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Preview Sample

Recruiting Metrics & Performance

Benchmark Report

2009 Edition

David Earle, Publisher & Author Philip H. Wagner, Editor/Writer

James P. Murphy, Ph.D., Survey Specialist Barnet Associates, Technology Consultants

Susan Earle, Design

Staffing.org, Inc. 23 West Branch Road

Weston, CT USA 06883

203-227-0186 www.Staffing.org

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© Staffing.org, Inc., 2009. All Rights Reserved. Published by Staffing.org, Inc., Weston, CT, USA No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1876 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to Staffing.org. Requests to the Publisher for permission should be addressed to Permissions Staffing.org, Inc 23 West Branch Rd Weston, CT 06883. +1.203.227-0186, or email [email protected] Limit of Liability/Disclaimer of Warranty: While the publishers and authors have used their best efforts in preparing this Report, they make no representations or warranties with respect to the accuracy or completeness of the contents of this publication and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with independent advisors where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. To ask a question about this report, to contact the author, or to report a mistake in the text, please contact Susan Earle at [email protected] For general information on our other products and services, call us at +1.203.227.0186 or email [email protected].

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List of Graphs and Charts

CHAPTER FIGURE AGE TITLE 1 1 2 Recruiting efficiency example 2 3 Benchmarking frequency 3 5 List of staffing metrics 4 6 Recruiting process flowchart 5 7 Most frequently measured metrics 2 6 12 Impact of external conditions on staffing 7 13 Sensitivity to external conditions 8 14 Rating external conditions by industry 9 16 Workforce mobility 10 17 U.S. labor force projected 11 18 Relocation by job level 12 19 Employment projections 2006-16 13 22 Use of Recruiting Solutions 14 24 Most valued candidate information sources 3 15 25 Centralization vs. decentralization 16 26 Centralization vs. decentralization trend 17 27 Percent centralized recruiting 18 28 Percent of centralized recruiting 4 19 29 Requisition load 20 30 Annual recruiter workload 21 31 Recruiter efficiency comparison 22 32 Weekly staffing summary 23 33 Weekly executive staffing summary 24 34 Customer staffing review 5 25 36 Perceived candidate availability 26 36 Perceived candidate availability 27 37 Perceived candidate availability 28 38 Workforce mobility 29 39 Mobility by education level 30 40 Over 65 work schedule 31 40 Median weekly earnings 32 42 Internet audience job status 33 42 Internet audience job activity 34 43 Receptivity to job offers 35 44 Status of job board users 6 36 46 Percent staffing outsourced 37 47 Percent staffing outsourced 38 47 Percent using outsourcing 39 48 Percent using outsourcing 40 49 Types of positions outsourced 7 41 52 Source popularity 42 53 Recruiting strategies used 43 54 Recruiting strategies used 44 55 Sourcing strategies increased Use 45 56 Sourcing strategies increased by company size 46 57 Sourcing strategies increased by number of hires

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CHAPTER FIGURE AGE TITLE 47 58 Sourcing strategies decreased use 48 59 Sourcing strategies decreased use by company size 49 60 Sourcing strategies decreased by number of hires 50 61 Sourcing net change 51 62 Sourcing net change by company size 52 63 Sourcing net change by number of hires 53 65 Staffing's sourcing benchmarks 8 54 74 Where job seekers look 55 74 Where job seekers apply 56 75 Use of social networking sites 57 75 Jobs found on social networking sites 58 76 Employment search on niche job sites 59 76 Applied for employment on niche job sites 60 77 Do you use company websites? 61 77 Do you click on careers tabs? 62 77 Replied to job posting within last 12 months 63 78 Websites as Employment Indicator 64 78 Application due to impressive website 65 79 Internet information resources used 66 79 Website functionality problems 67 80 Most important website information 68 80 Most persuasive forms of communication 9 69 82 Hiring volume past year 70 82 Hiring volume past year by company size 71 83 Change in compensation past year 72 83 Indexed mean compensation 73 84 Change in compensation by company size 74 84 Indexed mean company size 75 85 Change in compensation by number of hires 76 85 Indexed mean company hires 77 86 Internal recruiting costs 78 86 Internal recruiting cost average 79 87 Internal recruiting costs by company size 80 87 Average internal recruiting costs by company size 81 88 Internal recruiting costs by number of hires 82 88 Average internal recruiting costs by number of hires 83 89 External recruiting costs 84 89 External recruiting costs average 85 90 External recruiting costs by company size 86 90 Average external recruiting costs by company size 87 91 External recruiting costs by number of hires 88 91 Average external costs by number of hires 89 92 Total recruiting costs 90 92 Total recruiting costs percent internal/external 91 93 Total recruiting costs by company size 92 93 Total costs by company size and percent 93 94 Total recruiting costs by percent of hires 94 94 Total costs by percent of hires & internal/external) 95 96 RCR by industry 96 96 RCR by company size 97 97 RCR by number of hires 98 97 RCR by percent recruiting outsourced 99 98 RCR by industry 100 99 Blended RCR table

