3 Staffing KPIs and What They Mean for YOUR Business
The variety of staffing firms in terms of size, specialty, and strategy ensure that regardless of individual market positioning, all organizations will face stiff competition from all corners of the industry. Low barriers to entry for the industry as a whole leave firms vulnerable to new competitors exploiting their inefficiencies or weaknesses and stealing market share. Completely understanding your firm’s business performance, both internally and relative to other members in the industry, provides the insight necessary to identify weaknesses before they result in the downfall of the organization. Here are some staffing KPIs (Key Performance Indicators) and what they tell you about your business.
Calculated using the formula (# Successful Placements)/(# Client Submissions) X 100
The hit rate provides the scalability to compare individual recruiters, or firms as a whole and provides managers with valuable information about the quality of submissions recruiters are making. Obviously the higher this number the better, however when calculating Hit Rate percentage, keep an eye on the numerator and denominator which can vary greatly between firms or recruiters and provide the same ratio. Also, be careful using Hit Rate to compare firms across industries as averages can vary significantly.
Are you sleeping on the importance of hit rate? According to the 2017 North American Staffing & Recruitment Trends Report, many staffing professionals are. Only 17 percent of staffing professionals cited it as a top recruitment delivery metric.
Total Number of Placements
The no-brainer measure of performance for any staffing and recruiting company is the total number of placements made; after all, this is how the firm makes money. On an absolute basis, this number doesn’t provide much actionable information – recognizing you need to make more placements doesn’t exactly help with the solution. However, understanding how this number is affected by the other KPIs provides the big picture view needed to make strategic decisions for a firm. Also, placement growth of an individual firm relative to an industry average provides a high-level view of the firm’s health or the health of the industry as a whole. Total number of placements was ranked the most important sales performance metric by 29% of respondents in the 2017 North American Staffing and Recruiting Trends Report, second behind gross margin.
Job Order Pipeline Value
Calculated by multiplying potential $ for filling all job orders by fill probability
The most complicated performance metric thus far, the value of the job order pipeline incorporates multiple values into a forward-looking view of where the company will be at the end of a given time period. Determining the value for fill probability can involve a lot of variables or could be as simple as taking a particular recruiter’s historic close rate by the potential value of their open orders. Having a dynamic picture of the job order pipeline provides management with valuable projections and insight into the sensitivity of revenue to other KPIs like hit rate.
Success in the staffing and recruiting industry requires firms to understand how efficiently individual employees operate internally, as well as how they stand on a relative basis to industry or sector benchmarks. Using staffing KPIs like those mentioned above provide the baseline data needed to make strategic decisions and increase competitive advantage over less savvy firms that are unable to piece together how they are falling short.
Want more insight on the trends, priorities, and challenges staffing pros say they face in the year ahead? Read the full report and learn more about the opportunity that lies ahead for firms in 2017.