As agency recruiters, we all encounter KPIs in some shape or form throughout our daily professional lives. Agency culture is often driven, and sometimes even defined, by the extent to which it’s considered to be a ‘KPI focused’ environment.
KPIs are Key Performance Indicators. A quantifiable measurement of actions undertaken by a recruiter on a daily, weekly or monthly basis. They are designed to measure and evaluate a recruiter’s activity, performance and success.
Deploying a KPI-driven strategy works well with some recruiters. It helps them stay structured throughout the day, making sure they’re completing the right level of activity that will lead to success in that specific model. Other recruiters associate the acronym with negative connotations. Some recruiters don’t work well following one specific set of targets and would prefer to conduct the activities autonomously that they feel will lead to more revenue.
In recent years, the small to mid-sized agencies – especially startups – have moved towards a culture that is more focused on revenue generation over other intricate measures such as phone hours, but can a recruiter really be successful with zero KPIs?
Common KPI measurements
KPI measurements can vary depending on what the firm wants to measure, but these are the common ones. Our focus here is on permanent contingent recruitment.
- Phone calls – the total number of outbound calls a recruiter makes
- Candidate interviews – how many candidates a recruiter meets
- CVs sent – a measurement of the number of CVs sent out to clients
- First interviews – the number of first interviews conducted between a candidate and a client
- Subsequent interviews – second and subsequent interviews between a candidate and a client
- Placements – the number of physical placements made over a period of time
There are others, such as time spent on the phone, but from my experience these are the ones employed by the majority of contingent recruitment firms. This is the case for Hong Kong & Singapore, but equally applicable to New York or Sydney.
What circumstances are likely to lead to a greater emphasis on management by KPIs?
The question is: can recruiters achieve success without having KPIs?
I thought it would be a useful exercise to explore which environments see the highest focus on KPIs.
The recruitment model
The most common one. Some firms are simply KPI-orientated. Robertson Smart was overtly KPI focused. I am sure there are those out there that remember PCX and CPE?
In my recent article about what distinguishes a top biller from the herd, I reflected on the fact that we used to hire recruiters directly from industry, hence they had no prior recruitment experience.
We employed KPIs vigorously as it was a way of keeping the inductees on track. The methodology was totally alien to, say, a trader or a lawyer, hence we used KPIs to maintain adherence and control.
If a global recruitment firm had a strategy of hiring entry-level graduates to train up or if a firm has a vigorous training program then you would expect a similar approach.
The more experienced a team is, the less the reliance on KPIs. There are of course exceptions to this. The actions measured by KPIs also do not go away but the adherence to activity and quality levels simply becomes second nature.
Managers come in all shapes and sizes. There are managers who adopt KPIs as the core method by which they manage a team.
I began my career that way. My early mentors drilled KPIs into me to the point it ran in my veins. Over time, however, I learned that this is often a very unpopular management style and can often be very demotivational.
Managers must always use KPIs subtly and as a way to guide, mentor and train and never as a blunt instrument to bash a recruiter over the head.
I am talking figuratively, but management by KPI tends to lead to the negative connotation we talked of earlier.
How can KPIs be used positively?
Revenue is king
We adopt KPIs with a view to ensuring that recruiters conduct a level of activity that leads to end results in the form of revenue.
If a recruiter is 100% on target for a period then surely that is the most important thing? Some firms look at targets beyond revenue, even if the target has been hit.
There is an argument to say that you could have achieved greater revenue if you had achieved other non-revenue related targets, but there is also a counter argument to say if you did that, you may have affected the quality of your conversion rates and lost revenue.
My rule in this scenario became simply that revenue was the most important thing.
Carrot or stick
When a manager uses KPI data to help and guide a recruiter, it is far more positive than using bad KPI data as a stick.
The most important thing for me as a manager is to focus on the ratios, not just the numbers. If a manager tells the team that each recruiter must get 20 CVs, they will send 20 CVs out. Quality will suffer as quantity has taken over. Far more positive is to learn what percentage of CVs sent leads to a successful first interview being set up.
This is the sophisticated and far more interesting aspect of KPI measurement. However successful or experienced we become as recruiters, we will stay occasionally stray, lose focus and take our eye off the ball.
Trend analysis over time is a very useful tool for spotting this. It may be that the market is changing and you were not aware.
What if, for example, your interview to placement ratio was declining, or indeed improving. Wouldn’t you want to know?
For me, personally and managerially, my absolute most important measurement is the first interview to placement ratio. It is the ultimate measure of the quality of consultative work you produce.
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So, can recruiters be successful with zero KPIs?
Yes and no.
Trainee recruiters with subtle, positive and professional KPI management are far more likely to fully understand their art, and to be ultimately successful.
This is true also of experienced recruiters changing agency models. Over time, as the business becomes more like second nature, then an experienced recruiter will adopt the right level of activity quantity and quality.
For the most part that is true. That said, we have all managed many recruiters who do need fairly consistent motivation and discipline. I think these individuals are quite open to this.
I was talking to a great recruiter the other day, and he told me he would always opt for a tough but motivational manager. He openly said that if his manager was ‘soft’, he would not perform as well.
In my last article, one of the five top billers used to keep his own personal and meticulous KPI records, and these were independent of the ones we kept for him. I recall he even went further and measured his subsequent (second and third etc) interview to placement ratio. We discussed this and I felt that measurement had little validity. I felt that the decision to interview based on the CV coupled with the first interview to placement were the key metrics but he wanted to take it further. Though he was a top biller, he was a very detailed and numeric guy and saw the value in it.
Subtle, professional and motivational KPI management keeps us honest. This applies to the graduate recruiter on day one of their career, and equally to one of the very biggest billing recruiters I have ever worked with.
Embrace the science of recruitment KPIs would be my recommendation.
Consider an agency that adopts a different KPI model
If this article has helped you decipher that your KPI management doesn’t work for you, please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.