How effective has been your company’s recruitment and selection process? To determine this a KPI called yield ratio and HR metric is required.
Here we discuss what is yield ratio is, its importance, and how to calculate it.
What is the Yield Ratio?
The percentage of candidates passing from one stage of the hiring process to another is referred to as the yield ratio. Generally, it is used to measure how many candidates were hired from the total number of applicants.
It is used to measure how the effect has the selected hiring method has been.
The term yield ratio is used in the finance field too, but these two are completely different and valuable in their respective fields too.
Where yield ratio is used?
The yield ratio is used to calculate and compare how effective has the recruitment process been compared to the previous years.
It can also be used to analyze what kind of qualifications and skills the selected candidates in each stage had in common. The analysis can be done to make sure that every stage provides some input to find what the recruitment process lacks and has on point.
For example, you can calculate what percentage of women and minorities cleared each stage. Or what were the skills and experience they all had in common outside the job requirements?
Why yield ratio is important?
Few of the reasons why it is important to calculate;
- Measure the effectiveness of recruitment strategies
It can help in analyzing what are the sourcing and recruitment strategies giving out the desired result.
- Increases efficiency
While analyzing the mass recruitment strategies it makes sense to aim for a high yield ratio so that all the positions get filled.
- Helps in identifying bias
- Helps in lowering the cost per hire
If used correctly, yield ratios can deliver insights to help identify the right talent pools to reach, quicker and cheaper.
How to calculate the yield ratio?
The formula for yield ratio is
Yield Ratio = Total number of candidates selected from # stage/number of candidates that passed
The ATS system can help in collecting the data which you can use to find the results as per the requirements.
For example, if 100 people applied for a post and 15 of them made it to the final stage. Then your calculation would look like this,
(15/100) x 100 % = 15
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