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Recruiting Pipeline Coverage: What Is It?

Published Date
Author Beamery Team

Sales teams use pipeline coverage to predict whether they are going to hit their periodic sales targets. It’s a way to forecast their performance, and to reduce uncertainty around the future.

For recruitment marketers, pipeline coverage plays a similar role: it helps them understand whether there are enough incoming leads into the pipeline to convert into the target number of hires three months, six months, or one year down the road.

What is recruiting pipeline coverage?

Pipeline coverage helps Talent Acquisition teams make statements like these ones:

“Given our historical conversion rates, we are currently at risk of missing our yearly hiring targets.”

“Our current Designer pipeline should be more than enough to cover our quarterly hiring needs.”

More specifically, it’s a measure of how much the current pipeline will cover the future hiring needs of the company. It gives a value (a number) to the likelihood of hitting or missing targets.

pipeline-coverage-formula

A ratio higher than 1 means that the existing pipeline is likely more than enough to hit the target number of hires, while a ratio that is lower than 1 means that the hiring target is at risk.

NB: Sales teams generally use a slightly different formula, where the output is a multiple rather than a ratio. For example, they will say that their pipeline coverage is 5x, meaning that the size of their pipeline is 5 times that of their sales target. The goal of the metric, however, stays the same.

Coverage and conversion

Pipeline conversion rate, or ratio, is an underlying metric in pipeline coverage, but they are very different things.

The conversion ratio is the ratio of candidates at a specific stage, to candidates at the stage before it. In other words, it enables recruiters to say things like: “Typically, when we have X candidates in the “nurture campaign” stage, we end up having Y candidates in the “phone call” stage 2 months later.”

For pipeline coverage, an overall pipeline conversion rate is needed. It can be calculated by dividing the average number of hires by the average number of candidates in the the pipeline that eventually converted into those hires.

Bear in mind that both coverage ratio and conversion ratio are relative to a given time horizon. It wouldn’t be appropriate to use a 6-month conversion rate to calculate a yearly coverage ratio, for example.

The power of predictability

For Talent Acquisition teams, the ability to hit their hiring targets is huge.

If a CEO has promised their board that the company will open new production facilities in the coming year, and double the market penetration in three years, then there is an underlying assumption that the TA team will find enough engineers and line workers to fill that new plant by next year, and enough sales people to expand market penetration by year 3.

Can the TA team tell the CEO far in advance that they are indeed able to hit those targets? And reduce any uncertainty, and mitigate the risks?  

Predictability removes risk and, in every business, risk has a cost. That’s why investors get back more than the money they originally invest in a business, and why banks charge interest: because they put money in a risky proposition, and want to be compensated for taking that risk, for putting down resources that could be lost, or could potentially be used better elsewhere.

Pipeline coverage is a great start when it comes to managing risk within Talent Acquisition teams... and every recruitment marketers should have it in their arsenal.