How to Use KPIs to Improve Your Recruiting Process in Logistics
By Jessica Miller-Merrell ● June 22, 2021 at 10:54 AM
For logistics & fulfillment companies, social distancing, health concerns, and other pandemic-related challenges made finding qualified candidates to fill increased demand incredibly difficult – especially as shutdowns of warehouses and manufacturing plants were happening at the same time. At the height of the pandemic, depending on where a company fell on the supply chain, from manufacturing to delivery, many facilities found themselves trying to control the impact of the shutdown while keeping minimal operations running safely. Warehouse operators struggled with increased customer demand that strongly impacted the supply chain. Manufacturing interruptions, lack of components, and labor shortages created an ongoing supply chain disruption, so hiring was relegated to crisis number two for companies – many of which relied on contract employees to meet demand – as they focused on employee and customer safety and meeting the increased demand for goods.
The biggest challenge in this sector is finding qualified talent, from truck drivers to forklift operators and beyond. Recruiting candidates with a Class A CDL (commercial driver’s license) could be like finding a needle in a haystack prior to the pandemic, and it hasn’t gotten easier. Experience and required safety certifications have been supplemented by on-the-job and safety training for candidates with less experience in logistics jobs.
In order for recruiting teams to hire such a wide range of skilled and unskilled workers at a high volume, it’s crucial that we speed up our entire hiring lifecycle, from outreach to application to offer to hire to onboarding. Recruiting metrics give us some insight into how well we’re doing, but using key performance indicators (KPIs) can help you zoom in on very specific pieces of your hiring lifecycle, set goals, and remove obstacles so that you don’t lose out on qualified candidates.
Recruiting Metrics vs. KPIs
We’ve talked a lot about recruiting metrics, but it’s important to understand the difference between your recruiting metrics and KPIs, or key performance indicators. Recruiting metrics track the status of a specific business process, like source of hire, cost per hire, and so on. KPIs are specific metrics that help you measure the effectiveness of your hiring processes and give you insight into how close you are to achieving your recruiting goals. To look at it another way: Recruiting metrics exist whether you look at them or not. KPIs are measurable values set by you and your team, or by company leadership. Metrics track processes and KPIs track whether or not you meet business objectives.
The sheer volume of HR data and recruiting metrics can be overwhelming. In order to understand what efforts are working, what areas need improvement, and how recruitment efforts impact other parts of your human capital management strategy, KPIs can give you more targeted information from your recruiting metrics that measure improvement over time and industry benchmarking.
While many recruiting industry experts use the terms “metrics” and “KPIs” interchangeably, there are notable differences between the two. While the data for your key performance indicators is taken from your recruiting metrics, KPIs have distinct traits.
KPIs must be:
- Related to specific company goals
- Tied into high-level business objectives
- Uncomplicated (single figures, ratios or percentages)
- SMART (specific, measurable, achievable, relevant, and timely)
- Based on performance
Choosing which KPIs to measure depends on your company’s goals. Because recruiting is a significant operating expense, you could select KPIs that show how your recruitment efforts are saving money, improving efficiency, and reflect a positive ROI. If your company is focused on a business objective specific to hiring at high volume in a tight talent marketplace like logistics, use KPIs that show where you’re tightening up your recruiting funnel, speeding time to hire, and closing time to fill gaps.
Logistics Recruiting Metrics to KPIs Use Case
In logistics and distribution, there are some essential metrics that you’re likely already tracking. Let’s say that your recruiting metrics dashboard gives you data on the following recruiting metrics:
- Time to hire
- Time to fill
- Source of hire
- Quality of hire
- Interview per hire
- Offer acceptance rate
- Cost per hire
- Candidate conversion rate
- Cost of vacancy (COV)
These are solid recruiting metrics for the logistics industry, as they all focus on speed or cost. In order to break these down into KPIs, we’ll take a look at the top two on the list: Time to fill and time to hire.
Time to fill is the number of days between posting a job and getting an offer accepted for that role. If this metric has gradually increased over time, it can indicate that your sourcing efforts are lacking, that something isn’t working with your job description and posting (or where you’re posting it), or that the talent marketplace has become significantly more challenging.
Note that this metric is a broad snapshot of how long the process is taking based on internal and external factors, while time to hire tells you how quickly you and your team move once you find the right candidate. Time to fill is important for reporting to company stakeholders so they have a realistic expectation of how long it really takes to fill a position and can therefore adjust business planning for company growth.
Both can indicate where your recruiting team is making process improvements, but in order to accurately analyze and reassess your time to fill KPIs, it helps to break the time to fill metric down into segments, such as:
- Time to advertise an open position on all channels
- Time to select acceptable candidates
- Time to complete all interviews
- Time to complete background checks (if needed)
- Time to create and extend offers
- Time for candidates to accept offers
Setting KPIs for each segment gives you data that is less broad than “time to fill” and each of the segments on the list tie into your hiring lifecycle. The simplest way to set KPI objectives is to benchmark based on where you stand now, where you stood one month (two months, three months) ago, and the expectation for time on each moving forward.
Once you begin measuring these specific KPIs, you’ll have a clear picture of where you can improve your recruiting processes. If you’re falling short on time to complete interviews, is scheduling holding you up? Can you move to video interviews? If time to complete background checks is lagging, can you work with a third-party vendor specializing in CDL license and driving records? It also allows you to deliver very simple and very specific data points to your executive team who can give you and your team more autonomy to make hiring decisions, to build a case for a larger recruiting budget, or reset hiring manager expectations around hiring experienced workers versus training entry-level candidates.
Updated June 22, 2021