Detect Waste and Improve your Recruitment Process by Focusing on Quality of Hires

Posted on Friday, September 24, 2021 by Graham Quinn

With the economic downturn squeezing resources, reducing costs in your recruitment process is now more important than ever, not just in terms of cost per hire but also in terms of performance and retention. 

Given the bewildering range of metrics to choose from, it’s not surprising that only 19% of businesses monitor which recruitment channels give them the best results in terms of cost per hire, quality, and retention. 

We’ll guide you through the monitoring process, helping you quickly identify find the leaks in your budget. Drawing on our research plus key industry experts, this article provides practical strategies to reduce waste and improve the quality of your hires.

Make the link between attraction and retention

Metrics have long been used in the world of advertising, as without them it is hard to know where the big budgets are wasted. Similarly, without measuring where your recruitment budget is being well spent, the effect is very much the same – like pouring water into a bucket without checking for holes.


In recruitment, it’s useful to think of retention of the bucket itself; businesses often make the mistake of pouring in money into attract talent without measuring how much of this spend is wasted or retained. 

CIPD (The Chartered Institute of Personnel & Development) found that ‘while 83% collect data to identify retention issues within their organisation, only 30% use the data to inform resourcing decisions and even fewer evaluate the effectiveness of retention.’ 

A survey from Willis Tower Watson also found that ‘one in three hires will leave a company within two years,’ showing how much waste neglecting evaluating retention generates. This waste through low retention often stems from the initial attraction and selection process. 

Discover where recruitment costs are leaking

To measure where spend in terms of external recruitment costs are wasted through poor retention, find your employee retention rate; subtract the number of employees who have departed in a given period of time from the total number of employees. Next, divide that figure by the total number of employees.

Measure the retention rate of each recruitment source.  This will inform you of which sources present value in terms of retention. To do this, ask applicants to record the acquisition source, (e.g. recruitment agencies, Linkedin, Indeed, Facebook, referral) when they submit their application or to where the recruiter found their profile. Ensure that this information is retained in your employee records so that employee retention rates for each source can be compared.

Prioritise ‘Quality of Hire’ to Boost Retention 

Most businesses that begin to use recruitment metrics focus on attraction; gauging their success on how many applicants they pull in plus how cheaply and rapidly they can fill a vacancy. In the long-term, this leads to waste in the recruitment process by not focusing on attracting quality candidates who stay. 

When you consider that only about 2% of applicants receive offers, more applications mean increased waste through time spent identifying the few candidates who meet the requirements of the role. It makes more sense to create a smaller but better-quality applicant pool to improve the yield.

Hiring quality employees means less turnover, higher productivity, improved culture, and increased success for the company. By continuously measuring the quality of hire, you can keep track of the ‘health’ of your workforce. This metric is a very useful performance KPI as it measures the value new hires bring to your company. 

First, define the factors that make a quality hire at your company. This requires alignment between HR and managers/leadership.

These could be:

  • Meeting sales quotas
  • Delivering product units
  • Meeting deadlines and quality standards
  • Achieving target customer satisfaction ratings
  • Manager satisfaction ratings
  • Meeting CPD targets
  • Promotion
  • Attendance and punctuality

Incorporating these standards into your employee review / CPD process enables you to track which recruitment sources are providing the best quality candidates. Use this data to improve future recruitment strategies.

Work with an Agency with a Proven Track Record

Do your research when choosing a recruitment agency to find out about their screening and selection processes. A good agency will be happy to share with you their methods of reducing the number of applicants to those that meet the brief prior to screening and interviewing. Ensuring that their criteria for selection are aligned with your company’s unique needs increases the likelihood of retaining the employees they find. For this reason, it’s worth investing the time to build an understanding with your recruitment specialist. Basing your choice of agency on their track record of delivering high-quality candidates will pay off in the long run. 

Monitor Qualified Candidates Per Opening

A “qualified candidate” is anyone who passes the application screening process and moves to the next stage. This KPI is more meaningful than the number of applicants because it shows recruiters how employable the candidates are they’re attracting.

It’s really important to measure this metric because if a company realises that they are attracting a lot of unfit candidates, it allows them to set new strategies to improve the quality of applicants, such as improving job descriptions or introducing pre-application screening tests. 

To calculate the qualified candidates per opening you simply need to divide the number of candidates selected for an interview by the number of applicants.

In Summary: Measuring which agency and channels provide the best quality candidates who will boost your retention, lowering costs long term more effectively than monitoring cost per hire. Switching focus to measuring which channels provide the best quality of hires rather than cheap and fast attraction strategies will ensure your recruitment process produces less waste over time.


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