Benchmarking your graduate recruitment campaign

Popular recruiting KPIs. Source: AAGE Employer Survey, 2022

As you can see, most employers are only paying attention to a few numbers. But are these KPIs that you should be focusing on?

How many give actionable information that you can really use to improve your overall recruiting performance?

Equally important — which metrics are not included here that should be? What should smart employers be looking at that they’re not already?

After all, the goal of collecting data on your recruiting campaign isn’t simply to check boxes, but to give you genuine insight into operational effectiveness. When you look at your KPIs, you should be able to answer the question: Is my graduate recruiting campaign on track — and if not, how can I fix it?

Start by thinking of your recruiting as a funnel

We believe that in order to collect enough data to properly assess your recruiting performance, you need to start with the right framework. Here, we suggest looking to marketing (recruiting, of course, being a form of marketing itself) and thinking of your graduate recruitment campaign through the lens of a marketing funnel.

The graduate recruiting funnel.

Doing this is helpful because it gives you the opportunity to visualise each step of your recruiting process and identify which of those steps each of your KPIs is measuring.

In fact, using the funnel framework, you’ll be able to troubleshoot with almost surgical precision, rather than making spending decisions based on a few high-level (and potentially useless in the wrong context) metrics like number of applications received — and then hoping for the best.

So, that being said, which metrics hit the key areas on the funnel? While there are a ton of data points you could pay attention to, we feel that eight specific KPIs are a great place to start.

These include volume and conversion benchmarks (with the three-year annual average reported by AAGE employers included in parentheses) like:

• Number of applications (2,297)
• Application to hire ratio (2.4 per cent)
• Application to offer ratio (3.3 per cent)
• Offer to acceptance ratio (82 per cent)
• Acceptance to hire ratio (91 per cent)

And marketing ROI benchmarks like:

• Total marketing spend ($55,252)
• Marketing spend per hire ($987)
• Total spend per hire ($2,368)

We’ll go through each one, offering our thoughts along with rough spending benchmarks you should aim for.

A note on the data we’re using: As we’ve mentioned above, our benchmarks are based on the three most recent AAGE Employer Survey reports (ending with the 2022 report). These include results from over 100 employers every year (mostly larger organisations) for a total of 322 survey responses (usually from a similar pool of respondents each year).

Over the combined survey period, these employers spent a total of almost $43 million on graduate hiring. This breaks down to roughly $18 million on marketing and attraction, plus another $25 million on selection.

Worth mentioning: costs seem to be increasing significantly. AAGE Employers spent under $12 million on graduate hiring in 2019 (as documented in the 2020 AAGE survey), but almost $17 million in 2021 (reported in the 2022 survey).

Some of this may be linked to the effects of the pandemic. Overall spending was roughly flat from 2017 to 2019, with a big jump in 2020 and an even bigger leap in 2021.

However, we may also be facing a reality where the costs of hiring are simply going up in response to a market that is more fragmented and competitive than ever before.

Pandemic immigration restrictions, for example, have meant that Australian universities are graduating fewer international students than during the pre-pandemic era — but that trend is expected to continue through at least 2025. Meanwhile, employer demand for graduate talent has only gone up, just as the graduate pool has shrunk.

Given that you may have to spend more than you’re used to in order to compete in this environment, maximizing your hiring ROI is more important than ever. So without further ado, let’s dig into how you can be more efficient in your own hiring process.

Here are your key volume and conversion benchmarks

To start, take a look at how most of the key volume and conversion KPIs fit into our recruiting funnel:

Key volume and conversion KPIs. Data taken from AAGE survey reports.

We want to note that the KPIs that we’re focusing on skew towards the bottom of the funnel. This is for two reasons.

First, the closer you get to the bottom of the funnel, the more dependable your data is. We’re relying heavily on the AAGE reports to set target goals here, and these capture data points that occur after an application is submitted.

But this approach works because bottom-of-funnel metrics most accurately capture your operational performance. Higher up on the funnel, there is vastly more noise in the data (impressions or clicks, for example, can be very difficult to attribute back to a quality candidate you hired) while the closer you get to the bottom, the more actionable value you can find in each KPI.

