Need a Better Candidate Sourcing Strategy? Here’s Why Yield Ratio Holds the Key

By: Sierra Rogers on August 31, 2023
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If you feel like your job postings aren’t drumming up enough qualified applicants, you’re not alone: A global survey conducted by Gartner revealed that the majority (65%) of recruiting staff are finding it harder to source candidates from key segments. [1]

No longer able to rely on the same talent pools to generate a sufficient number of qualified candidates per position, recruiting leaders need to take a more proactive role in strategically sourcing candidates—and there’s no better way to do that than by analyzing metrics such as yield ratio that reveal where your current sourcing strategy is both failing and succeeding.

Ahead, learn how yield ratio can help you focus on the most promising places to source talent. You’ll hear from peers who’ve used this metric to shape their own sourcing strategy, and find out how to calculate and interpret your own yield ratio so that you can level up your talent acquisition techniques.

What are yield ratios in recruiting?

Yield ratio is a recruiting key performance indicator (KPI) that reveals what percentage of candidates from a specific source are invited to interview for a role. It is a metric that is used to determine which talent pools and sourcing strategies are the most effective at yielding high-quality candidates.

That said, today’s recruiting leaders also use yield ratio to determine how many candidates move from one stage of the recruiting process to the next—meaning, it can be used to analyze more than just where you’re sourcing candidates from.

Shirley Borg, head of human resources at Energy Casino, told us that her team uses yield ratio to understand the percentage of candidates who advance through each step of their recruitment pipeline. [2] This helps them pinpoint whether there is a particular phase in the process where candidates are dropping out. She says:

“If we notice a low yield at a particular phase, it signals a potential issue or bottleneck. By identifying these, we can address concerns promptly and refine our recruitment process.”

Shirley Borg

Head of human resources at Energy Casino

Through tracking the yield ratio at her organization, Borg noticed a significant drop-off in candidate progression after the initial screening phase of their recruitment process. The culprit? Scheduling interviews was a slow-going process. She says:

“After some analysis, we realized that the interview scheduling process was causing delays, leading to candidate disengagement. Addressing this bottleneck allowed us to improve the overall efficiency of our recruitment process.”

How can recruiters calculate yield ratio?

Yield ratio can be calculated manually or with the help of a recruiting platform or applicant tracking system

Most recruiting systems have built-in analytics dashboards (like the one shown below) that can be customized to track the metrics that are important to your team.

A recruitment dashboard in Geckoboard visualizes hires by source

A recruitment dashboard in Geckoboard visualizes hires by source (bottom right) [3]

Borg uses an HR tool to calculate yield ratio. Using software enables her to track real-time and historial recruitment data more accurately than if she were calculating the ratios herself. She says:

“This software allows us to visualize our current hiring pipeline and analyze historical hiring data, then we can make data-driven decisions based on these insights.”

Considering investing in an ATS? Read this first: A Guide to Applicant Tracking Software Pricing Models

The yield ratio formula

If you do decide to calculate yield ratio without the help of a recruiting system, here’s the formula you need to do that:

Yield ratio = # of candidates progressing to next stage / total # of candidates in previous stage

Let’s apply this formula to an example. Say you post a job opening on LinkedIn and receive 120 applications through that platform. Then, you decide to have a screening call with 24 of them. Your yield ratio for LinkedIn would be 20%.

.2 (or 20%) = 24 candidates in screening stage / 120 candidates in application stage

In theory, the higher the yield ratio for a sourcing method, the better. Consider the alternative: If your LinkedIn post attracted 120 applicants but only three individuals were qualified to move on to the screening stage of the process, you’d end up with a very low yield ratio (2.5%). That would indicate a problem—maybe your job description wasn’t specific enough about the skills and experience you’re seeking, or maybe you need to consider posting to an alternative site to find the kind of talent you’re looking for.

Further, as we mentioned earlier, you can apply this formula to any stage of the hiring process. So, continuing with our example from above, if you moved eight of the 24 candidates from the screening stage to the initial interview stage, the yield ratio for your screening stage would be 33%.

Recruitment yield pyramid

One way the yield ratio can be represented is through a recruitment yield pyramid. This graphical representation of the yield ratio at each stage of the recruitment process can help hiring teams understand how many applicants they need to progress through each stage in order to reach their hiring quota.

Here’s an example of what a recruitment yield pyramid for a single opening might look like:

Recruitment yield pyramids are most helpful when they’re applied to larger talent acquisition goals rather than single openings. For instance, if your organization is growing and therefore aiming to bring on a certain amount of new hires per quarter, the recruitment yield pyramid can help you understand how many candidates you’ll need to start with in order to reach that goal.

How can you tell if your yield ratio is good?

Context is required in order to know whether or not your yield ratio is good. Further complicating this, a “good” yield ratio may be different depending on the stage of the recruiting process you’re calculating the ratio for. For those reasons, businesses have to commit to calculating yield ratio on a regular basis. Borg told us that comparing yield ratios over time is extremely important for her team because it helps them understand the impact of strategy changes:

“Comparing results from one quarter to the previous quarter, or even from one year to another, provides us with a clear understanding of trends and improvements. This practice helps us gauge the impact of process changes and continuously refine our recruitment approach.”

That said, if you’re just starting to look at yield ratio and you don’t have historical data to rely on, you can use a benchmark to determine how your yield ratio compares to similar businesses.

What is a benchmark?

Internal benchmarking is defined by Gartner as the continuous process of measuring a company’s products, services, and practices to determine whether the best possible job is performed with the resources at hand. [4]

Finding accurate, relevant benchmarking data can be a difficult task. Fortunately, some recruiting tools and HR analytics platforms have benchmarking information available for their clients to reference.

Level up your recruiting efforts with the right resources

As a recap, the yield ratio can help you do two things:

  1. Determine which sourcing methods are the most effective at bringing in top talent

  2. Recognize bottlenecks in your hiring process

With these benefits in mind, it’s easy to understand why analyzing your yield ratio is worthwhile. However, manually calculating this metric—especially for each stage of your recruiting process—is a tedious undertaking that could lead to inaccurate results. Instead, we suggest automating this task with the help of software.

To get help finding a tool that can do that, chat with one of our Software Advice advisors. It’s a free, fast, and effective way to get a shortlist of solutions that could help your business.

Then, check out our related content to continue leveling up your talent acquisition efforts:

Note: The applications selected in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication. 

Note: Questions and responses have been edited for brevity and clarity.