The Most Important Key Performance Indicators (KPI’s) to Evaluate Your Staffing Agency’s Efficiency

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MARCH 10, 2023

KPIs are measurable values that allow businesses to track progress and success in accomplishing their goals. Key performance indicators (KPIs) are invaluable tools for a company’s contingent workforce program to measure their staffing agencies’ accountability and performance. Denken Solutions, having been in the industry for over a decade, has identified the most important KPIs that its clients look at to determine their effectiveness. By having established a structured process for reviewing these recruiting metrics with your staffing partner, clients can quickly identify any problems or opportunities for improvement for their staffing partners. To ensure consistent performance over time, review recruitment KPI results with your staffing agency on a regular basis to keep them focused and motivated toward achieving your company’s goals. These KPIs are helpful for companies with contingent workforce programs with more than 50 jobs per year.

Top recruiting KPIs to measure staffing agency’s performance

1. First submittal time; Category- Speed

First submittal time measures the time it takes between when a job is shared or posted over to a staffing agency till the time you get your first submission for the job. This metric is important as it provides insights into the capabilities of the staffing agencies’ recruiters as well as the depth and breadth of the staffing agencies’ database and network. A staffing agency that has built a deep network of contingent workers over long periods of time and has to maintain detailed information about those they have come in contact with should be able to turn around and provide quality candidates faster than others. An excellent average first submittal time would be 4 days.

2. Response Ratio; Category- Coverage

Response ratio measures the coverage that a staffing agency can provide for the jobs you distribute to them. This is measured by the jobs with submissions over the total jobs share over a period of time. It is often helpful to partner with staffing agencies with a broad range of capabilities and a broad database of candidates to reduce the cost of working with a large vendor base. A good response ratio would be >75% e.g. if a staffing agency submits candidates for 34 out of 45 jobs distributed, the response ratio would be 75.6%. It might be helpful to further analyze the category of jobs that did not receive coverage and determine a suitable course of action such as bringing a specific vendor that is strong in that particular job category.

3. Client disqualification ratio; Category- Quality

Another important KPI to consider when evaluating the performance of your staffing agency is the ratio of submissions that are disqualified upon being submitted prior to being interviewed over total submissions. Reasons for disqualification could include not having specific skills such as capabilities in certain software or not having sufficient experience in a certain area. A high average disqualification ratio may indicate that the staffing agency’s recruiter does not really understand the role and is therefore submitting candidates that are a poor fit. A target for staffing agencies to be below < 10% e.g. Teknowlogic inc, had 3 submissions disqualified as they didn’t meet what the hiring manager is looking for upon reviewing the candidate’s resume out of 12 total submissions in the past month, this means that Teknowlogic inc has a 25% client disqualification ratio which is higher than the target 10% and therefore a bad quality measure.

4. Interview ratio; Category- Quality

Another important KPI to consider when evaluating the performance of your staffing agency is the ratio of candidates requested for interviews by hiring managers over total submission, which measures how effective the sourcing and screening process is. The ratio of candidates submitted/presented to hiring managers to the number of given interviews. Average value: A good Interview ratio of 20% meaning 1 out of every 5 candidates submitted is interviewed.

5. Offer to submission ratio; Category- Quality

Interviews are essential in any recruitment process, but they can be time-consuming and costly for both staffing agencies and hiring managers. As a result, companies must take the interview-to-offer ratio into account. It is a figure that shows how many jobs offers an organization extends in comparison to how many submissions are provided. A good target is >4% meaning 1 out of every 25 submissions result in an offer provided.

6. Submittals At/ Under Requested Bill Rate; Category- Cost

Submittal at or under the requested bill rate measures the number of submissions at or under the requested bill rate over the total number of submissions. The target for this should be >80% which shows that your staffing agency is disciplined in finding people under the bill rate provided. This may also show how much your staffing agency is willing to partner with you to achieve your goals which may mean sometimes reducing their margin to ensure a long term partnership where both companies achieve mutual benefits.

7. Negative disengagements to offers; Category- Influence

Negative disengagements are candidates that are terminated due to a negative experience with the candidate upon extending an offer to them. The reasons for these negative disengagements may include the quality of work done, the behavioral aspect of the candidate, tardiness, etc. The standard operating procedure is to first have a conversation with the staffing agency to try to correct things (Do not attempt to address that directly with the contingent worker since your company is not the employer of record and may present co-employment risk). If this doesn’t work and it results in termination, this should really be reviewed seriously. Typically, 1 negative disengagement is one too many however if your staffing agency fills more than 50 roles for your company per year, you may expect that 1(2%) or 2(4%) candidates to result in a negative disengagement. Target less than < 5%.

Looking for a staffing agency that works on data-driven results? Over to you!

Businesses exercise extreme caution when selecting a staffing agency that is best suited to their workforce requirements and is focused on all important KPIs for data-driven results. Denken Solutions provides strong governance on the services that they provide for their clients and conducts reviews on the aforementioned KPIs on a consistent basis (Weekly, monthly, quarterly, and annually), so we can delight our customers with the services we provide. To obtain more information on us, please visit our website or connect with us on LinkedIn.

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