In the mid-2000s, a key metric for customer service reps at Dell Computers was “handle time,” or the amount of time they would spend on the phone with a customer. The concept was it would encourage customer service reps to handle problems quickly.

What happened, though, was that it incentivized customer service reps to transfer customers with complex problems to someone else. What was happening was that their personal “handle time” was low, and they graded out well, but the actual amount of time customers spent on the phone went up, as customers wasted hours getting transferred from person to person.

In 2007, Dell hired Dick Hunter – its former head of manufacturing – out of retirement, and he promptly made the chief metric for customer service reps the total amount of time a customer spends on the phone; not the amount of time they spend on the phone with a particular rep. Almost overnight, Dell consumers said customer service at the company improved dramatically.

Why am I telling you this story? Because it shows that what you measure really, really matters.

That lesson certainly applies to recruiters – as any company’s most-critical process is hiring – as well. So the question is, then: what should be your recruiters’ key metrics? And how should you measure it?

The Best KPIs For Recruiters

The overall goal of hiring should be to improve quality-of-hire. From an ROI-perspective, cost-to-hire and time-to-hire, for example, pale in comparison to quality-of-hire (although they might have a relationship with each other).

That said, recruiters themselves aren’t fully responsible for quality-of-hire. Recruiters are responsible for delivering what hiring managers want in their candidates. If recruiters are consistently delivering what hiring managers want, and yet the hires aren’t working out, it falls onto the shoulders of the hiring managers; not the recruiters.

So with all that said, what are the best KPIs for recruiters? Well, there are two:

Percentage of Referrals Who Take A Job

This should be the number one metric for recruiters. If a high percentage of a recruiter’s referrals ultimately wind up getting hired, it means the recruiter is giving hiring managers what they want.

If this percentage is low, there are three likely scenarios:

1. Problem: The recruiter is referring the wrong people.

Solution: The recruiter needs to communicate better with hiring managers. However, if one hiring manager is consistently not hiring recruiters’ referrals, perhaps that hiring manager needs to communicate better with recruiters.

Not-So-Obvious Concern: The percentage of candidates who get hired is a good metric, but it might be the result of hiring managers feeling as if they have to “settle” on applicants. Business leaders should also conduct anonymous surveys periodically with hiring managers to see their overall satisfaction with recruiters’ referrals.

2. Problem: The offer-to-acceptance rate is low. In other words, the referrals are strong and the candidates are getting job offers, but they aren’t accepting them.

Solution: The recruiters are doing a poor job of vetting candidates. Yes, you want great people, but you also want people who will actually take the job. If recruiters are not vetting candidates for salary requirements, for example, they are wasting everyone’s time by passing people on who will never take the job.

Not-So-Obvious Concern: This could also be a direct result of time-to-hire. If a recruiter’s hiring process is slow, it could mean that great candidates are getting jobs elsewhere before an offer is ever made.

3. Problem: The recruiter is passing along way too many candidates.

Solution: A recruiter’s job is to vet down an applicant pool to just the best candidates. If too many candidates are getting passed along, it means recruiters aren’t narrowing the pool down far enough and ultimately are making more work for hiring managers.

Not-So-Obvious Concern: Some hiring managers might want more applicants than others. Again, periodic anonymous surveys of hiring managers regarding their satisfaction with the hiring process can provide useful insights into this.

Overall Candidate Experience

Some cynics will question why this is worth measuring. And that’s reflected in a lot of companies’ hiring processes, as they seem to forget that job applicants are, well, humans.

However, a great candidate experience has two major benefits: it improves applicant pools over time and it can actually work as a form of marketing for the company. In fact, a CareerBuilder survey found that the better recruiters treat applicants during the hiring process, the more likely those applicants will become a customer of that company and the more people will apply for that company (after all, word spreads fast on the Internet).

The best way to measure candidate experience? Ask the candidates (and not the ones who got the job).

Sure, many will be bitter because they didn’t get hired. But most will be reliable indicators of how candidate-friendly the process is (a great example of a company that does this is Capital One).

The CareerBuilder survey found that all candidates expect is some basic courtesy, like some transparency on where they stand in the process and an email notifying them if they are no longer being considered. Unfortunately, the survey found that few companies even do that.

Summary

That’s it, those are the two main metrics to measure for recruiters: the percentage of the referrals they send over that are actually getting hired and how well recruiters are treating those candidates. If both of those metrics are strong, they are doing their job.

From there, if a lot of hires aren’t working out, it is probably time to look at the hiring managers themselves.