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CHAPTER FIGURE AGE TITLE 10 101 104 Percent of candidates starting on time 102 105 Actual vs. allocated weeks 103 106 Index of actual vs. allocated weeks 104 107 Average time to hire by industry 105 108 Time to start by position 106 109 Variation in hiring times 107 110 Time to start non-exempt 108 110 Time to start non-except by company size 109 111 Time to start non-except by number of hires 110 111 Time to start supervisory 111 112 Time to start supervisory by company size 112 112 Time to start by number of hires 113 113 Time to start professional 114 113 Time to start professional by company size 115 114 Time to start professional by number of hires 116 114 Time to start professional 117 115 Time to start senior executive 118 115 Time to start senior executive by company size

11 119 117 Organizations defining quality before recruiting 120 117 Measure hire qualifications vs. job specifications 121 118 Do you measure new hire qualifications? 122 119 Sample pre-hire quality checklist 123 120 Hiring manager ratings of new hires 124 121 New hire quality vs. job specifications by co. size 125 122 New hire quality vs. job specifications 126 123 New hire measurements after initial period 127 123 Positions measured 128 124 Measure quality after hire by company size 129 124 Measure new hire quality after hire 130 125 Timing of new hire quality assessment 131 125 Timing of quality assessment by company size 132 126 Timing of new hire quality assessment by industry 133 127 New hires rated "poor" or "needs improvement" 134 128 New hires rated "excellent" or "very good" 135 129 Hiring manager satisfaction sample survey

12 136 134 Frequency of employee retention measurement 137 135 Measuring retention

13 138 140 HR's role in business transformation 139 140 Access to & satisfaction with senior management 140 141 Moderately or very satisfied 141 141 Satisfaction by job function 142 142 Very satisfied with senior management 143 144 Staffing's alignment with organization strategy 144 145 Well aligned or minor compatibility 145 146 Well aligned or minor compatibility by company size 146 147 Well aligned or minor compatibility by industry

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Chapter 2|Pages 11-14

Recruiting Trends Trends Toward greater efficiency Toward greater effectiveness Toward improved business alignment The fundamentals of the staffing equation remain constant. It may appear otherwise as we reel from the effects of the economic downturn, but the same basic market that existed before the downturn still exists today. Sharp, short-term fluctuations either up or down make headlines, but do not much change the larger landscape. At its core, staffing remains a supply/demand equation: on the one side, the number of open jobs, where they are located and the skills required to fill them properly; on the other, available job candidates, where they live, and whether they have the skills, talent, and experience to perform well in those jobs. When the United States marketplace is operating efficiently, employment runs 94-96%. At the moment, we are out of balance. The public mood is dark. Yet even as net monthly job numbers turn negative, staffing has not stopped. As this report goes to press, there are three million jobs that need to be filled. When the short-term supply/demand equation changes, it changes around the edges. The vast majority of people continue to work. The natural flow of young people into the workforce and older people out of it continues. Even as certain industries suffer contractions and layoffs, others expand and hire. There are always winners and losers. This dynamic does not change. Another thing that has not changed is the stress felt by corporate staffing departments. In boom times, staffing professionals worry about worker availability, recruiter workloads, doing more with less, worker training and management succession. During contractions, they worry about retention, cost controls, defending headcount and managing layoffs. Staffing is not easy in any season and as the world globalizes and technology advances, it will become more complex and difficult to do well.

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Figure 6

Changes That Do Matter Our research suggests that efficiency, effectiveness and business alignment will be the staffing imperatives of the next decade. What new perspective will that require? Once day-to-day concerns are dealt with, where should we be focused? What should our planning - and careers - take into account? Short-term economic fluctuations aside, there are powerful long-term trends at work in the job marketplace that will have major impacts on staffing. Together, they are slowly but inexorably altering where work is done and by whom, how companies are structured and how workers look for jobs. Efficiency, so important in any business climate and in every business function, will become more so. We refer to it as one of the trains barreling down the tracks toward the recruiting profession. But efficient recruiting has become more complicated in recent years and harder to do well. And as this has occurred, a gap has begun to appear between companies who have adapted and those who haven’t. Into this gap have stepped third-party specialists who combine new technologies with economies of scale and sharp business focus to do the job better. The marketplace is evolving.

