Traditional hiring metrics, such as time-to-hire and cost-per-hire, often fail to measure true hiring success. As organizations shift to skills-based hiring, they need Key Performance Indicators (KPIs) that reflect the effectiveness of this approach in identifying, hiring, and retaining the best talent.
In this blog, we explore the most critical KPIs for skills-based hiring success and how they help organizations refine their recruitment strategies.
1. Skills Match Rate
✅ What it Measures: How well candidates’ skills align with job requirements.
✅ Why it Matters: A high match rate indicates that pre-hire assessments are accurately identifying the right candidates.
✅ How to Track It: Compare assessment scores with post-hire performance reviews to measure alignment.
2. Hiring Efficiency (Time-to-Fill & Time-to-Hire)
✅ What it Measures: The time taken to find and onboard the right candidate.
✅ Why it Matters: Skills-based hiring streamlines recruitment by prioritizing competency over résumé scanning.
✅ How to Track It:
🔹 Time-to-fill – Measures the number of days from job posting to offer acceptance.
🔹 Time-to-hire – Tracks the duration from application to hiring decision.
Reducing these metrics indicates a faster and more effective recruitment process.
3. Pre-Hire Assessment Completion Rate
✅ What it Measures: The percentage of candidates who complete skill assessments.
✅ Why it Matters: A high completion rate suggests that assessments are well-structured and engaging. A low rate may indicate a lengthy or unclear testing process.
✅ How to Track It:
Measure the number of candidates invited vs. those who complete the test.
Identify drop-off points in the assessment process to optimize the experience.
4. Post-Hire Performance Correlation
✅ What it Measures: How well new hires perform compared to their pre-hire assessment results.
✅ Why it Matters: A strong correlation between test scores and performance proves that skills-based hiring selects the right candidates.
✅ How to Track It: Compare new hires'
Assessment scores
Performance reviews (after 3–6 months)
Manager feedback
A high correlation confirms that pre-hire assessments are predictive of job success.
5. First-Year Retention Rate
✅ What it Measures: The percentage of new hires who remain with the company for at least one year.
✅ Why it Matters: A high retention rate indicates that employees were well-matched to their roles.
✅ How to Track It: Monitor retention trends before and after implementing skills-based hiring.
Companies with strong skills-matching processes often see higher employee retention because new hires feel more competent and engaged in their roles.
6. Candidate Diversity in Skills-Based Hiring
✅ What it Measures: The variety of backgrounds, experiences, and education levels among new hires.
✅ Why it Matters: Skills-based hiring should increase diversity by eliminating bias in favor of traditional qualifications.
✅ How to Track It:
Compare pre- and post-skills-based hiring diversity metrics.
Analyze whether a broader range of candidates is being hired based on skills rather than degrees or past job titles.
7. Promotion and Internal Mobility Rate
✅ What it Measures: The percentage of hires who advance within the organization.
✅ Why it Matters: Skills-based hiring ensures that employees are capable of growth and leadership.
✅ How to Track It:
Measure how many hires are promoted within a set timeframe (e.g., 1–2 years).
Track how many employees transition into different roles based on skills rather than tenure.
A high mobility rate suggests that employees are not only skilled for their current roles but also adaptable.
Conclusion
Setting the right KPIs ensures that skills-based hiring delivers higher-quality candidates, improved retention, and greater organizational success. By tracking metrics such as skills match rate, assessment completion, post-hire performance, and retention, companies can continuously refine their hiring strategies for long-term benefits.
