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'Why recruitment has ‘outgrown’ cost-per-hire and time-to-hire'

While cost-per-hire and time-to-hire are still commonly described as ‘essential metrics’, perhaps recruitment has outgrown them, Tony de Graaf, Hiring Success Director EMEA at SmartRecruiters says. “CPH and TTH measure the cost center, but they don’t really say much about if you are hiring the right talent.”

Jasper Spanjaart on March 22, 2021 Average reading time: 3 min
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'Why recruitment has ‘outgrown’ cost-per-hire and time-to-hire'

The undeniable rise of data usage in recruitment is just that: undeniable. But as talent acquisition and recruiting teams have widely measured a variety of things, some organisations may come to a point wherein have to pose themselves the question: why are we still measuring this? “I don’t think anything has gone wrong specifically”, Tony de Graaf, Hiring Success Director EMEA at SmartRecruiters, says. “I think we have grown and evolved as function.”

After holding various senior positions in Talent Acquisition at several e-commerce, fashion and retail companies — De Graaf transitioned to SmartRecruiters in 2019, where he was made responsible for developing thought-leadership and Hiring Success consultancy. “We have gone from being a back-office function, managing a process and moving resumes to get butts in seats — to a situation where we are busy attracting the right talent that possesses the right competencies and mindset”, he says.

“We have gone from being a back-office function to a situation where we are busy attracting the right talent that possesses the right competencies and mindset.”

“All while delivering a great experience and help candidates make a good decision — in our favour of course”, De Graaf continues. “To get butts in seats is managing a process, or a cost center if you will. And how do you optimise a cost center? By making it more efficient and cheaper. Or, in other words: improving a cost center is focused on becoming faster and cheaper. That’s exactly what CPH and TTH measure — but they don’t really say much about if you are hiring the right talent.”

‘No connection’

While CPH and TTH may not say anything about the talent you’re hiring — organisations have a adopted quality-of-hire as a fruitful alternative. But that alone does not solve the problem, De Graaf says. “You need to ask yourself what the numbers actually say. If you’re in a meeting with your CEO, and you have a CPH of 1500 and a TTH of 65? What is good? Lower is better, I guess, but doing projects to improve these metrics do not help you hire ‘better’ talent.”

“You need metrics that actually say something about your ability to deliver talent when it is needed — and the subsequent quality of those people you hire.”

“This means there is no connection between these ‘numbers’ and business outcomes”, De Graaf continues. “They don’t say anything about your ability to hire the right talent. So you need metrics that actually say something about your ability to deliver talent when it is needed — and the subsequent quality of those people you hire. If you understand that, you can start working on concepts that improve your ability to deliver on time and maintain the right quality. That’s the conversation I want to have with my CEO.”

‘Don’t start with your metrics’

Therefore, De Graaf’s advice to fellow talent leaders is simple: please don’t start with your metrics. “Start by talking to your leadership and understanding what their goals are, and what they need from you in order to achieve those goals”, he says. “If you have that understanding, then you can ask yourself about metrics. We need to define: ‘what we need to deliver’ and find metrics that say something about how well I am doing.”

Hiring Success Metrics: a new approach

Rather than looking at ‘the cost of recruitment’, De Graaf is more focused on ‘investment to attract the right people’. “At the end of the day, your job as TA function is easy: deliver talent at the moment the business needs it, against the right quality or with the right fit”, he says. And as part of the solution, a new approach to TA may be required. “If we start approaching TA as a sales and marketing function — then that changes everything”, De Graaf says.

“If we start approaching TA as a sales and marketing function — then that changes everything.”

“Then we’re not talking about managing a cost center; we are talking about what we invest in acquiring the right talent or what we call: a Hiring Budget”, he says. “The outcome of that investment is easy. I’m repeating myself, but it is measured in your ability to attain the right talent within the right timeframe for your business. Or: your Hiring Velocity. Then, as far as measuring the quality, or the right fit, of the people you hire, you need a simple straightforward method that evaluates consumer sentiment: a Net Hiring Score.”

Want to learn more about Hiring Success Metrics?

Don’t miss Tony de Graaf’s keynote at ToTalent Live 2021. On March 23rd, 24th and 25th, we’re hosting the first ever European Recruitment Leadership Event. Sign up for free.

 

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Jasper Spanjaart

Jasper Spanjaart

Writer and editor at ToTalent

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