0 0.5 1 1.5 2 2.5 3

Environmental / Green issues

Mergers and consolidations

Internal technology

External technology (Internet)

Economic slowdown

Candidate quality

Impact of External Conditions on Staffing 

(1 = Little or none, 2 = Somewhat, 3 = Significant)

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In a more complex, evolving marketplace, we see three segments forming:

o Smaller employers with smaller-scale recruiting needs that can be adequately handled by staffing generalists

o Large employers who choose to develop sophisticated recruiting capabilities in-house

o Third-party staffing companies who take over staffing for companies with “average” staffing capabilities

This market segmentation has already happened in payroll services, travel services, telemarketing, computer services and customer relationship management. Whole industries have been created and whole in-house corporate departments eliminated by this phenomenon.

Figure 7

1.80

1.871.91

1.98

1.701.751.801.851.901.952.00

<100 100‐499 500‐4,999 5,000+Company Size

Sensitivity to External Conditions

Long-Term Trends Globalization, demographic shifts and technological trends are all converging on the job market. They form the context in which jobs are offered and jobs are sought. They are the deep powerful currents on which the staffing boat floats. Each trend increases the pressure on recruiting organizations to be more efficient and effective in their work while at the same time making that work more challenging. The combined effect of the following trends on finding and hiring the most appropriate workforce is both unprecedented and extremely powerful.

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Figure 8

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Chapter 5 | Pages 35-37

Candidate Availability Trends 2007-2009 More candidates are increasingly available Benchmarks Variation by industry, high (>50%) Variation by company size, high (>50%)

Talent is in short supply and talent is not in short supply. Your choice!

Demographically speaking, we have entered a prolonged period of worker shortages. The trends in Chapter 2 explain why and research data confirms it. In 2006, the Corporate Executive Board reported that three-quarters of senior HR executives stated that “attracting and retaining talent” was their first priority. (“The Battle for Brainpower,” The Economist, Oct 5, 2006)

In 2007, SuccessFactors reported that over half the firms surveyed listed talent acquisition as a key challenge (“Performance and Talent Management Survey 2007,” SuccessFactors, 2007).

Our own more recent survey of more than 700 companies paints this picture in more detail. One quarter of all companies are confronting worker shortages, and only one-third considers the supply adequate. The problem exists across a wide variety of business sectors. Paradoxically, this perceived shortage of talent occurs against a backdrop of increased workforce mobility and availability. Never in history has the worldwide supply of labor been more available and willing to move in search of opportunity. In other words, for those who can recruit effectively and efficiently there is a potentially ample supply of workers. They are moving (or will consider doing so), they are available, and they are looking.

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Figure 25

Figure 26

1%

2%

24%

26%

31%

39%

38%

30%

5%

3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Suppliers

Employers

Perceived Candidate Availability

Almost nonexistent Hard to find Borderline

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Arch Eng ConstructionAerospace DefensePers & Bus Services

Energy UtilitiesOther Fin ServicesLT Care Spclty Med

Software TechnologyPharma Biotech

RetailingEducation

Transp DistributionHospitals

ManufacturingTelecommunications

BankingConsulting

GovernmentNon‐ProfitsInsuranceHospitality

Perceived Candidate Availability

Insufficient Borderline Adequate

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Figure 27

A Controllable Problem We believe that for the astute firm willing to study the data and the trends and to modify their recruiting programs accordingly, worker shortages are a problem that can be not merely contained, but solved. In other words, the problem can be relative rather than absolute, presenting a competitive scenario of winners versus losers rather than one where everyone struggles equally. The first step is to understand the trends related to:

o Mobile workers o Pools of untapped workers o The size of the labor force relative to economic conditions.

Mobility The starting point is to understand the pool of available workers. Since from a macro perspective globalization fosters mobility, what matters from a recruiting perspective is the ability to move work to workers, or workers to work. Mobility has been increasing for decades, driven by steady decreases in the cost of transportation and communication. Where work is to be had, word now quickly circulates around the globe and workers respond.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

<100

100‐499

500‐4,999

5,000+

Company Size

Perceived Candidate Availability

Insufficient Borderline Sufficient

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Chapter 7|Pages 51-53

Candidate Sourcing Trend Away from volume, towards efficiency Variations By company size, extreme (>100%) By industry, extreme (>100%) The major sources of candidates are mostly familiar and well understood. However, the newest ones, those that are Internet-related, continue to roil the waters of candidate sourcing. These relatively new Internet sources have risen to the #2 and #3 places on the sourcing list, both in terms of efficiency and effectiveness. Employers are experiencing this as a mixed blessing: more viable candidates overall, but at the price of increased processing inefficiency. In other words, more wheat but also more chaff. The quantitative increases in Internet-based sourcing are stunning.

