Recruitment is a strategic process that involves attracting, evaluating, and hiring top talent to drive organizational success. Understanding the recruitment funnel, its stages, and key metrics is essential for optimizing the hiring process and ensuring the right candidates are selected for the job.
Let’s delve into the intricacies of the recruitment funnel structure and explore the key metrics that drive recruitment success.
What is a Recruitment Funnel?
The recruiting funnel is a concept for creating an endless pipeline of candidates to find the right people for the right position at your company. The funnel process includes attracting, evaluating, and hiring talented employees. It covers the entire talent acquisition journey, starting from when a job description is posted to the moment a candidate signs an offer letter.
The Recruitment Funnel Structure
In an increasingly tight talent market where unemployment is around 4%, having an effective recruitment plan with HR management KPIs is more important than ever.
The recruitment funnel serves as a visual roadmap, outlining the stages candidates navigate during the hiring process. It enables organizations to comprehend and enhance their talent acquisition strategies. Here are the basic 5 steps in the recruitment funnel.
- Awareness
- Consideration
- Interview
- Offer
- Hire
Each step involves establishing relationships and networks to identify and secure the best-fit candidates.
Stage #1: Awareness
In the awareness stage, potential candidates first learn about your company and its employer brand. At this stage, the goal is to create brand awareness among potential candidates. They need to know your company exists and understand its values.
- Examples:
- Attending career fairs, hosting employer branding events, and promoting job openings on social media platforms.
- Employer Branding: Showcase your company culture, mission, and unique selling points. Highlight what makes your organization an attractive place to work.
- Social Media Presence: Regularly share engaging content on platforms like LinkedIn, Twitter, and Instagram. Post employee testimonials, behind-the-scenes glimpses, and job openings.
- What Employers/HR Should Do:
- Focus on building a strong employer brand to attract top talent. This can be achieved through showcasing company culture, values, and employee testimonials.
- Audit Your Employer Brand: Understand how your company is perceived by candidates.
- Leverage Social Media: Use platforms strategically to reach a wider audience.
Stage #2: Consideration
In this stage, candidates actively consider your company as a potential employer. They assess factors such as workplace culture benefits, explore job opportunities, and evaluate fit.
- Examples:
- Job Postings: Clear, compelling job descriptions attract candidates. Providing detailed job descriptions, offering competitive salaries, and highlighting unique company perks are examples of activities in this stage.
- Employee Referrals: Encourage current employees to refer qualified candidates.
- What Employers/HR Should Do: Employers and HR should ensure job ads are optimized for relevant keywords, post openings on job boards frequented by their target audience, and actively engage with candidates through personalized communication. Emphasizing the company’s values and mission can also attract candidates who align with the organization’s culture.
Stage #3: Interest
During the Interest stage, prospective candidates show a sincere interest in your company. They may start following your social media accounts, engaging with your content, and actively seeking more details about your organization. Candidates express a genuine interest in specific roles and start exploring job boards, researching your company, and imagining themselves working there.
- Examples:
- Engaged Job Descriptions: Provide detailed information about the role, team, and impact: engaging job descriptions and interactive career pages on the company website.
- Job Board Utilization: Post openings on relevant job boards.
- What Employers/HR Should Do:
- Optimize Job Listings: Make them compelling and informative.
- Monitor Job Boards: Ensure visibility where potential candidates search.
Stage #4: Application
The Application stage is where potential candidates formally apply for specific positions within your organization. They submit resumes and cover letters. This is a critical step where candidates showcase their qualifications and interest in the position.
- Examples:
- Online Applications: Candidates – submit resumes, cover letters, and complete application forms through your company website or job portals.
- Resume Submissions: Review submitted resumes.
- What Employers/HR Should Do:
- Streamline Application Process: Make it user-friendly and efficient.
- Review Applications Promptly: Show responsiveness. Utilizing applicant tracking systems (ATS) can help automate data capture and acknowledgment of applications, providing a seamless experience for candidates.
Stage #5: Select
The selection stage involves evaluating and selecting candidates based on their qualifications, skills, and fit for the role. The funnel narrows down to qualified applicants. This stage typically includes interviews, assessments, and reference checks.
- Examples: During the initial stage, one of the key activities is to conduct interviews, skills assessments, and reference checks to assess fit.
- What Employers/HR Should Do:
- Structured Interviews: Employers and HR professionals should ensure a structured and fair selection process. Use consistent questions.
- Assess Cultural Fit: Beyond skills, consider alignment with company values.
Stage #6: Hire
The Hire stage marks the final step in the recruitment funnel, where the best candidate is offered the position and officially joins the organization.
- Examples:
- Offer Letters: Extending a job offer, formalizing employment terms.
- Onboarding: Introduce new hires to the company.
- What Employers/HR Should Do: Employers and HR should focus on providing a positive onboarding experience for new hires to ensure a smooth organizational transition. Clear communication regarding job expectations, company policies, and support during the initial period can help new employees feel welcomed and valued.
Key Metrics of Recruitment Funnel
To measure the effectiveness of your recruitment process, it is essential to track key metrics that provide insights into different stages of the funnel. Here are the top 10 metrics to monitor:
1. Source of Hire
Track the sources of your top performers, such as job boards, social media, referrals, and recruitment agencies. Knowing where they come from can help you allocate resources effectively. Use the “source of hire” data to focus on the channels that bring in the best talent and drop the ones that don’t.
2. Cost per Hire
Calculating the cost incurred to hire a new employee helps optimize recruitment budgets and identify cost-effective sourcing channels. To compute your recruitment cost per hire, divide the total cost by the number of hires made in a year while considering internal and external costs.
