Transform your Staffing Agency or Recruiting Agency by focusing on these Performance Indicators
Staffing firms manage their operations in myriad ways using creative indicators. Many of these indicators are useful, but take a lot of effort to measure, track, review and improve on a continuous basis. One needs to choose what’s relevant to the business, and act on what makes the most impact. Despite the variety of staffing firms in various verticals or type of contract, four indicators stand out, irrespective of type of firm. These indicators when measured, tracked and improved, clearly transform the company’s overall position in terms of market share, customer satisfaction and profitability. They are
The same rates can be used at the team level or at the individual recruiter level, and can effectively be used to review performance and take reward and responsibility decisions.
Fill rate is a powerful indicator since it does the double duty of checking how satisfied the client is, as well as the effectiveness of the recruiter in servicing the client. It indicates the commitment of the staffing firm to put the customers need first irrespective of profitability or priority level. Fill rates can be measured in terms of percentage of fulfilment or time to fulfilment
Fill rate = Number successfully fulfilled/ Number of Job Openings * 100
Fill rate (time to fulfil) = Average time taken to fill an opening
Clients retain and give more businesses to staffing firms that concentrate on filling their needs in shorter timeframes. The more effective one is at filling jobs, the more productive an organization is.
Conversion (Hit Rate) indicates how smartly the firm works. It is measured as
Conversion (Hit Rate) = Number Successfully Placed / Number of candidates submitted * 100
For more conservative measurements one can define the denominator more tightly as
Conversion (Hit Rate) = Number of candidates submitted/ Number Joined * 100
The number of candidates submitted is a good indication of the effort put in towards the filling of the candidate. It could be work done earlier in terms of sourcing candidates and tagging them effectively for search, or it could the effort put in after firming up the opening to find the right candidate. The measure hence is a powerful indicator of how effective and smartly this work was done. The effectiveness of the recruiter, the tools used for matching the method of sourcing all come into scrutiny once this figure is determined. As competition intensifies this is the figure to watch to keep your firm ahead
Opportunity Volume measures the health of the sales/ account management pipeline. All firms need a healthy pipeline of new business for continuous growth. Opportunities in the pipeline as associated with a probability and a value to determine the quantum
Opportunity Volume = Value of Opportunities * Probability
The importance of the accuracy of probability and a shared understanding of its meaning across the sales/ customer acquisition team is crucial to make this indicator perform the job of transformation
Gross margin is a well understood financial term and is common to all businesses. As always, its highly relevant because it is the best indicator of the long term financial health of the services provided. One could have excellent revenues, fill and conversion rates and a healthy pipeline of new jobs, but if one is spending too much for the same it loses that effectiveness.
There could be more indicators, but it is better to have a culture within an organization where everyone knows a few indicators and work together to improve them. Measuring, reporting, correcting, reviewing and improving them are a periodic activity that when done effectively positively aligns work, transforms not just the numbers but the culture of the organization positively in visible forms. In short, measure a few things but measure it well.
The use of software that measures these indicators well and automatically is a big plus. One saves the time in obtaining and tracking them because the software does it automatically in the normal process of work. Software like www.StaffingDigitized.com provide automated and user enjoyable processes for opportunity management, applicant tracking and billing, and while doing so also calculate these measures automatically. These figures are available at individual, team and company level and hence measurement, correction and improvement can happen instantaneously and continuously. Products that are available on the cloud have the added advantage of continuous improvements, far lower IT costs to keep the system running, only recurring costs and ability to switch provider at any time if one is not happy.