Key HR metrics: Job offer acceptance, rejection and new hire turnover
Recruiting

Key HR metrics: Job offer acceptance, rejection and new hire turnover

A successful recruiting process comes down to one thing: getting the best candidate to join your company. But even after a long recruitment process, your job offers may not appeal to your finalists. Tracking job offer metrics as part of your overall HR metrics strategy can help you improve:

The main metric: Offer acceptance rate

Offer acceptance rate (OAR) shows what percentage of candidates accepted your job offer. Here’s the formula to calculate OAR:

offer acceptance rate formula

Sometimes, this metric is expressed as a ratio. For example, if your company extended ten job offers in one month, and six candidates accepted, your offer acceptance ratio for that month is 10:6. Your offer acceptance rate is 60%.

OAR takes into account official offers from the moment they’re communicated to a candidate. Include official verbal offers too, even if they precede written ones. That’s because OAR would still be affected if a candidate rejected a verbal offer and prevented you from extending a written one.

It’s useful to keep a spreadsheet of this information, or keep track of it automatically in your Applicant Tracking System (ATS.)

Why OAR matters

Your offer acceptance rate helps you determine the overall success of your recruitment process. If your OAR is 90%, there’s good cause to believe your process works well. If your OAR drops to 30%, your hiring process is in trouble.

An OAR between 30% and 90% is harder to interpret. Track and compare your rates over time to identify changes. Calculating your offer acceptance rate monthly, quarterly or annually and by department, hiring manager or recruiter can give you more insight into potential problem areas.

Delving deeper: Tracking candidates’ reasons for rejecting you

OAR is a high level metric that doesn’t dig into much detail. Tracking qualitative data helps you understand candidates’ decisions better.

For measurements, you could track Glassdoor reviews where candidates rate their experiences and give reasons for rejecting offers. Alternatively, you could send candidate experience surveys. Add a couple of open-ended questions asking candidates who rejected your job offer to elaborate on their reasons for turning you down. Avoid including multiple choice questions as they constrain candidates’ answers. You could also give this kind of survey to new hires to learn why they accepted your job offer.

After collecting data from candidates, you could compile a simple report like this:

  • Ninety-percent of candidates had a positive experience with our hiring process
  • Eighty-percent thought our interview process wasn’t challenging enough
  • Seventy-percent thought our offers weren’t attractive
  • Sixty-percent liked our company culture

These kinds of results may prompt you to rethink how difficult your hiring process is or explore new ways to bring your job offers up to industry standards. Here are a few common reasons candidates give for rejecting job offers and some possible remedies:

Job offers aren’t competitive enough

Salaries and benefits are important. Especially for candidates who are considering multiple offers.

Here are a few ways to address uncompetitive job offers:

  • Research standard benefits through competitors’ careers pages or Glassdoor. Glassdoor and PayScale.com can give you good insight into salary ranges.
  • Communicate each position’s salary range and ask candidates what’s important to them in a new role.
  • Screen candidates according to their salary expectations during initial phases.

Final job offers don’t reflect job ads or discussions during the hiring process

Inconsistencies aren’t likely to entice candidates to join your company. For example, offering a job in a different location than the one mentioned in the job posting may put off candidates.

Here are a few ways to avoid inconsistencies:

  • Decide on a position’s characteristics before posting a job.
  • Present and discuss only those benefits and job attributes that you’ve confirmed.
  • Write honest job descriptions describing the job and your company’s mission.

Candidates have issues with location, working hours etc.

Candidates who plan to relocate might face some logistical issues that prompt them to reconsider moving for you. They might have thought their commute would be easier or that working hours wouldn’t interfere with caring for their family.

Here are a few ways to help candidates overcome obstacles:

  • Consider the possibility of offering relocation expenses or flexible working hours as a benefit.
  • Consult a lawyer to better understand possible immigration or international mobility issues.

Candidates didn’t intend to work for your company

People may interview with you so they can negotiate a pay raise or a promotion with their current company.

Here’s how to identify those candidates early on:

  • Ask interview questions that explore candidates’ motivations, aspirations and reasons for wanting to work for you.

Going a step further: New hire turnover

To calculate new hire turnover, divide the number of new hires who left within a certain period (e.g. a year) after they were hired by the overall number of employees who left during the same period:

new hire turnover rate formula

The definition of a ‘new hire’ varies. People who joined a company three, six or 12 months ago may be considered new hires.

Your overall turnover rate has many causes, but your new hire turnover is closely related to your recruiting and onboarding process. Any miscommunication may jeopardize a new hire’s future at your company. Compare your new hire turnover with your overall turnover to see if your company has problems retaining new hires.

Tracking job offer metrics in your HR metrics dashboard gives you tangible information you can use to revamp your hiring process. Collect data and ask for feedback. Getting the best candidates on board is the biggest reward for your efforts.

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