What is Yield Ratio in Recruitment? Definition, Formula, Examples

As an HR leader, you know that recruitment can sometimes feel like a game of darts — played in the dark. You pour your efforts into different sources and channels and hope that one hits the bullseye of the perfect candidate. But how do you know which sources are effective and which ones might be a waste of time?

Enter yield ratio. Yield ratio is a metric that can provide clear insight into your recruiting pipeline. It helps you understand which sources are producing the best candidates, allowing you to focus your efforts and resources on what works.

Whether you're looking to save time and money on recruitment processes, to improve the quality of your hires, or to understand the latest recruitment trends, yield ratio is a valuable part of any HR leader's toolkit. 

What is Yield Ratio?

The yield ratio is a key performance indicator (KPI) that measures the efficiency of the recruitment process. It is an essential metric in human resources that provides insights into how well a company can convert applicants into hires. Specifically, the yield ratio compares the number of candidates at one stage of the recruitment process to the number at the next stage, helping to identify which stages have higher drop-off rates or areas of inefficiency.

HR departments often use yield ratios to analyze the effectiveness of different recruitment methods and candidate sourcing tactics. For instance, if the yield ratio for candidates coming from a particular job board is low, this might indicate that this source is not the most effective for attracting quality candidates. On the other hand, a high yield ratio may indicate that a particular recruitment method or source is very effective in drawing in qualified candidates who are a good fit for the company.

How Do You Calculate Yield Ratio?

Calculating the yield ratio is a straightforward process that involves dividing the number of candidates who successfully move to the next stage of the recruitment process by the number of candidates at the beginning stage. The formula for calculating the yield ratio is as follows:

Yield Ratio = (Number of Candidates in the Second Stage / Number of Candidates in the Initial Stage) x 100%

This percentage-based metric offers a clear picture of the effectiveness and efficiency of your recruitment process.

For example, let's say you posted a job listing and received 200 applications (initial stage). After the initial screening process, you shortlist 50 applicants for interviews (second stage). Using the formula, you would calculate your yield ratio as follows:

Yield Ratio = (50 / 200) x 100%

Yield Ratio = 25%

This means that 25% of the initial applicants moved to the next stage of the recruitment process — the interview stage. By monitoring the yield ratio at each stage of the recruitment process, HR professionals can identify where potential bottlenecks or inefficiencies are occurring, and work towards implementing necessary improvements.

Benefits of Tracking Your Yield Ratio

Understanding yield ratio can help HR professionals strategically allocate their resources and optimize their recruitment processes, in turn maximizing the potential for successful hires.

• Improves recruitment efficiency: As a recruitment KPI, yield ratio is a vital metric for understanding how efficiently your recruitment process converts applicants to candidates, and eventually to hires. By knowing which stages have lower yield ratios, you can identify bottlenecks and work to eliminate them, improving the overall efficiency of your recruitment process.
• Optimizing recruitment channels: By tracking yield ratios for different recruitment channels, you can identify which sources are generating the most qualified candidates. Employee referrals, for example, account for about 30% of all hires — but yield ratio can help you track if this is a worthwhile source for your company. This information can help you optimize your recruitment budget and efforts, investing more in high-performing channels and less in those that are not yielding high-quality candidates.
• Enhances quality of hire: The yield ratio can help identify stages in the recruitment process where highly qualified candidates might be getting lost. For instance, nearly 40% of job seekers say that they’ll move on to other job postings if they can’t find info about your company online. Clear data like this allows you to refine your recruitment strategy to ensure that quality candidates aren't being overlooked, ultimately leading to better hires.
• Aids strategic decision-making: Yield ratios provide data-driven insights that can aid strategic decision-making in HR. By analyzing these ratios over time, HR leaders can identify trends, make informed forecasts, and develop more effective recruitment strategies.
• Increases return on investment (ROI): A more efficient recruitment process, informed by yield ratios, can lead to significant cost savings. Many employers have difficulty filling positions, increasing the cost of vacancy that the company must shoulder. By reducing the time and resources spent on less effective recruitment channels or process stages, companies can increase their overall ROI in recruitment.

How to Apply Yield Ratios at Your Company

Using the yield ratio as a benchmark, your company can begin to refine its recruiting strategy to maximize results. For instance, if your yield ratio is particularly low between the application and interview stages, your initial job listing or qualifications might not be clear or compelling enough. As a result, you could end up attracting a large volume of applicants who are not a good fit for the position, and wasting time and resources during interviews. In response, you can take steps to modify your job postings, ensuring they're clear, targeted, and accurately reflect the requirements of the job.

In another scenario, let's say the yield ratio is low between the interview stage and the job offer stage. This could indicate a need to reassess your interview process. Perhaps candidates are not being evaluated effectively, or the interview experience is not appealing to top talent. Based on this insight, you could reevaluate your interview techniques, train your interviewers to ensure consistent candidate assessment. Alternatively, you could improve your company's employer branding to make the interview process more engaging and representative of your company culture.

Consider evaluating your yield ratios from different recruitment sources. If one source yields a high ratio but another does not, you can shift your resources to favor the more successful channel. This analysis allows you to fine-tune your recruitment strategy, ensuring that you're reaching out to potential candidates in the most effective way possible.

Understand the Impact of All of Your HR Initiatives

Yield ratio is just one metric that can be used to help you understand the impact of your recruitment strategies, and where you can find opportunities for improvement. But using calculable metrics and setting KPIs across the board can help you understand how your HR programs are contributing to the overall employee experience. Ultimately, the numbers can help you prove the value of your initiatives, showing that there’s a positive ROI when it comes to investing in the team.

Take employee wellness. Some company leaders might see these initiatives as nothing but sunk costs, but the truth is they actually offer a strategic advantage and a strong ROI. Nine out of 10 companies see positive returns from wellbeing programs, and 85% of CHROs agree they cut healthcare costs, according to our 2023 Return on Wellbeing Study.

If you want to positively impact areas like employee engagement, retention, and recruitment, all while reducing costs, a wellness program is a great place to start. Talk to one of our wellbeing specialists to find out more about how your own program can yield a positive ROI for your company!

References

• Dovich, Renee. (September 15, 2021.) What is the Cost of Vacant Positions? LinkedIn. Retrieved July 11, 2023 from https://www.linkedin.com/pulse/what-cost-vacant-positions-renee-dovich 
• Flynn, Jack. (February 19, 2023.) 20+ Essential Hiring Statistics You Need to Know About Hiring. Zippia. Retrieved July 11, 2023 from https://www.zippia.com/advice/hiring-statistics/