Jobs Posted Online

o 1996 1.2 million o 1998 28.7 million o 2008 48 million

Employment Websites

o 1996 3,500 o 2008 50,102 o 2012 105,000 (projected)

Resumes Posted

o 1996 1 million o 2008 77.7 million

In an absolute sense the new channels have succeeded extremely well. Employers can access huge numbers of resumes and candidates can access huge numbers of job openings. However, that success has created new problems, including:

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o Clutter – An enormous amount of extraneous material in the system that buries what one is looking for in a large amount of what one is not looking for, the classic needle in the haystack problem.

o Quality – Poorly defined job postings intersecting inaccurate resumes, otherwise known as “garbage meets garbage”

o Noise – Increasing communication of decreasing significance

o Measurement – Inadequate systems to measure productivity against more traditional recruiting channels.

Figure 41

Source Popularity Source Effectiveness 1 Employee referrals 1 Employee referrals

2 Large job boards 2 Large job boards

3 Niche job boards 3 Niche job boards

4 Trade media 4 Temp to perm

5 Career fairs 5 Recruiters

6 Staffing services 6 Trade media

7 College recruiting 7 Staffing services

8 Temp to perm 8 College recruiting

9 Recruiters 9 Career fairs

10 Mass media 10 Co-op education

11 Co-op education 11 Mass media

12 Military 12 Military

To confront these problems, best-in-class companies are focusing on:

o Yield analysis – to determine the sources providing the highest percentage of qualified candidates per dollar spent

o Quality control – to better identify and filter candidate leads o Process improvement – to create less friction, more transparency,

and better communication for the candidate throughout the application and selection process

o More and better public information – concerning job openings, benefits, career tracks and corporate culture

o Candidate communities – pools of pre-screened, pre-disposed applicants

o Magnetic branding – to create experiences that pull desirable candidates into and through the recruiting funnel

o Integrated systems – that optimize both internal and external recruiting channels.

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Figure 42

0% 20% 40% 60% 80% 100%

Military

Cooperative education …

Mass media advertising

Outsourced recruiters

Temp to perm programs

College recruiting (on‐site)

Staffing services

Career fairs

Business, trade or prof. assn. …

Niche or regional job boards

Large job boards

Employee referrals

Recruiting Strategies Used Past 12 Months

Suppliers Employers

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Chapter 9|Pages 81-83

COST Trend Negligible changes from 2008 Variation Significant (>50%) variations by company size,

number of hires, and percent of recruiting outsourced

Four issues surface most frequently in our conversations with clients:

o Using cost by itself as a measure of staffing efficiency

o Using cost per hire to compare the results of different recruiting channels

o Using partial costing instead of total costing

o Justifying their costs against a benchmark

Important Notes on Costs For those clients who have used our cost statistics in the past, 2008 RCRs, which averaged 10.6% for all 710 respondents providing sufficient data, are lower than the average of 14.9% in our 2007 report. We attribute this to the fact that the improved survey sampling procedure of 2008 resulted in larger numbers of high-volume recruiting departments participating in the study. A contributing factor was the redefinition of some industry sectors for the purpose of better comparability with U.S. Census and other statistical services. A statistical comparison of the rank ordering of RCRs by industry sectors for 2008 and 2007 showed, with the exception of three segments, a high degree of similarity. This solidifies our conclusion that the observed differences resulted from the 2008 database containing a higher and more accurate proportion of organizations with large recruiting volumes than had been the case in prior studies. Statistical comparisons between 2008 and 2009 data show very small overall differences in recruiting cost ratio (RCR), a mere .2%. This year’s overall numbers are therefore identical to last year’s for practical benchmarking purposes. Variation by company size, number of hires and percent of recruiting outsourced are, as we explain, much more significant.

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Figure 69

Figure 70

0%5%10%15%20%25%30%35%

Hiring Volume Past Year

Total Employer Supplier

0%5%10%15%20%25%30%35%40%45%

Hiring Volume Past YearCompany Size

<50 50‐999 1,000+

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Figure 71

Change in Compensation Past Year

0%5%10%15%20%25%30%35%40%45%50%

Figure 72

100.27100.51

98.74

97.5098.00

98.50

99.0099.50

100.00

100.50

101.00

Total Employer Supplier

Indexed Mean

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