Understanding the Lag and Lead Metrics of Recruiting

Strategic recruiting is much more like sales than traditional recruiting. Correspondingly, how recruiting results are best analyzed is similar to how sales and marketing metrics are analyzed. Recruiting metrics can be broken down into two broad categories: lag and lead metrics.

Lag vs. Lead Metrics

Lag metrics are output oriented. They’re great for analyzing how your bottom line is doing, but they analyze history. For example, a lag metric in sales would be what your total sales revenue was in a given month. Because lag metrics look at past results and thus study the success of past strategies, they’re all looking at where you’re coming from.

Lead metrics are input oriented. For example, a lead metric in sales would be number of introductory sales calls made per day. Lead metrics study what your strategies are and how you’re executing them. They look at the present and help you plan your future, but they don’t measure the results of your strategies, since the correlating results are yet to be realized.

Traditionally, lag metrics have been the main type of metrics analyzed in human resources, including recruiting. But times are changing. “Lead indicators will become very important” says Richard Todd, regional HR director at Hilton Australia. “Metrics like the back-up talent ratios, qualified applicants, performance reviews, training... will need to play a much stronger role moving forward."

So which recruiting key performance indicators fall into each category? If you’re familiar with the recruiting funnel, it’s helpful to sort key performance indicators to different steps in the funnel. Key performance indicators associated with the bottom of the funnel are lag metrics and key performance indicators further up the recruiting funnel are lead metrics.

At the very top of the recruiting funnel is sourcing. That includes everything around attracting candidates, gathering contact information, driving job applications, etc. Some of the key performance indicators to consider here are how much traffic career sites are getting, how long visitors are staying on the sites, how social media followings are growing over time, and how many net new candidates are entering the job application system, among others.

These indicators are important for analyzing what you’re currently doing and how good you are at doing it, but they don’t tell you how those efforts will convert into new hires. They are lead metrics.

At the very bottom of the funnel is hiring. This is includes how many total offers are extended to applicants and how many offers are accepted. These metrics tell you how successful your recruiting process is at converting candidates into hires, but it doesn’t tell you what along the way is working for you. These are lag metrics.

Given the high cost of employee turnover, retention can potentially be considered another step in the recruiting funnel, just below hiring. “If you’re losing people, particularly high performers, you must find out why and quick,” says James Kemper, president of W. H. Meanor & Associates. Employee churn rate is a lag indicator, because that value is a response to past strategy, but should be analyzed in combination with lead indicators from HR.

Lead and lag indicators work together to give you a more comprehensive evaluation of your recruiting strategy’s performance. “A lead indicator is a measure that suggests how another measure, the lag measure, might behave in the future” says Stacey Barr, performance measurement specialist. The key to understanding your results, based on the strategies you implement, is using a healthy balance of lead and lag indicators in your analysis. Lag indicators allow you to identify the effect and lead indicators allow you to narrow in on the cause.

Liked this? Read the full article on the Happie blog!

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