We’ll go through each one in order.

Number of applications

Nearly every employer surveyed by the AAGE tracks how many applications they receive. In fact, you’ll notice that this is the most commonly measured KPI of any listed in the AAGE data.

You’ll also notice that we didn’t highlight this KPI on our funnel graphic. That’s not an omission. On its own, the number of applications received is a vanity metric that doesn’t mean much of anything.

We know that the average AAGE employer sees 2,297 graduate applications each year. But for any one individual employer, that number is useless as a benchmark.

That’s because your target number of applications should be based entirely on the number of graduate positions you actually need to fill. And the simplest way to figure out that target is to start with the AAGE’s application to hire ratio and work backwards from there.

Now, as we’ve shared above, the three-year average for that ratio is 2.4 per cent. That means to find one high-quality graduate that you're excited to hire, on average you’ll need to review 41 applications (we suggest rounding up to 50 as a safe rule of thumb).

If you want to dig deeper, you can also review your own historical recruiting data (if you’ve got it). How has your campaign performed year over year? Is your number of applications received going up or down?

Again, though, you need to consider this number in the context of your application to hire ratio. If your overall number of applications is going up, but your application to hire ratio is going down, then you’re likely sacrificing quality applicants for volume. 

Application quality (application to hire ratio)

So, let’s talk about how to improve your overall quality of applications. Here, we’re going to start by digging more into your application to hire ratio.

This is a big, overall number that you need to pay attention to. If you’re going to hire one high-quality candidate, how many applications should you aim for?

Now, we’ve already shared that based on the AAGE three-year average, employers hire roughly 2.4 per cent of all applicants. This number has held fairly steady for the last three years, never dipping below 2.2 per cent or rising above 2.8 per cent.

That makes a 2.4 per cent application to hire ratio a good target goal. But the thing is, you shouldn’t just settle for hitting that number. If you can push your application to hire ratio even higher — to 3, 4, or even 5 per cent (all without compromising your selection standards) — it will be because you will have found a way to raise your overall applicant quality.

This will mean that you’ll be able to solicit fewer applications in the first place and run a more efficient, cost-effective recruiting campaign. And to do this, you’ll want to start monitoring the three other ratios that drive your application to hire numbers.

Application to offer ratio

First, take a look at your application to offer ratio. In order to make one job offer you feel good about, how many applications do you need to receive?

As a rough rule of thumb, we can note that AAGE employers typically make offers to about 3 per cent of applicants. This means that you’ll usually want to source 30-35 graduate candidates for every offer you make.

In other words, a certain degree of volume is key here. But as with your application to hire ratio, your application to offer ratio is heavily influenced by the quality of your candidate talent pool.

If the latter ratio is low, try reviewing your job ads. Is there an issue with your messaging? Are you framing your opportunity in the right way?

Here, transparency is essential. Today, more than ever, candidates want to feel like their new graduate job offers a sense of meaning and purpose — and can smell corporate PR-speak from a mile away.

The more open and honest you are able to be about the pluses and the minuses of your graduate roles, the more you’ll attract high-quality candidates who are self-selecting to tackle the challenges involved.

You should also consider the channels you’re advertising on. If you can, track which channels or jobs boards generate the most new hires and consider making those your main focus.

You can also reach out specifically to jobs board providers and ask them for guidance on how to tailor your listings for maximum impact on their audience.

Offer to acceptance ratio

Second, consider your plan B or offer to acceptance ratio. When you make an offer, how often will you get a yes — and how often will you need to have a backup candidate standing by?

This ratio has a lot to do with the strength of your job offering. If candidates are eager to join your team, you’ll get more yeses.

Conversely, if your employer brand is weaker, your graduate duties unappealing, your culture uninviting, or your compensation and benefits sub-par, then you’ll see more nos than average.

Per the AAGE, roughly 4 in 5 offers (82 per cent) over the last three years led to an acceptance. However, if we dig a little deeper into the data, we can see that this number was actually significantly lower in 2021 (76 per cent) than it was in 2019 and 2020 (86 and 87 per cent, respectively).

