People Drive Your Plan: Metrics that Matter for HR and Recruiting

Have you ever thought, “HR is not my job”? I ask––do you manage people? Are you planning on hiring in the next year? If the answer is yes, HR is your job. And this post will help you focus on the HR metrics that matter most.

For context, an HR team typically has two core components: Talent Acquisition and People Ops/HR. Talent Acquisition functions as a go-to-market team, like marketing or sales, while People Ops/HR operates more like an operations team. Like all functions, both require precise metrics to drive success. Let’s dive into the key metrics and frameworks that can transform these functions.

The talent acquisition funnel

The operations of Talent Acquisition can be visualized as a funnel. At the top, you’re identifying potential candidates and pulling them into the process. As they move through the funnel, the goal is to refine and align until you find the right fit, similar to the go to market funnel.

More often than not, unsophisticated or novice managers might look at lagging indicator metrics at the bottom of this funnel—offer acceptance rate, time to fill a role, cost per hire. But you have so much more ability to improve your process if you focus on leading indicator metrics like phone screen conversions—the number of candidates your recruiter sends you that you want to meet—and onsite-to-offer ratio—the number of candidates your team gets all the way through your process. The two tips below will help you improve these metrics.

Creating an Ideal Candidate Profile

Before you write a job description, kick off by calibrating with the recruiters on an Ideal Candidate Profile (ICP). Recruiters will then use that shared source of truth to do frontline assessment, and should aim for a 100% success rate handing candidates to the hiring manager, meaning you’re excited to meet everyone the recruiter suggests for you.

When this metric is low, it's an indication that either the recruiter or the external market is not calibrated with your expectations. Either way, if this metric is low, you should immediately make a change and recalibrate.

The biggest mistake in calibration is the hiring manager starts by describing the person they want to hire. Instead, start by defining the outcomes: the work that needs to get done. Then reverse engineer the outcomes into the competencies that will get you there. Make sure these competencies are objective and measurable—replace vague terms like “good vibes” with more tangible traits like “collaborative.” The clearer your ICP, the more efficient your funnel will look. For example, if the outcome is “Individually drive ~$1 million ARR,” the competencies would be sales fundamentals and pipeline creation.

Onsite-to-offer ratio

Further down the funnel, we’ll look at the “Onsite to Offer” ratio—the percentage of candidates who progress from interviews to offers. Ideally, more than half of your candidates should receive an offer. This ratio reflects both the quality of your candidate pool and the effectiveness of your interview process, and it matters because your team is taking a ton of time off of other work projects to meet these candidates—you want to make sure it’s a great use of their time!

To optimize, ensure your interviews continue to assess those specific competencies defined in your ICP. Create an interview plan that assigns one or two competencies to each panel member and only ask them to assess those specific competencies. To build off of the previous example, questions for sales fundamentals would include:

• Tell me about an enterprise persona you’ve sold to.
• How do you build relationships with this persona?
• How do you prospect this person and land meetings?
• Tell me about the sales process. What demos, technical documentation, integration solutions, business cases, etc. do you employ?
• What are some common objections or challenges in this sales process?
• How do you drive momentum towards close? Which urgency drivers work? Which don’t?

Consistency in these conversations is key, as is asking great behavioral questions. Ask two to three questions that measure what candidates have actually done before by using the STAR method—Situation, Task, Action, and Results—and keep reusing the same questions for all candidates so you have a controlled experiment.

At Primary, we often say, “If it’s not a hell yes, it’s a hell no.” Assess each competency, and use an assessment chart by each interviewer to then better understand if it’s a “hell yes.” If a candidate doesn’t inspire confidence during the process, it’s better to pass than to pay the price later.

The people & HR team

Shifting focus to what happens after hires are made, it’s important to concentrate on four main metrics: alignment, revenue per headcount, engagement, and retention. These metrics tie directly to driving outcomes and performance.

A common mistake is HR leaders focus on making the HR processes world class, when in actuality having the best performance management process, for example, may not be a business priority. Aligning first to the company goals should be the focus.

Here’s how to do that:

Focusing on the First team versus the HR team

As leaders, our primary focus must be on the "first team"—the leadership team. Aligning the first team should be our top priority because it sets the tone for the entire organization and drives performance.

Every leadership team member should answer key these six alignment questions consistently.

1. Why do we exist?
2. How do we behave?
3. What do we do?
4. How will we succeed?
5. What is most important, right now?
6. Who must do what?

If discrepancies arise, it’s everyone’s responsibility to address these misalignments. The teams that are the most aligned will have the strongest performance.

Building smart and healthy teams

Successful teams are both smart and healthy. "Smart" refers to functional expertise, while "healthy" is about trust, alignment, and open communication. As leaders, we can play a pivotal role in nurturing healthy teams by fostering trust and facilitating productive debates. Healthy teams are the foundation for sustainable organizational success.

Aligning incentives for business outcomes

Compensation and incentives are powerful tools for driving alignment within executive teams. Incentive structures should evolve based on the company’s stage and goals. Ensuring alignment between compensation strategies and desired business outcomes is essential for achieving long-term success. For example, your compensation philosophy should differ if you are trying to turn your business around versus competing with a public company versus transforming your product.

Revenue Per Headcount: This metric contextualizes headcount planning, helping organizations understand the "why" behind hiring decisions. This metric can also reveal pockets of underperformance. Start by setting a baseline, then manage the metric through improvements to retention, information mobility, and pricing.

For organizations scoring low on this metric, improvement often requires taking a hard look at overhead and resource allocation. Is the balance of administrative and revenue-generating positions appropriate? Are employees performing optimally? Can they access the information they need to carry out their work? If not, look for ways to maximize skill set application and knowledge-sharing to increase productivity.

Employee Engagement and eNPS: Engagement surveys provide insights into not so much employee satisfaction but how your discretionary efforts impact team alignment and motivation. While comprehensive surveys are typically conducted annually, eNPS surveys can offer a quarterly pulse check. These metrics act as leading indicators for performance and retention. You should aim to get at least 70% of your organization participating, and 50-70 is a standard benchmark.

Retention Analysis: Understanding retention trends requires context. Aim for a retention rate of around 85%, but also dig into metrics like tenure, team membership, and turnover type (voluntary vs. involuntary) to better understand how your leading metrics might impact these lagging ones. Not all turnover is bad; cohort analysis can identify patterns worth addressing.

Final thoughts

Alignment, smart metrics, and a healthy team culture are the cornerstones of organizational success. By focusing on these priorities, any type of leader can support thriving businesses.

P.S. I originally shared this blog piece as a presentation at On The Business, a gathering of senior executive women working in B2B SaaS. If you’d like to learn more about this program, see upcoming sessions here!