It’s no secret, your offer acceptance rate (OAR) directly affects your time to hire (TTH). So, what happens when your offer acceptance rate is low? What is the real cost of a reset time to hire when a candidate falls through?
Here’s why you should be worried about your offer acceptance rate, how to measure this critical metric, and what to do if your OAR is too low and negatively impacting your TTH.
Time to hire is how long it takes from when a candidate enters your hiring funnel to when an offer is accepted. A subset of time to fill (TTF), TTH is more candidate centric and ignores the back-end process that happens before a job is formally posted to gather applications.
Time to hire starts when a candidate enters the pipeline, and ends when an offer is extended - and accepted!
Benchmarks for TTH vary widely by industry and position, as well as the labor market and geographical hiring location. If you’re filling an entry-level position in a department like Sales or Customer Service, the TTH can be short (although turnover will also be higher). If you’re filling a role that requires specialized skills and competencies, or are hiring for an upper-level management or C-suite position, TTH will typically be longer.
What happens when your TTH stretches beyond a few weeks? Your recruiting pipeline can become stalled due to a number of reasons; from poor recruiter/hiring manager communication, to availability creating difficulty in scheduling, to an interview process that doesn’t result in an offer.
In the meantime, your employees are having to carry the load of the unfilled position, which can cause loss of morale, and even more vacancies as people become burned out. For higher-level roles, interim leaders who fail to produce results can lead to a general malaise within the company and teams that are misaligned.
TTH is impacted when candidates have a poor experience or the hiring process takes too long. This can cause highly qualified candidates to remove themselves from the process for other opportunities, or open themselves up to competing offers that seem more compelling, especially if they feel their application with your company is stuck in limbo.
Getting to the point of finding the perfect candidate, and then having to restart the TTH clock because you waited too long to lock them in, can be demoralizing for recruiters, managers, and other stakeholders. It can also give your company a poor hiring reputation, as candidates often talk freely about their hiring experience to colleagues and on Glassdoor.
The offer acceptance rate (OAR) is the percentage of candidates who accepted a formal and unique job offer. However, an offer acceptance isn’t necessarily a lock until after onboarding; some new hires quit even before their first day on the job. Post-hire, stats are even more concrete: an entire third of new hires quit their new job within the first 90 days of employment.
How can you improve your OAR and prevent candidate attrition at this critical point? Your OAR is affected by candidate experience, which includes recruiter/candidate communication, as well as recruiter/hiring manager communication. Before you start addressing your OAR, you need to understand the basics.
The average offer acceptance rate is 69.3%, but your goal should be pegged at above 90% to reduce hiring costs and improve your company’s bottom line. Recruiters, interviewers, and hiring managers all must work together to make a high OAR a reality.
What happens when you have a low OAR? You lose the person you identified as the best fit for your organization, and have to select a new candidate. Your second or even third runners up may not be available; either because they have already accepted other offers or because they didn't feel that their candidate experience was positive. After all of the work, time, and cost involved in candidate selection, it can be a real hit if your first choice declines your offer.
If you have to go all the way back to the drawing board to find a new candidate, you’re going to feel that pain from a lot of different perspectives. There’s all the sunk cost in the recruitment process dedicated to the candidate that didn’t accept your offer, which must now be replicated. There’s also still the lack of productivity that’s happening inside your organization due to the role you’re trying to fill.
Finally, there’s the impact an empty role has on your other employees who are being forced to pick up the slack. Watching your workforce become apathetic due to overwork can be difficult, and rescuing employees from burnout can seem almost impossible. Once a cycle of quitting starts, things can go from bad to worse pretty quickly.
Obviously, it’s in your company’s best interest to shorten time to hire and increase offer acceptance rates. However, there’s a third important support to your hiring funnel, and that’s Quality of Hire (QoH). Quality of Hire is the value a new hire brings to your organization, adjusted over time.
Quality of Hire can be calculated using a number of factors, which may be weighted for accuracy. Common factors used to arrive at QoH scores include:
Quality of Hire varies from organization to organization, department to department, recruiter to recruiter, manager to manager, and even hiring source to hiring source. Generalized QoH scores can be divided into four levels:
Getting a score for Quality of Hire company-wide, then segmenting by department, manager, etc, can help you arrive at your current benchmark, which can then be targeted for improvement.
Hiring for Quality of Hire can mean better performance post-hire, and longer retention, eliminating the need to hire again for the same position after just 90 days or six months. A good QoH hire will be less likely to quit before the one year mark because effort was put into hiring the best possible person for the job, while making their candidate experience as positive as possible.
It’s extremely easy to lose out on candidates with high QoH potential when your process takes too long. Likewise, it’s easy to hire too quickly and without taking QoH into account if you’re laser focused on only hitting a good TTH and OAR.
Hiring a poor-quality candidate just to fill an empty seat and shorten TTH can mean you’ll be right back where you started in just a few months, or even weeks. Conversely, making offers and pushing for their acceptance, without being certain the candidate is the best fit, can leave you shouldering the costs of a bad hire - which can total up to a quarter of a million dollars.
There’s no denying that hiring has gotten messy, and the number of people involved with each new hiring decision continues to balloon. Democratizing hiring was intended to improve diversity and culture adds, but it’s having a devastating impact on TTH. In fact, TTH was up to a staggering 44 days across all industries as of Q1 2023.
More people involved with hiring means your processes simply have to be streamlined and easy to understand, or you’re going to lose out on great candidates who go with the first offer they receive. Simply put, quality candidates don’t stick around waiting on a company that has them stuck in the “waiting for interview” phase.
Improving TTH, OAR, and QoH means improving your hiring process. Are you leveraging tools like AI and automation to streamline time-consuming tasks, and free up your recruiters and hiring managers for more important things?
What about your interview processes - do your interviewers have concrete, unbiased data on candidates so they can compare them fairly based on skills and competencies? Using candidate assessment tools and hiring intelligence to highlight critical data in your recruitment pipeline can improve all three metrics.
TalentWall provides that all important visual of your pipeline, allowing recruiters, hiring managers, and other stakeholders to easily see at a glance “how things are going in hiring.” The ATS overlay works with a platform that everyone on your team is already accustomed to, but pulls the most important data right up to the surface for easy visualization.
TalentWall gives need-to-know access to everyone involved in hiring (but you don’t have to pay per user!) It automates repetitive tasks, and reminds recruiters and interviewers about high-value candidates in the pipeline so they can take action, or at least touch base with those candidates before the end of each week (no one likes heading into a weekend without knowing where they stand!)
Best of all, TalentWall reports are highly visual, making them easy to understand for stakeholders who don’t love spreadsheets. It’s the ideal way to ease your recruitment team into a better way of hiring.
Picture this: the instant a job posting is approved for recruitment, you have several terrific candidates already waiting in the wings? This could significantly shrink your TTH window, and improve your chances of a fast offer acceptance, increasing your OAR.
Crosschq Recruit lets you add candidates to your talent pool at any time, and tap into that pool on demand. If they have been through your recruitment funnel, then you’ll already have their Crosschq 360 Digital Reference Reports, know their specific skills and competencies, and have a pre-hire QoH score assigned.
This can make it incredibly easy to find potential matches for newly open roles. Just filter your database to surface candidates who are pre-vetted and ready to fast-track to the interview stage. You could end up securing top talent in just days without spending weeks weeding through applications and doing repeated reference checks.
Recruit helps you with future-proofing your workforce, by both hiring perfectly matched candidates, and planning ahead for future needs to close skills gaps and keep your company well staffed.
Are you ready to bring your TTH down to an acceptable level, boost your OAR, and improve QoH across your organization? Ask us for a demonstration today.