5 Ideas to Replace “Time to fill” HR KPI With a Better One

In previous articles I shared my thoughts about the problem with HR KPIs and specifically about the problem with turnover rate KPI. Today it’s a turn to talk about “Time to Hire.”

  • Time to hire is an average amount of time needed to fill an opened position.

According to some data [1], most executives (53%) track “Time to hire,” it’s nice to know this especially when according to the same survey 30% of interviewed top managers don’t track any HR recruiting KPI. I’m exaggerating, but sometimes I feel that those who don’t track anything are in a more advantageous position.

Most executives (53%) track "Time to hire"

A little bit more about the numbers. On the website of SHRM (Society for Human Resource Management) [2] I’ve found old data for the time to fill KPI across various industries. It was less for retail (26 days on average) and more for government and educational services (51 and 48 days).

The problem of “Time to hire” KPI. Focus on the process, not on the result.

Can we learn anything from these numbers?

  • There are industries where it is easier to find new employees and where it is harder to find new employees.

Now, imagine what happens when HR managers start taking these numbers too seriously. If some position was opened for 20 days in retail, guess what HR managers will do? Continue searching for a good candidate or hire someone more or less suitable just to keep KPI in the green zone?

  • Time to hire KPI measures the process, not the outcome.

Yes, your HR is fast/slow, but fast/slow in what? In hiring talents or in spending your resources on people that won’t help your company much?

"Time to hire" HR KPI pitfalls

One KPI doesn’t fit all. Profile your hires.

Another pitfall is that a “time to hire” KPI is used company-wide. A company measures the average “time to hire.” If you do this too, then I do recommend stopping doing it today. You will save resources and won’t miss any insights.

As was shown above the average values of “time to hire” KPIs are different across various industries. It is easier to find someone for the first-line of the call center than to find an engineer that will develop your product.

I would suggest focusing on “time to hire for high-performance positions.” Add a separate “time to hire” if you need to measure hiring efficiency for less important positions.

When the position needs to be opened? Backlog strategy.

A business case for a manager: you know that in 3 months you will need to start a new project where you will need to hire two high-qualified engineers. What would you do today?

Correct answer: I would open a position and start looking for candidates, so that in  3 months I would have a backlog of candidates!

This makes sense. But have a look at what will happen with a “time to hire” KPI in this case? It looks like you spent 90 days from the time a position was opened until it was filled, instead of the average 40 days needed! The KPI is not supporting a common sense method here. Instead, the “time to hire” KPI tells you not to open a position earlier.

What does it mean? A position won’t be opened “officially” in order not to mess up the “time to hire” KPI. HR will still be looking for potential candidates, but won’t use all of the “official” resources of the company. You won’t have a backlog of candidates. A “Time to hire” KPI doesn’t help in this case!

The hiring process: 4 is an optional number of interviews

Let’s try to disassemble the hiring process and see if we can apply any best practices at least to some parts of the process.

The simple model of HR hire process is “Posting” + “Screening”. I’ve shared my thoughts about the danger of “Time to hire” for the “Posting” phase. What about “Screening?”

According to Todd Carlisle, Google’s director of staffing, after the fourth interviews “the candidate’s average score would converge on his final score” [3].

For me it looks like a good target value for ” the number of interviews” KPI! Are you among these companies that conduct seven interviews [4] before hiring a person? Ask yourself: what kind of employee will you finally hire? A talented person with high creativity and professional skills? I doubt it!

How good is your HR  converting candidates into hires

Normally, to find a talent you actually want in your business you need to interview 10-15 highly qualified candidates. Or in your case the number may be 4 or 100. The number doesn’t matter. What matters is that a certain conversion ratio exists.

If you want to know how good your HR is working why don’t you play a conversion game with them. Here is an example:

  • You need 2 talents in your team of engineers
  • You know that you are looking for persons with a PhD and proven experience in certain areas
  • Your business experience tells you that only about 10% of candidates are normally good for your job.
  • It means that your HR should find at least 20 candidates according to a specified candidate profile.

