Last week, Billy Beane, the Oakland A’s general manager known for his Moneyball approach to winning baseball, spoke at the Staffing Industry Analysts Executive Forum in Orlando, Fla. In his speech, he stressed the importance of finding the key metrics that drive success, and told attendees to really focus in on them. Although, quite powerful and inspiring, he didn’t say anything specific to staffing firms, which left some lingering questions in the audience such as, “which key metrics should we (staffing firms) be focusing on?”
After working with thousands of staffing and recruiting firms to answer this very question,we thought we’d share our Moneyball approach to recruiting. When it comes to choosing which key performance indicators (KPIs) your business should be focusing on in order to boost revenue and profitability, consider a few of the following that we’ve found work best for firms like yours:
Activity Conversion Ratios. Tracking the conversion ratios of certain key activities can be the best way to measure the quality of your efforts, which you can use to improve business processes. You may want to focus on activity ratios that are specific to your sales funnel (e.g. job orders, internal submissions, etc.) or you may want to look at ratios by employee and determine which employees work most efficiently. You also might want to look at your ratios by client to determine which clients are most profitable in order to learn how you can change internally/externally to bring your less profitable clients up to speed. Remember ―quality matters. As you become more efficient in processes, your activity ratios will increase. Don’t allow quality to suffer.
Percent of Actionable Goal. Percent of Goal is a standard metric tracked by companies in every industry, but Percent of “Actionable” Goal is a specific goal that your employees can take action on. For example, “total number of placements” was recently reported to be the most important staffing metric in 2013. If placements are the desired goal, then the actionable goal behind that would be client submissions. Work backwards and set the right client submission goals in order to work toward your overall placements goal.
Expected Value of Pipeline. Tracking the Expected Value of Pipeline can help you forecast the revenue that is projected to come in a few months out. Understanding this value will give you more visibility into the direction that your business is headed.
Employee Value (in dollars). Knowing how each employee is performing is a great way to keep pulse on the success of your business. The annualized booking revenue value for each recruiter will give you a good understanding of individual employee performance. You can change goals, compare rookies to veterans and determine the health of your employees as a whole with the information that you learn from this KPI.
Ten years ago we didn’t analyze emails and website activity, not to mention we relied on our IT departments (if we even had one at all) to manage business data. But, with the business intelligence tools we have today, we have no excuses. Business intelligence can seem complex and at times overwhelming, but it offers enormous growth potential if used effectively to enable better decision making and better business performance.