Three Critical Metrics for any Staffing Company

For staffing organizations the objectives are typically pretty clear, grow revenue and profit. Some more mature staffing organiations also focus on goals such as candidate & customer experience, but of course with the intention of growing the business.  So, it remains pretty simple and straight forward.

The challeng is when a staffing company wants to improve productivity and starts to grow to a point where they need to scale processes.  This is typically where staffing companies start to see a slow in growth.  This is where it starts to get a bit more complicated and companies need to take a deeper look at what they are measuring and the metrics they are building.  It is critical to point out that OUTPUT metrics such as fill ratio and time to fill are not as useful as INPUT metrics such as speed to first submit, daily or weekly submittals and/or interviews.  The input metrics are those measurements which can be associated to an activity which can be measured.  This will be the topic of an upcoming post, so for now, I will focus on the simple metric areas any staffing company should be focusing on. 

These three categories are QUALITY, SPEED and COST.

QUALITY Metrics

Quality metrics are those metrics which focus on the quality of a variety of input measurements, such as the quality of a submittal, a candidate or the quality of requisition. A few simple measurements which can be weekly or even daily is the conversion of a submittal into an interview.  This typically is focused on the quality of what was submitted to the hiring manager.  The quality of the candidate is the interview to offer or start ratio.  The two vary vary, because the submit to interview is focused on the quality of what is presented and the interview to offer or start focuses on how good the actual candidate was.

SPEED Metrics

Speed metrics are those metrics which measures the speed of any two process points, such as speed to submit, to speed to start. This metrics is the one which I tend to see is measured least by staffing companies.  Or they typically just look at the speed of the end to end process, if they measure speed at all.  Speed metrics are powerful to understand how to accelerate performance if speed is an important item for clients.  We typically see speed is an issue in competitive VMS clients.  In some cases, the staffing vendor must submit a candidate within 6 hours to increase they likelihood of an interview or a fill.  Several speed metrics include; speed to first submit, or speed to interview.  

COST Metrics

These are metrics associated to costs and/or gross margin (GP) performance.  I group GP performance into category to keep it simple. The most common metric we see in staffing companies, is the GP per sales and/or recruiter.  Most have a company and office view, but few have an individual GP performance view.  Typically leadership is more interested in cost metrics such as the cost to source and hire candidates.  Whereas the individual performer is more interested in individual GP performance metrics because they are aligned to compensation plans.  The bill rate is also a powerful metric to measure, especially when you know what are the ideal rates which drive the best submit to interview and interview to fill rates. A final very effective cost metric to drive performance is the return on investment (ROI) metrics.  Which is calculated as the total cost of the recruiter including bonus divided by the GP created by the individual performer.  This is a great way to see who is profitable and who is not.  It is also powerful to see which clients and business units are profitable. 

In summary, a simple way to measure performance is to focus on a few metrics which are centered around what clients want, QUALITY, SPEED and COST. Focus recruiters on delivering the highest quality candidate, in the fastest time period at the ideal rate.  Keeping it simple is a powerful way to get everyone focused on what is important to grow your business.