This may be the result of an especially competitive hiring market in which candidates had more options than usual. If the trend continues, be aware that you may need to go to a fallback candidate a little more often than in years past.

Overall, though, 82 per cent is probably a good target benchmark to aim for. So if you find yourself falling significantly below that number, what do you do to improve?

Start by reviewing your screening and offer process. Look for any obvious red flags or weak spots. Are you doing something that is putting candidates off?

Make sure that you’re taking time to sell each candidate on why your company is a great place to work as you go through the recruiting process. After all, recruiting is a two-way street — you should be trying to impress candidates as much as they are trying to impress you.

If you can find the data, look at where the candidates who reject you do end up. Are they regularly choosing one of your competitors instead?

If so, you need to figure out why — and how you can strengthen your own offer to match or exceed the competition.

Now, money is often a big factor here. Candidates who make it to the offer stage are usually a good fit for the role and typically have built at least some degree of rapport with their recruiter.

Still, a lower-than-expected salary offer can throw a last-minute wrench in the works. More senior workers may choose to value a good fit over an extra $5,000 in annual compensation but a grad fresh out of university may not have the luxury of doing so.

You can mitigate this by being transparent about pay early on in the process and again — by making sure that you are matching or exceeding whatever your main competitors are offering.

Remember — if you’re really excited about a candidate, chances are another company is too. And you’re better off investing a little more in a candidate you’re eager to work with than pinching pennies and hiring someone uninspiring.

Worst case, if you genuinely can’t provide a stronger pay package, then think about all the benefits you can offer — remote work, flexible scheduling, unlimited PTO, etc — and make those a big part of your pitch.

A final thought on offer to acceptance — in rare cases, a lower ratio here can point to broader issues with your employer brand. Do a little research on how grads perceive your company (social media and Reddit can be useful here).

Are you widely seen as a backup option? If so, that’s a sign you’ll need to strengthen not just your offer but your overall image in the graduate community.

Acceptance to hire ratio

Third, evaluate your acceptance to hire ratio. For every graduate who actually shows up for their first day of work, how many offer acceptances do you need?

You might assume that this ratio would be essentially 1:1. After all, who accepts a job offer if they don’t intend to follow through?

Well, more people than you might think — the AAGE three-year average acceptance to hire ratio is only 91 per cent. This means that almost 10 per cent of grads who say yes to an offer back out before actually starting the job.

Now, a new hire may renege at the last minute for some of the same reasons we’ve already explored above — salary, a poor closing pitch, or a last-minute offer from a competitor. Unusual, yes, but not unheard of.

But graduate recruiting also offers an additional peril not seen when hiring more senior workers. Most grads accept a job months before their expected start date.

This is just how graduate hiring works. But it means that you have to make a concerted effort to nurture your new hires and keep them engaged and excited during the gap period.

Per the AAGE report, most employers do understand this. 91 per cent make some effort to maintain a connection by using phone calls or email to keep in touch with graduate hires (see the graphic below for more details here).

But if you want to do everything you can to avoid losing your first-choice candidates — and having to scramble for a replacement at the last minute — you need to put care and attention into what is a somewhat delicate dynamic. Don’t just send out a weekly email blast to all your new hires and assume that’s going to keep them inspired and in the fold.

Instead, learn from the 47 per cent of employers who encourage managers to check in regularly with their future employees. Even better, follow the example of the 59 per cent of AAGE employers who invite those new hires to social events or pair grads with an existing employee as a mentor.

Don’t be afraid to try several different approaches at once, either. Some grads may be eager to socialise with their soon-to-be co-workers in a group while others may find that off-putting and respond better to a one-on-one coffee invitation from their new manager or mentor.

Throw several different strategies at the wall and see what sticks. Whatever the method, if you can help a new hire to feel like they are already part of the team, you’ll significantly improve your odds of seeing them for their first day of work.

Popular methods for maintaining relationships with new hires. Source: AAGE Employer Survey Report 2022

Your top marketing cost (ROI) benchmarks

So far, we’ve focused on KPIs that have more to do with attracting and converting high-quality candidates. But what about improving your overall recruiting ROI — making the most of your marketing budget?

