- HR performance management
Time-to-hire: Why should you optimise this metric?
A depleted labour market, demanding job seekers and an increasing demand for skilled workers make it difficult for companies to fill vacancies quickly. Experts estimate that each vacant position costs a company amounts in the five-digit range - always depending on the relevance of the position and the time it takes to fill it. If your company is also affected by long recruitment times, action is called for. But simply taking measures in the blue is rarely a good idea. Certain key figures from HR analytics are there to analyse the current situation and to work out improvements. One of the most important benchmarks for your recruiting is time-to-hire. What does it tell you and how can you use it to optimise the recruitment process?
What information is contained in the key figure for the duration of recruitment?
Time-to-hire is a parameter from the field of personnel management, especially recruiting, and belongs to the key performance indicators or recruiting ratios.
It indicates the duration (in days) that a company needs on average to fill a position. The start of the search for candidates marks day one and the signing of the employment contract is the end of this phase. With this indicator, a company can assess the efficiency of its own recruiting process, interpret it and possibly initiate adjustments.
This is an important means of making a company more competitive in the recruitment market. Because a cumbersome recruiting process often causes applicants to drop out in discouragement or another company to move more quickly on an interesting candidate, and the company's own position remains unfilled. It should not be confused with the similar key figures time-to-fill and vacancy time.
In comparison: time-to-fill
Time-to-fill is also a key figure from HR analytics, but it describes the time from the start of the applicant search to the first day of work. It therefore also includes the period between the conclusion of the contract and the start of the job. A phase that is determined, among other things, by the notice period of the selected candidate. But the time-to-fill is also extended by applicants who, despite having signed a contract, ultimately do not take up the job.
What then is the vacancy time?
The vacancy time does not come directly from the field of human resources. It is a parameter that is collected and published by the Federal Employment Agency, among others. This period starts when a job is advertised and ends as soon as an applicant is found and the job advertisement is removed. For the calculation, the Federal Employment Agency often combines entire occupational groups. This enables it to make statements on skilled labour shortages and bottleneck occupations.
How to calculate time-to-hire
There is a simple calculation behind this key figure. In the first step, you need a start and end date for the recruitment process of an individual position. First, you define individually for your company which event should mark the start of an application phase. This can be, for example, the creation of an applicant profile or the publication of the job advertisement. And you determine whether you want to use weekdays or working days for the calculation. The end is always the day the contract is signed. Now the number of days that pass in this period result in the key figure for this position.
Next, calculate average values from the duration of several recruitments by grouping together similar positions, areas and departments or even all positions in your company - depending on what information you want the data to give you. Since hiring durations can vary widely across different occupations, management positions and requirements, not every summary is equally meaningful.
Analysis made easy - sequencing the recruitment period
It is often necessary to quickly find out which areas are already working perfectly and where there is still need for action. To enable you to compare key figures, calculate the hiring duration of different departments, for example, and get a value that makes it easy to identify delays. Alternatively, you can uncover potential for improvement by dividing the recruitment period into individual phases:
Creation of applicant profile, job description and job advertisement.
Pre-selection of applicants
Preparing and conducting interviews and assessments
Contract negotiation and execution
"Every touchpoint in the recruiting process can cause a delay if you don't consider a few things:
Take a couple of steps back and consider these two questions:
1. What do we need to take a hiring decision?
2. Who takes the hiring decision?
Then build consensus on the job profile:
1. What is actually needed and why?
2. Does the whole hiring team agree on the profile?
So a good start with a proper intake to build consensus is essential to avoid hiring delays and mistakes."
Karim Gharsallah, Head of Talent, Recruitee
What advantage does a company gain from analysing the duration of recruitment?
Control and analysis of KPIs is already part of the daily work of every HR department today. HR reports provide information about company growth, costs, fluctuation and employee satisfaction. Important information for optimising processes and reacting to changes at short notice. Controlling recruiting key figures is just as useful. What does Time to Hire achieve for your company? In short: You receive the necessary information to accelerate your recruiting. Why is this important? Many skilled workers, talents and managers are in demand on the labour market and a company has little time to convince them. Speed is therefore the secret to successful recruitment in a small applicant market. This creates further advantages:
More qualified applicants: from an applicant's point of view, a company is attractive if it has a streamlined application process with as little waiting time as possible. If he or she receives prompt responses and interview appointments at short notice, the feeling of being appreciated is created. As a result, talented candidates are less likely to leave. The company's reputation also benefits and the chance of receiving more qualified applications increases.
