to have less impact on applicants‘ job choices than we might expect.
Recruiter’s Functional Area. Most organizations must choose whether their recruiters are
specialists in human resources or experts at particular jobs (supervisors or job incumbents).
Some studies indicate that applicants find a job less attractive and the recruiter less credible
when he is a personnel specialist. This does not completely discount personnel specialists‘ role
in recruiting, but it does indicate that such specialists need to take extra steps to ensure that
applicants perceive them as knowledgeable and credible.
Recruiter’s Traits. Two traits stand out when applicants‘ reactions to recruiters are examined.
The first, which could be called ―warmth,‖ reflects the degree to which the recruiter seems to
care about the applicant and is enthusiastic about her potential to contribute to the company.
The second characteristic could be called ―informativeness.‖ In general, applicants respond
more positively to recruiters who are perceived as warm and informative. These characteristics
seem more important than such demographic characteristics as age, sex, or race, which have
complex and inconsistent effects on applicant responses.
Recruiter’s Realism. The recruiter‘s job is to attract candidates, there is some pressure to
exaggerate the positive features of the vacancy while downplaying the negative features.
Applicants are highly sensitive to negative information. On the other hand, if the recruiter goes
too far in a positive direction, the candidate can be misled and lured into taking the job under
false pretenses. This can lead to a serious case of unmet expectations and a high turnover rate.

Topic 3: Recruitment Metrics

Recruiting metrics are an essential part of data-driven hiring and recruitment. Recruiting
metrics are measurements used to track hiring success and optimize the process of hiring
candidates for an organization. When used correctly, these metrics help to evaluate the
recruiting process and whether the company is hiring the right people.

17 MOST RELEVANT RECRUITING METRICS

Recruiting metrics are an essential part of data-driven hiring and recruitment.

What are recruiting metrics?

Recruiting metrics are measurements used to track hiring success and optimize the process of
hiring candidates for an organization. When used correctly, these metrics help to evaluate the
recruiting process and whether the company is hiring the right people.

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17 MOST RELEVANT RECRUITING METRICS

1. Time to fill
This refers to the time it takes to find and hire a new candidate, often measured by the number
of days between publishing a job opening and hiring the candidate. Time to fill is influenced by
supply and demand ratios for specific jobs as well as the speed at which the recruitment
department operates.

It‘s a great metric for business planning and offers a realistic view for the manager to assess the
time it will take to attract a replacement for a departing employee.

2. Time to hire
Time to hire represents the number of days between the moment a candidate is approached
and the moment the candidate accepts the job. In other words, it measures the time it takes for
someone to move through the hiring process once they‘ve applied. Time to hire thus provides a
solid indication of how the recruitment team is performing. This metric is also called ‗Time to
Accept‘.

A shorter time to hire often enables you to hire better candidates, preventing the best
candidates from being snatched up by a company that does have a short time to hire. It also
impacts your candidate experience as nobody likes a recruiting process that takes a long time.

This metric is heavily influenced by your recruitment funnel. If you are hiring for jobs that have a
relatively straight-forward recruitment process of one interview, the time to hire will be shorter
than when you have a phone intake, assessment day, and three rounds of interviews.

3. Source of hire
Tracking the sources which attract new hires to your organization is one of the most popular
recruiting metrics. This metric also helps to keep track of the effectiveness of different recruiting
channels. A few examples are job boards, the company‘s career page, social media, and
sourcing agencies.

4. First-year attrition
First-year attrition is a key recruiting metric and also indicates hiring success. Candidates who
leave in their first year of work fail to become fully productive and usually cost a lot of money.
First-year attrition can be managed and unmanaged.

Managed attrition means that the contract is terminated by the employer. Unmanaged attrition
means that they leave on their own accord. The former is often an indicator of bad first-year
performance or bad fit with the team.

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The second is often an indicator of unrealistic expectations which cause the candidate to quit.
This could be due to a mismatch between the job description and the actual job, or the job
and/or company has been oversold by the recruiter.

This metric can also be turned around as ‗candidate retention rate‘.

5. Quality of hire
Quality of hire, often measured by someone‘s performance rating, gives an indicator of first-year
performance of a candidate. Candidates who receive high-performance ratings are indicative of
hiring success while the opposite holds true for candidates with low-performance ratings.

Low first-year performance ratings are indicative of bad hires. A single bad hire can cost a
company tens of thousands of dollars in both direct and indirect costs. To read more about how
to assess these costs, check out our article on HR costing.
When combined with the channel through which the candidate was sourced, you can measure
sourcing channel quality.

Quality of hire is the input for the Success Ratio. The success ratio divides the number of hires
who perform well by the total number of candidates hired. A high success ratio means that most
of the hired candidates perform well, however a low ratio means that you need to fine-tune your
selection process!

The success ratio is used as input for recruitment utility analysis. This analysis enables you to
calculate an ROI for different selection instruments.

6. Hiring Manager satisfaction

In line with quality of hire, hiring manager satisfaction is another recruiting metric that is
indicative of successful recruiting metrics. When the hiring manager is satisfied with the new
candidates in his team, the candidate is likely to perform well and fit well in the team. In other
words, the candidate is more likely to be a successful hire!