Now the question: how much time did it take for HR to find 20 candidates according to a specified candidate profile?

Why is this measurement  better?

  • Because it is hard to game with it! When HR needs to fill in a position he or she could find someone just to keep the time to hire KPI in the green part of the scale. With 20 excellent candidates it is not so easy.
  • This measurement is more result-oriented than a “time to hire” KPI. Having 20 excellent candidates is a good guarantee that you will hire someone among them.

The key secret here is how to define a qualified candidate. The requirements for the candidate must be tangible. Don’t just ask candidates to have a “AJAX” or “Video Editing Software” record in their CV, ask your HR to find people who can show a portfolio of projects or specific work experience.

Roles and processes of HR: posting and 1st interview

I’ve mentioned that the HR process is about “Posting” and “Screening.” For high-performance positions HR most likely is responsible for “Posting” and for the first interview. The rest of interviews are involving top managers and specialists that are able to estimate candidate’s skills.

If your goal is to measure HR efficiency then you should focus only on the parts where HR holds the main responsibility, e.g. “posting” and “1st screening.”

Better “Time to hire” KPI

Replace "Time to fill" HR KPI with  “Time to find a # of qualified candidates”

Now, let me summarize all my skepticism about “time to hire” KPI and share the improved version of “time to hire.”

  1. Define a profile of qualified candidate. Don’t just ask for some skills in s CV, ask for candidates with a portfolio of real projects.
  2. Use “Time to find required number of qualified candidates,” not “time to hire.” With “time to hire” you measure a process, not results. With “Time to find qualified candidates” you don’t measure a final result either, but you are much closer to it.
  3. Interviews number. Find the optimal number of interviews for your screening process or take Google’s “4 interviews.” Don’t waste your resources and time of your candidates for 7+ interviews.
  4. Don’t align this type of KPIs with compensation of HR or any other type of recognition. It is easy to fill the position with a less competent employee if a KPI’s value is the goal.
  5. Don’t use this type of KPIs company-wide. Divide employees into groups first, then your numbers will make some sense.
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Here what KPIs might look like in the Balanced Scorecard.

KPI in the Balanced Scorecard

Business Objective: Find qualified employees for high-performance positions

Action plan:

1. Define “qualified candidate” with specific requirements based on previous achievements.

2. Use historical candidate/employee conversion rate to assign a target value

3. Use KPIs for high-performance positions only

KPI 1: Average qualified candidate to employee conversion rate, %

  • Description: (# of employees hired)/(# of qualified candidates).

KPI 2: Time to find a required number of qualified candidates

  • Target value: number of qualified candidates is set according to candidate/employee conversion.
  • Description: the KPI will show how fast your HR finds qualified candidates.
  • Find this KPI in the HR Balanced Scorecard project.

KPI 3: The average number of interviews

  • Target Value: 4.
  • Description: use Google’s best practice to do 4 interviews.

Conclusion

The suggested “Time to find required number of qualified candidates” is not a panacea. Still, there is a space for wrong candidates and gaming with KPI.

I do understand that “time to hire” has a long history and companies won’t stop using it, even if everyone understands how useless it is. In this case I would recommend following the 5 rules described above, this will increase your chances to get some meaningful value for “time to hire.”

References

  1. ^ Recruitment Benchmark Survey Results, 2013, NovoGroup
  2. ^ Time to Fill, SHRM,  2004
  3. ^ The Happiness Machine. How Google became such a great place to work. Farhad Manjoo, 2013,
  4. ^ With Positions to Fill, Employers Wait for Perfection, Catherine Rampell, 2013. The New York Times.

Related Articles

Strategy and KPIs Scorecard Expert | Speaker | CEO. Aleksey Savkin (LinkedIn, @bscdesigner) is helping companies to better formulate their strategies and make the process of strategy execution more tangible with KPIs. New book by Aleksey: 10 Step KPI System

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