Increased labour productivity: Vacancies mean extra work and overtime for colleagues. Projects stagnate and important tasks remain undone. This is poison for a company's labour productivity and fast recruitment processes are the effective antidote.
Reduced costs: Hiring generates direct and indirect costs for a company. Obvious are the expenses incurred in the process itself - through job advertisements, labour costs of the HR department, and so on. The key figures for this are cost-per-hire or cost-per-applicant. In parallel, the vacant position also generates costs (cost-of-vacancy), for example through overtime hours, delayed projects and, in the worst case, rejected orders. The shorter the recruitment period, the lower these costs and losses.
"20 to 25 days is a good number to strive for. The time to hire should be in good balance between speedness and candidate experience"
Karim Gharsallah, Head of Talent, Recruitee
Challenges in dealing with time-to-hire
In order to evaluate the success of a company's own recruitment strategy, it is not enough to look at the time-to-hire alone. Speed in a process is always related to quality and cost. For example, you may find a candidate for a vacancy quickly, but your company had to pay a high cost-per-hire to do so. You may also be disappointed with the quality of the applications, even though the hiring time and expense side are right. Should you then change something in the budget for more qualified applications or accept a longer candidate search? For a balanced process, recruiters therefore use different KPIs for assessment and analysis and, especially for jobs in shortage occupations, specialists and managers, they are not afraid of a longer recruitment period.
Improving time-to-hire - how does it work?
For some years now, the trend in the labour market has been for applicants to be able to choose a job. This forces companies to compete for capable workers and to make their hiring as efficient as possible. There are various levers they can turn, as numerous factors influence the speed of the application process. A large number of unsuitable applicants, for example, prolongs the search just as much as many decision-makers during the selection process or the long review of applicant documents in the specialist department. What steps do you take to improve hiring time in your company? Here are some possibilities:
1. Job advertisements
Goal: Effective publication
Optimisation: To make sure your job ads reach interested people, keep them up to date and make sure they are visible. For some portals, this may mean using keywords that suitable candidates use to search for a job. If the ad for a vacant position expires, remember to renew it immediately.
2. Digital communication
Goal: Quick accessibility
Optimisation: Interviews via video conferences, questions via social media channels and online applications - modern forms of communication are flexible and time-saving. This enables you to answer interested parties' questions quickly, speed up application formalities and keep in touch with your applicants.
3. Target group
Goal: Sufficient number of suitable applicants in a short period of time
Optimisation: With a detailed applicant profile, you write job advertisements that appeal to the right applicants. In addition, you choose channels for publication on which these candidates are actually on the move. By increasing applications from qualified workers in this way, you simultaneously reduce the workload of selecting candidates. The result is improved hiring time.
4. Internal processes
Goal: Short decision-making processes
Optimisation: The larger a company, the greater the workload involved in sifting through documents and deciding on a candidate. Departments, HR staff, supervisors and the works council all have a say. To shorten these times, improve internal communication, smooth processes and set deadlines.
5. Bounce rate
Goal: Reduce job ghosting
Optimisation: To prevent applicants from suddenly dropping out or becoming unreachable, make the application phase pleasant and transparent. This works by improving the candidate journey. Provide quick feedback on the status of the application, respond promptly and individually to questions and arrange timely appointments for interviews and assessments.
6. Career website
Goal: Permanently address interesting candidates
Optimisation: A career website has the advantage of being accessible at all times. Candidates look up information about the employer and find out about its USPs. A well-structured page attracts interested parties, encourages unsolicited applications and enables a direct online application. It is important to update the page regularly.
Time-to-hire is an indispensable key figure for recruiting and shows how much time the hiring phase takes on average. Since a vacant position has a high cost, it is the goal of every recruiting department to shorten this hiring time. An analysis of the different stages helps to identify and eliminate delays. To do this, companies optimise internal communication or tailor job advertisements more precisely to the applicant profile, among other things. An accelerated process has the added advantage of making it easier for companies to attract and hire qualified applicants. After all, if applicants receive feedback faster in the process and experience a positive candidate journey, competing companies lose out.
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