Here, we suggest paying attention to three specific KPIs: total marketing cost, marketing cost per hire, and total cost per hire. Let’s take them in order.

Total marketing cost

If only to keep your CFO happy, you need to monitor your total marketing cost. How much are you spending to promote your annual graduate recruiting campaign?

After all, you want to fill your open graduate positions, yes. But you’d rather not spend a king’s ransom to do it — or at least not more of one than is necessary.

Total marketing spend won’t tell you much about your efficiency by itself. But it will give you motivation to improve your efficiency so you can bring down your overall cost.

For reference, we do want to note that the average AAGE employer spent $55,252 a year on marketing aimed at graduate recruits over the last three years. Of course, as a raw figure and not a ratio, this number doesn’t mean much given the range of employers and sectors covered.

Your costs may vary considerably based on the number of graduate positions you’re looking to fill or the specific types of candidates you’re seeking to attract.

Still, take a moment to compare your own marketing budget to the average. If you’re spending significantly more and don’t have a clear reason why (like, say, you’re filling more open spots than even the typical AAGE employer), then you might want to dig deeper into your spending.

And the key to doing that is our next KPI — marketing cost per hire.

Marketing cost per hire

Here’s where your marketing KPIs get more interesting. How much are you spending on marketing to bring in a single new hire?

Now, we’ll say upfront that your marketing cost per hire isn’t the only granular marketing KPI you could be tracking. You can measure marketing costs on a per-candidate basis throughout your recruiting funnel, including metrics like marketing cost per application or offer.

Marketing cost benchmarks. Data taken from AAGE survey reports.

All of these can be helpful under the right circumstances. However, if you’re really looking to assess your marketing ROI, measuring your marketing cost per hire will be the most valuable by far.

Why? Because, again, the further down the recruiting funnel we go, the stronger the data. Just like with our volume and conversion KPIs, you’ll find more noise than signal at the top but real, actionable information by the time you reach the bottom — because you’ll be accounting for the full picture of your expenditures.

Here’s an example to explain why you should be wary of relying too much on metrics higher up the funnel. Let’s say you were looking to improve your ROI by reducing your marketing cost per application (which captures your costs through the middle of the recruiting funnel).

AAGE employers are spending $24 on average, you tell yourself, but I bet I can get that down to $20.

And you do! You focus your recruiting campaign on more economical platforms, get a ton of applications, and even beat your own goal by spending just under $19 to generate each one.

Pretty great, right?

Well, until you realise that the cheap recruiting channels you’re using are cheap for a reason. Yeah, you’re spending less to bring in each application, but you’re finding so few quality candidates that you’re having to drastically increase your volume of applicants in order to fill each open position.

As a result, your overall marketing costs have actually gone up. You’re spending more per candidate hired, not less.

Again, this is not to say that measuring metrics higher up on the funnel can’t be useful. But without a clear understanding of your per-hire marketing costs, you risk missing the forest for the trees.

So then, how much should you spend on marketing for every open graduate position that you fill? Remember, this covers your whole recruiting process up until you begin CV review and candidate selection — everything from creating a terrific job listing to using sites like Prosple, Indeed, or LinkedIn to connect with graduates and solicit applications.

From 2019 to 2021, the average AAGE employer spent $987 on marketing for each new grad they went on to hire. This ranges from $784 in 2019 to $1,098 in 2021, with almost no change between 2020 and 2021.

As this number is per-hire, we feel it’s much more useful than total marketing cost as a standalone figure. However, you should still bear in mind that there are economies of scale at play.

Companies looking to hire just one or two grads may have to pay significantly more on a per-hire basis than those seeking to onboard ten or a hundred times as many.

Now, if you’re looking to get your marketing costs to meet or improve on industry averages, we suggest tracking which platforms typically generate the most high-quality applicants for your open positions. This can be as simple as figuring out where your new hires applied from (and you can use free tools like Google UTM parameters to make it happen).

Then focus your marketing budget on those high ROI platforms.

Seems obvious right? You might be surprised, then — per the AAGE, only 19 per cent of employers measure their ROI on a per channel basis.