7. Candidate job satisfaction

Candidate job satisfaction is an excellent way to track whether the expectations set during the
recruiting procedure match reality. A low candidate job satisfaction highlights mismanagement
of expectations or incomplete job descriptions.

A low score can be better managed by providing a realistic job preview. This helps to present
both the positive and negative aspects of the job to potential candidates, thus creating a more
realistic view.

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8. Applicants per opening
Applicants per job opening or applicants per hire gauges the job‘s popularity. A large number of
applicants could indicate a high demand for jobs in that particular area or a job description that‘s
too broad.

The number of applicants per opening is not necessarily an indicator of the number of suitable
candidates. By narrowing the job description and including a number of ‗hard‘ criteria, the
number of applicants can be reduced without reducing the number of suitable candidates.

9. Selection ratio
The selection ratio refers to the number of hired candidates compared to the total number of
candidates. This ratio is also called the Submittals to Hire Ratio.

The selection ratio is very similar to the number of applicants per opening. When there‘s a high
number of candidates, the ratio approaches 0. The selection ratio provides information such as
the value of different assessment and recruitment tools and can be used to estimate the utility of
a given selection and recruitment system.
.
10. Cost per hire
We could write a full article on cost per hire. The cost per hire recruitment metric is the total cost
invested in hiring divided by the number of hires.

Cost per hire consists of multiple cost structures which can be divided by internal and external
cost. By quantifying all of them you can calculate the total recruitment cost.

11. Candidate experience

When we talk about recruiting metrics, candidate experience shouldn‘t be

overlooked. Candidate experience is the way that job seekers perceive an employer‘s
recruitment and onboarding process, and is often measured using a candidate experience
survey.

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12. Offer acceptance rate
The offer acceptance rate compares the number of candidates who successfully accepted a job
offer with the number of candidates who received an offer. A low rate is indicative of potential
compensation problems. When these problems occur often for certain functions, the pay can be
discussed earlier in the recruiting process in an effort to minimize the impact of a refused job
offer. An example is by listing pay in the job opening or by asking for the candidate‘s salary
expectations.

13. % of open positions

The % of open positions compared to the total number of positions can be applied to specific
departments or to the entire organization even. A high percentage can be indicative of high
demand (for example due to fast growth) or low labor market supply.

14. Application completion rate

Application completion rate is especially interesting for organizations with elaborate online
recruiting systems. Many large corporate firms require candidates to manually input their entire
CV in their systems before they can apply for a job. Drop-out in this process is indicative of
problems in this procedure, e.g. web browser incompatibility with the application system, or a
non-user-friendly interface.

15. Recruitment funnel effectiveness

Recruitment is a funnel which begins with sourcing and ends with a signed contract. By
measuring the effectiveness of all the different steps in the funnel, you can specify a yield ratio
per step. This makes for some excellent recruiting metrics.

For example,
 15:1 (750 applicants apply, 50 CVs are screened)
 5:1 (50 screened CVs lead to 10 candidates submitted to the hiring manager)
 2:1 (10 candidate submissions lead to 5 hiring manager acceptances)
 5:2 (5 first interviews lead to 2 final interviews)
 2:1 (2 final interviews lead to 1 offer)
 1:1 (1 offer to 1 hire)

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The recruiting funnel has changed a lot over the last few years due to advances in HR tech. The
first few steps are often atomized: software helps to automatically screen CVs and select the
best fits. Some companies opt to go for video interviews to change submittals and even first
interviews.
In other words: expect this funnel to change over time.

16. Sourcing channel effectiveness

Sourcing channel effectiveness helps to measure the conversions per channel. By comparing
the percentage of applications with the percentage of impressions of the positions, you can
quickly judge the effectiveness of different channels.

A simple way to do this is by using Google Analytics to track where the people who viewed the
job opening on your website actually came from.

By setting ‗goals‘, like the successful completion of an application form, this conversion rate can
be made much more accurate.

17. Sourcing channel cost

You can also calculate the cost efficiency of your different sourcing channels by including ad
spend, the amount of money spent on advertisement, on those platforms. By dividing the ad
spend with the number of visitors who successfully applied through the job opening you
measure the sourcing channel cost per hire.

18. Cost of getting to Optimum Productivity Level (OPL)

The cost of getting to Optimum Productivity Level (OPL) is the total cost involved in getting
someone up to speed. This includes things like onboarding cost, training cost, the cost of
supervisors and co-workers involved in on-the-job training, and more. Usually, a percentage of
the employee‘s salary is also included in this calculation, until they hit 100% OPL.

On top of this metric, there is also the ―logistical‖ cost of replacing an employee. These are also
called the cost per hire. Research by Oxford Economics (2014) lists OPL cost in retail at £
16,240 (approx. $ 20,200), in media £ 21,633 ($ 27,000), and in legal £ 35,307 ($ 44,000).

19. Time to productivity

Time to productivity, or time to Optimum Productivity Level, measures how long it takes to get
people up to speed and productive. It is the time between the first day of hiring and the point
where the employee fully contributes to the organization.

According to the same research by Oxford Economics, the average time a new employee takes
to reach their OPL is 28 weeks. Employees from within the same industry usually take less,
while employees from outside the industry take significant longer (32 weeks). University

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