At iLogos we have been working with many large companies on metrics recently. Demanding economic conditions and increasing concern about the alignment of staffing with corporate goals are prompting companies to measure staffing departments’ activities more systematically. As many staffing departments consider cutbacks, a frequent question is, “How can I determine if my recruiting department is optimized for our workload?” Layoffs, although a standard method for reducing costs, are never good for long-term motivation and retention. Layoffs precipitate low morale and a problematic workload re-balancing. Faced with this pain ó and given the cyclical nature of demand for staffing ó some companies even consider outsourcing the staffing department function. Staffing, however, is highly strategic. It is very difficult to outsource staffing completely and maintain the systematic quality that produces the real strategic influence of staffing, along with the related metrics that translate into strong human capital valuations. But financial pressures may leave no alternative to departmental cutbacks. If you need to reduce your recruiting staff, how much do you have to cut? To ascertain the answer, we will introduce a simple metric to help you calculate the number of requisitions per recruiter at your company. Although that seems easy enough, it’s not as straightforward as it might first appear. Let’s examine how to go about calculating this metric.
- Customer service. Identify the level of customer service your recruiters are providing to your hiring managers. Is it only resume collection, or is their role full pre-selection, validation, and background checking? Cutting the number of recruiting staff will affect successful delivery of the service your hiring managers have come to expect. Hiring managers will in essence be penalized, since they will have to assume more of the work that is currently in the staffing process. As the recruiting workload shifts more to the hiring manager, your organization as a whole will feel the impact negatively as well. The increased resource allotment of hiring managers’ time towards staffing will cause them to be less productive in their core roles.
- Recruiter equivalent. To create a metric, you must be clear on the definition of each variable in your formula. For a recruiter efficiency metric you need to define what a recruiter is. At iLogos, we prefer to speak in terms of the “recruiter equivalent” as the sum of the recruiters and the administrative assistants. This is more meaningful than just counting the number of recruiters. Instead, the recruiter equivalent is a composite number that represents the true cost of processing manpower for each talent transaction. It enables an apples-to-apples comparison, a way of more accurately measuring labor allocation rather than defaulting to a simpler, but less precise, data point as is too often used in our industry.
- Industry specific. What industry are you in? Industries have different and often specialized staffing issues. Healthcare, for example, is in a talent crunch. With many hard-to-fill positions, recruiters working in healthcare companies manage a high number of requisitions. As you create the ratio and build the case for your recruiter efficiency metric, recognize the specifics of staffing conditions in your industry and its current recruiting environment.
- Strategic priorities. What is the level of efficiency you are expecting to achieve? Here you want to consider both your corporation’s as well as your staffing department’s strategic priorities. Think broadly in terms of corporate goals, revenue targets, and value creation. For instance, are high corporate opportunity costs necessitating a hiring cycle time of less than 30 days, or is a 90-day time to fill acceptable? Again, the parameters around your staffing department’s delivery of service must be clear.
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Once these steps are taken, you can go to the next level and develop a historical view of your level of efficiency. You may choose to view your results by business unit or by location. At iLogos, we also benchmark recruiter efficiency results against external data, analyzed by industry. Your recruiter efficiency metric can be used to start comparing the true service delivered by your team. Then, according to your planning, you can project how your team should be optimally sized and determine if you have to cutback, reassign or make new hires.