High Yield Ratio Recruitment: What is it?

6 minute read

Posted by Chris Platts on 21 August 2020

Hiring can feel like a never-ending treadmill of ‘must-fill’ vacancies. Calculating your recruitment team’s yield ratio will help demonstrate the value you are adding to the organisation and help allocate your recruitment marketing budget more effectively. 

Yield ratios show the percentage of candidates that pass from one stage of the hiring process to another from a particular source. It allows the business to identify the best candidate sources. Ultimately, it helps reach the right candidates at a lower cost.

Yield ratios are one of the essential recruiter metrics to assess how well your hiring processes are working. In this post, we’ll explain a yield ratio and how high-yield ratio recruitment tactics could reduce your cost per hire and time to hire.

What is a high yield ratio in recruitment?

To properly understand high yield ratio recruiting, you need to have a clear recruitment funnel with individual stages to pass through. Therefore, industry benchmarks for yield ratios can vary based on how many steps you have in the hiring process.

Yield ratios are different from a generic pass-through rate, which can be used to identify bottlenecks in the recruitment process.

high yield ratio recruitment: pass through rate chart
Pass-through rates show you the % likelihood of progressing through the recruitment process. Source: Google Hire

Yield ratios show the same data but are broken down by source channel. This helps you identify how to allocate your recruitment marketing budget best.

The higher the yield ratio percentage, the more applicants from that channel made it to an interview or went from an interview to securing an offer.

High-yield ratio recruiting is, therefore, any recruitment channel that attracts many successful applicants. 

Notice the emphasis on the word “successful” here; you can achieve high recruitment yields with accurate sourcing, tailored job adverts and data-driven improvements to your sourcing approach.

How to calculate a yield ratio

Calculating a yield ratio is simple:

Yield Ratio % = (No. of leads from recruitment method / No. of candidates invited to interview) x 100%

Turning this numerical value into insight is less simple. A high yield recruitment ratio results in spending less time and money filtering out unsuitable candidates; however, decreasing the yield ratio, for example, by tightening up screening processes, can be a good thing. 

In other words, while increasing your yield ratio is generally a good thing, it shouldn’t be pursued at all costs, and other factors need to be considered to paint a full picture of your recruitment process.

High Yield Ratio Recruitment
Here’s an example of calculated yield ratios from three different recruitment sources. (Source: https://resources.workable.com/tutorial/recruiting-yield-ratios-recruiting-metrics).

Why is high yield ratio recruitment useful?

1. It can reduce hiring costs

Yield ratio percentages are not a straightforward representation of the merits of a particular talent acquisition channel. Like a good cocktail, they must be mixed with other metrics to assess your overall recruitment effectiveness properly.

When you use yield ratios correctly, they should deliver insights to help identify the right talent pools to reach quicker and cheaper than your competition.

It’s important to note that a high yield ratio is not always a good thing. For example, the yield ratio of applicants from agency recruiters making it to the interview stage is very high. Still, the ratio of those applicants accepting the position could be low. Seeing the recruitment process as a funnel can help here.

2. It increases the efficiency of mass recruiting

High-yield ratio recruiting is most helpful if your business has a regular intake of new staff. If you need to fill 100+ positions annually, aiming for a high yield ratio makes sense so that all the positions get filled without having to build an impossibly expensive recruitment funnel. This is where personalised candidate selection tools such as ThriveMap can help ensure that only the most suitable candidates make it into the recruitment process early on.

Side note: At ThriveMap, we can help you identify which sourcing channels are most effective in attracting quality candidates, not just quantity. We can compare your candidate source channel data with our anonymised assessment performance data to see which channels are providing you with the highest-performing candidates. This can be especially useful when deciding how to allocate your job advertising budget effectively.

3. It can identify hiring bias and discrimination

Calculating yield ratios for specific demographics of applicants offers an insight into what parts of your recruitment process may be discriminatory. For example, if 50% of female applicants pass a pre-employment test, but only 20% are invited in for an interview, it’s clear that you have a bias at the pre-screen stage. Luckily, you can use high volume candidate screening software to remove bias in the initial sifting process; this results in you hiring a more diverse and job-capable workforce.

Yield ratios, costs and time

When creating yield ratios, you get the percentage likelihood that a candidate from that sourcing channel will be hired, but each channel will have separate hiring costs. Referrals may have a referral bonus; agencies will have recruiter fees, and job boards will have posting or subscription costs. 

Each sourcing channel will also require a time investment. Well-crafted job postings require you to do the initial candidate sift, while agency candidates and referrals tend to remove the need for this. 

You’ll need to factor these costs (time and money) into your decision about where to invest your recruitment budget.

Tip #1: Get meaningful data

The only thing worse than no data is bad data. If you deal with a few hires yearly, the yield ratios won’t be reliable. We recommend only conducting yield ratio analysis once you’ve hired at least 20 people into the same role.

Tip # 2: Build a yield ratio pyramid

We can build a recruitment yield pyramid by calculating the yield ratio on different levels. For example, we plan to open four positions for salespeople.

  • We know that the interview-to-hire ratio is 20%, so we need approximately 20 candidates for interviews.
  • The applicant-to-interview ratio for the selected method is 10%, so we need approximately 200 applicants from this source.

In closing

Calculating the yield ratio of your various recruitment channels should help you to identify opportunities to improve your high volume hiring process

Yield ratios are handy KPIs that you can measure easily, track in your ATS or recruitment software and improve upon. So next time you review your hiring process we hope you’ll do the math and reap the rewards!

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ThriveMap creates customised assessments for high volume roles, which take candidates through an online “day in the life” experience of work in your company. Our assessments have been proven to reduce staff turnover, reduce time to hire, and improve quality of hire.

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