What (Definition)
After the interview stage, applicants who progress receive offers to join the organization. Upon their decisions, candidates get hired. It is crucial for the HR department to calculate one of the key recruiting metrics known as the conversion rate. Conversion rate is the percentage of applications that got hired out of all applications received during a particular hiring period.
Why (Benefits)
Calculating this metric offers several benefits to the organization.
- Efficiency can be evaluated as the organization will be able to analyze how the hiring stages have been to convert the candidates to successful hires.
- Allocating resources can become easier and more efficient. The high number of applications and low conversion rate means that the organization is allocating resources and spending on candidates who are not eligible.
- Therefore they can allocate different resources and save money to successfully hire.
- Quality of hire can be studied as a higher conversion rate means more successful hires.
- By obtaining this value the HR department can work on improving the hiring process for more successful hiring and higher conversion rates.
How (Calculation?)
To calculate this metric you will have to follow a few simple steps.
- Count the number of applicants who got hired.
- Count the total number of applications received.
- Ensure the data you use are from the same hiring period.
Hiring data from an organization is provided below.
The number of applicants who got hired is 4.
Say, the total number of applications received are 10.
The general formula to calculate the rate of applicants who got hired:
Conversion % = (Number of Applicants Hired/Total Number of Applications Received) * 100
Therefore,
Conversion % = (4/10) * 100 = 40%
- We can now conclude that 40% of the applicants have been hired for a given time range.
- The value you obtain must be equal to or less than 100.
- If it is above 100, there must be an error in the calculation.
- Note that the conversion rate may vary from one organization to another or different departments of the same organization.