- Internal costs: Salaries for recruiters, costs for interviewing, employee referral expenses.
- External costs: Technology costs, advertising costs on job boards/newspapers, headhunter agency fees…
The top three factors affecting cost per hire are industry, company size, and the required expertise level. According to Zippia, for non-executive positions, the average price per hire is around $5,000.
3. Time to Hire
Measuring the time taken to fill a position from the job opening to candidate acceptance provides insights into recruitment efficiency and helps in reducing time-to-fill gaps. According to Glassdoor’s research, the typical time to hire is anywhere between 10 and 60 days. That’s not a great indicator. A slow hiring process loses good candidates. So, by tracking the time it takes to hire, your team can gauge operational efficiency.
4. Quality of Hire
Assessing the performance and impact of new hires on business outcomes helps in determining the effectiveness of the recruitment process. The quality of hire can be calculated in numerous ways depending on the criteria prioritized.
For a salesperson, their success may be measured by the number of deals closed or performance reviews. For a developer, their success may be measured by the number of apps scanned per month in order to identify errors.
Managers assess employees annually. Companies have diverse ways of evaluating recruitment metrics, but tracking the quality of hires is crucial. LinkedIn research shows that 88% of organizations find it a useful metric. Firms usually consider sales quota, retention, manager satisfaction, and other relevant factors.
5. Time to Fill
Tracking the time it takes to fill a position from the moment it becomes open to the candidate’s start date helps identify bottlenecks and streamline the hiring process.
Time to fill and time to hire are two recruitment funnel metrics that are often confused with each other. Time to hire measures the time taken for a candidate to apply for a job and accept the job offer. On the other hand, time to fill measures the time taken to fill an open position, starting from the day the job is posted.
6. Candidate Experience
Evaluating candidates’ satisfaction with the recruitment process can enhance employer branding and attract top talent by providing a positive candidate experience.
Monitor candidate experience to avoid losing out on top talent. According to CareerBuilder, 68% of candidates believe that the recruitment process reflects how they will be treated as employees. By tracking candidate experience, you can identify areas of strength and areas for improvement in your recruitment process.
We recommend using quick polls and surveys to gather candidate experience feedback, treating it like customer satisfaction.
- How would you rate the entire process?
- Which part of the procedure did you love most?
- Which element of the process did you not like the most?
- How pleased were you with the duration of the process?
To score most of the questions, you can use a numerical scale. Once you have scored all the questions, you can calculate the average score of each question. This will give you an overall impression of the candidates. If you want to collect qualitative data, use a multiple-choice format and analyze the most frequent responses.
7. Application Completion Rate
Measuring the percentage of candidates who complete the application process provides insights into the application’s user-friendliness and identifies areas for improvement. To calculate this recruitment metric, take the number of completed application forms and divide it by the number of people who started the form. Then, multiply the result by 100. According to Recruiter.com, completion rates drop by 365% if the application process takes more than 15 minutes. To attract a wider range of talent, keep the application process simple.
8. Offer Acceptance Rate
The turnover rate shows how many employees leave your organization at a certain time. It helps you find and fix retention problems and improve employee engagement. By using these key numbers, employers can make better decisions to improve their recruitment funnel and get and keep the best talent.
9. Turnover Rate
The turnover rate shows how many employees leave your organization at a certain time. It helps you find and fix retention problems and improve employee engagement. By using these key numbers, employers can make better decisions to improve their recruitment funnel and get and keep the best talent.
High turnover rates indicate poor hiring practices. If a quarter of new hires leave quickly, it’s likely due to unclear job roles and expectations. Studies show that replacing an employee costs 6 to 9 months of their salary on average. To calculate your company’s turnover rate, divide the number of employees who left your organization during a specific period by the average number of employees you had during that period, then multiply by 100.
FAQs about Recruiting Funnel
SMBs face recruitment challenges that affect how they attract, select, and retain top talent. Here are some FAQs about optimizing the recruiting funnel for SMBs.
1. Considering the dynamic nature of social media, how can SMBs consistently and effectively use these platforms to source and engage potential candidates?
To leverage social media effectively, SMBs should maintain an active presence, share engaging content related to company culture and job opportunities, interact with followers, and utilize targeted advertising to reach specific talent pools.
2. Considering the importance of online reviews, how can SMBs manage and showcase positive testimonials to influence candidates during the consideration stage?
SMBs can manage and showcase positive testimonials by encouraging satisfied employees to leave reviews on platforms like Glassdoor and LinkedIn, highlighting these testimonials on the company website and social media, and incorporating them into recruitment marketing materials.
3. How can SMBs ensure a fair and inclusive selection process, mainly when dealing with a limited pool of applicants?
To ensure a fair and inclusive selection process, SMBs can implement strategies such as using structured interview processes with standardized questions, providing unconscious bias training to hiring managers, setting diversity goals for candidate pools, and utilizing blind resume screening techniques to focus on qualifications rather than personal characteristics.
4. Considering the impact of turnover on small teams, what retention strategies can SMBs implement to ensure long-term employee satisfaction and loyalty?
SMBs need retention strategies to keep their workforce stable and engaged. These strategies include competitive compensation and benefits, career development opportunities, a positive company culture, work-life balance, and regular feedback sessions to address employee concerns and improve satisfaction.
Hire better with Boulo.
To effectively harness and navigate the recruitment funnel, understanding its six stages and monitoring key metrics is essential.
By focusing on these elements, organizations can refine their recruitment strategies, improve candidate engagement, and achieve a competitive edge in talent acquisition.
Besides, for additional support and guidance, consider posting a job on Boulo. Boulo streamlines the hiring process and helps you find talent that aligns with your organizational goals, fostering growth and success.
