Business Advice: Tara Ricks on measuring performance

Key performance indicators – to measure, or not to measure?

The term ‘KPI’ can often elicit a sharp intake of breath, conjuring up visions of a micromanaged environment with rather a lot more stick than carrot. I’m confident in saying that most of us will have interviewed potential consultants in our time whose first or final question was ‘Do you have KPIs? I won’t work in a company that has KPIs’. This view, I believe, is damaging and unfair to a business focus that promotes visibility and allows for the celebration of successes.

In the debate about the virtues, or not, of employing KPIs in the business, we can muddy the waters and sometimes forget they are merely, but very importantly, the quantifiable measure of a specific objective, over time. Failure to communicate this with clarity can mean you miss out on the opportunity to keep your team focused on trackable key targets – targets that will ensure the best possible impact on your strategic plans. As Peter Drucker famously said – and he is credited with inventing much of modern business management – ‘If you can’t measure something you can’t improve it’.

As with many other areas in management, being able to clearly communicate the ‘why’ is paramount:

  • Are the activities key?
  • Is the performance linked to your company’s purpose?
  • Is the indicator measurable, and is it data you can report on?

Picking the right KPIs for your business is a bespoke approach: pick the activities that best suit the key strategic initiatives you are focusing on that month or quarter. Start with the main areas that, with improvement, will deliver value and growth, for example:

  • Client meetings
  • Jobs registered
  • First interviews
  • Candidate registrations
  • CVs sent

As these KPIs become embedded in the business, you can start to look at conversion rates throughout the recruitment ‘funnel’ and identify your own unique company model, whether that be at company, team or desk level. Setting expectations at the conversion level will allow your teams to understand what looks good and what is improving. For example:

  • Job fill rates – the data will inform you how many roles it takes to make a placement, and if your perm fill rate is 25%, what key actions need to be taken to move that up to 30%+
  • Client engagement – measure how successful the business is at filling all roles from any specific client
  • Candidate utilisation – in a hugely candidate-driven market this is key, so it is vital to measure and understand what service and commitment to candidates each team is delivering – is this proactive, or just reactive?
  • Can you calculate, and communicate, the £ value of a client meeting? Or a second interview? Use these numbers to drive activity.

For managers and team leaders, GP [gross profit] and profitability per head are important KPIs that should be visible (the ‘per head’ concept can be a little opaque) – understanding productivity and how that is improving.

The move from a process-focused approach and conversation to a more outcome-driven one makes the manager’s job much more interesting. Each business review conversation should be output-focused in an adult and productive style. When managers adopt an outcome-led style of communication, they are in a stronger position to create a work environment of trust and transparency. 

The ATS and CRM systems in our market have advanced hugely, and these advances have been more rapidly and effectively embraced during and post-pandemic than ever before. They make it significantly easier to measure and report on successes – and challenges, to a desk level.

Acknowledging and celebrating successes at all stages of the recruitment process will also play to retention in the business (not to be underestimated in today’s market!). Let people clearly see and understand that not only are they doing a great job, but they are also consistently improving.

Tara Ricks is co-chair and COO of Elite Leaders and a winner of Recruiter’s Impact Award.

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