In other words, if you take the plunge, you’ll be ahead of the curve.

If, on the other hand, you can’t track your ROI for each individual channel, you can use your marketing spend per application as a backup metric. As we discussed above, though, this number can be misleading without the broader context of your overall marketing costs per hire.

Total cost per hire

How much should you spend in total to bring in each new graduate that you hire? This includes both your marketing and your selection costs — the price of bringing applications to your inbox plus running each applicant through your assessment system.

Total cost per hire is your ultimate big-picture hiring costs KPI. Working to improve your performance here means creating a more efficient, effective hiring process that can generate more high-quality candidates from a smaller volume of overall applicants so you can spend less time and energy on selection.

What’s the benchmark here? Well, over the last three years, AAGE employers have spent an average of $2,368 to fill each open graduate position.

That’s a good target for you to aim for. However, depending on the size and scale of your recruiting operation, your final costs could vary for reasons beyond inefficiency.

There's a broader context here too. You should know that as with some of the other benchmarks we’ve discussed above, total cost per hire has climbed sharply upwards over the last few years. Employers spent $1,969 in 2019, but that increased to $2,488 in 2021 (the last year we have data for).

Interestingly, though, spending was highest in 2020 at $2,657 per grad hired. This was largely due to higher selection costs (more on that to come), so the fact that employers were able to reduce their overall spending by $150 per grad the next year may be a sign that selection options are becoming more cost-effective.

Bonus KPI: selection costs

While this section has so far focused on marketing costs, we do want to mention your selection costs here too. After all, selection costs make up the other half of your total cost per hire — and for AAGE employers, the lion’s share of that latter figure.

In other words, your selection and marketing costs are deeply intertwined. A poorly run marketing campaign will generate fewer high-quality candidates — meaning that you have to run more applicants through your selection process in order to fill your open graduate positions. This will raise your selection costs.

Meanwhile, a poor selection process can increase the likelihood that your desired candidates reject your offer (or renege after accepting). Then you’ll end up spending more on marketing because you’ll have to drum up additional candidates for screening.

So, how much should it cost to run each new graduate hire through your selection process?

Based on the three-year AAGE average, you can expect to spend roughly $1,381 to fill a grad job once you’ve got a stack of applications on your desk. This figure covers the costs of things like skills or personality assessments, interviews, and test work.

Now, predictably, this number went up considerably from 2019 ($1,186) to 2020 ($1,586). What was surprising, though, is that selection costs actually plummeted in 2021 — to $1,390.

This is right in line with the three-year average, so we feel that you can rely on that number as a reasonable benchmark.

A targeted approach will improve your results

When you take the time to track your recruiting data and set clear targets, you’ll be on your way to optimising your results. Over time, you should be able to plan and budget more efficiently — and even lower your costs per hire.

We do want to add a note of caution about how you should think about the AAGE benchmarks we’ve included. Most of the employers surveyed by the AAGE are long-standing, established brands.

Why is this important? Because those employers have a big head start over smaller or newer companies in terms of controlling their recruiting costs. While they will likely be targeting a higher overall volume of graduate applicants (after all, KPMG is going to need to bring on more grads than a seed-stage startup) and thus spending significantly more total dollars than most employers, their per-candidate costs may be notably lower.

This is because most major employers already have strong brand awareness. Many may have to spend less money per candidate at the top of the recruiting funnel because grads will be seeking them out.

Meanwhile, further down the funnel, large employers will also benefit from economies of scale. While some elements of recruiting are less scalable — an individual one-on-one interview, for example, takes the same amount of time and effort regardless of how many candidates an employer is vetting — others like testing or CV screening can be made more cost-effective through automation.

And major employers are typically the ones who can afford to invest in the enterprise-level platforms that make such automation possible.

In other words, remember that the specific numbers we’re sharing above are big-picture averages based on data from employers across a range of sectors. Your specific situation may be different — and if you can’t hit the AAGE targets right away (or even after several years) don’t worry too much.

We encourage you to use the benchmarks we’ve mentioned as a rough guide and adapt based on fit.

Good luck!

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