Staffing Essentials: How Metrics and Recruiting Forecasting Can Drive Margins

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In the staffing world, we operate in a “just in time” staffing model, whereas recruiters and agencies that support businesses in their hiring efforts are often reacting to the needs of the clients. As we increasingly focus on building relationships and working in specific verticals, we can use metrics and forecasting to grow our candidate funnels and increase our qualified candidate ratio to hire numbers. This lowers our cost per hire and increases our margins.

Balancing these while focusing on the metrics and forecasting behind these can be tricky.  Recruiting teams in staffing can use a variety of candidate attraction efforts like recruiting marketing, sourcing, traditional job board advertising, and even social media to attract the right candidates before there is an opening, which allows you to build and nurture relationships with passive candidates and increase your talent database. A strategy like this helps eliminate the constant reactive recruiting and fire drills that often happen where the focus can be on presenting the highest level of candidate quality just in time when a company is in need.

The Unique Challenges of Forecasting in Staffing

The staffing industry is particularly unique in its need to be able to forecast with flexibility built in and broken down by industry verticals with projected growth and few benchmarks to depend on. According to the American Staffing Association, more than three million temporary and contract employees work for America’s staffing companies during an average week. During the course of a year, America’s staffing companies hire more than 15 million temporary and contract employees.

  • Most (76%) work full time, comparable to the overall workforce (82%).
  • Half (49%) of staffing employees say it’s a way to get a permanent job.
  • Nine out 10 said staffing work made them more employable.
  • One-third (35%) were offered a permanent job by a client where they worked on an assignment, and two-thirds (66%) of those accepted the offers of permanent employment.

Staffing recruiting agencies employ a diverse group of workers, made up of people across numerous professions, including administrative workers, accountants, IT technicians, health care staff, marketing specialists, graphic designers, skilled tradesmen, security officers, computer programmers, writers and construction workers. Staffing firms can play a vital role in any company’s workforce planning approach, and the advantages to HR are numerous when both parties—the staffing agency and the client employer—engage in a shared strategy. It’s imperative that staffing professionals are able to lead a company in recruiting game plans and being able to provide metrics and forecasting is key to this process.

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Another challenge in forecasting is that staffing companies both provide temporary employees to businesses in need of additional help for a short period of time as well as placement of contract or contract-to-hire employees. The biggest difference, outside of recruiting strategies, is that temporary and ongoing assignment staffing provides a steady stream of revenue and contract placement typically pays in lump sum bonuses. This difference requires a delicate balance most agencies are adapting to achieve with internal forecasting.

Common Recruitment Staffing Metrics

  • Contract to Perm Ratios - This is important to measure when you are looking at staffing effectiveness and a balanced book of business. We know that staffing is a cyclical business. While permanent placements offer larger lump sums amounts, contract and temporary placements often lend to more regular client conversations which lead to more requisition opportunities.
  • Time to Fill - You are only as good as your last placement. The faster you serve up qualified candidates to present to your client, the more likely you will gain future business.
  • Ratios - Whether it is the number of interview to placement or hire, apply to placement, submissions to placement, these are important metrics that can be used to fine tune your staffing forecasting. It is important to evaluate the ratios by position type, geographic location, and/or industry.
  • Offer Acceptance Rate - The market is competitive and if you begin to notice lower offer acceptance rate percentages, you can forecast the need to have more candidates in your candidate funnel.


Increasing Margins Through Recruiting and Staffing Metrics

The metrics you’ll want to focus on in both situations would be based on the services you offer, such as screening candidates, providing job descriptions and guidance, handling payroll, monitoring job performance, and sourcing contract placements to offer the best candidates from a wide pool of candidates. Your time to hire, time to fill, quality of hire, performance metrics, and placement rate are all going to be the KPIs that can keep your margins high. Depending on your staffing organization type, you also might consider traditional sales metrics like call time and number of calls per day to help forecast and understand your candidate to offer rates and client prospecting ratios.

In order to retain your clients, it’s imperative to proactively set benchmarks and reporting so companies understand the value you add as a staffing firm - from screening to performance management.

Topics: Staffing Essentials

Updated December 21, 2018