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Client Articles |
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HIRING METRICS for HR Professionals
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If you had to debrief the Board, your CEO, President/VP, how would you do it? And could you do it in a way that makes sense to them, understanding how they think, which is really taking facts and converting the facts to dollars!
I recommend you report your numbers in a factual way executives can relate to.
For example, what is Cost of Turnover (COT)?
COT is derived by taking the number of replacement positions filled in a quarter or a year, and multiplying it by the average cost per hire. For example, if you fill 50 replacement requisitions this year and the average cost per hire is $17,000, your cost of turnover equals $850,000 per year. Now this makes sense to your executives and they quickly understand and feel the pain of poor hiring decisions!
Business leaders are motivated by facts and statistics that are relevant and can give them a competitive advantage. They measure and report what they do, as an HR professional, you should do the same. If you are working on an initiative that requires investment of funds and time, make sure you can effectively measure your progress.
Your next step will be to report your findings in a professional presentation with facts and figures. Let's try some examples.
At T-Mobile, they measure quality of hire by measuring what happens after the new hires start. This metric is a combined measure of performance and retention. They determine how well one group of hires has done from a performance and retention standpoint versus other groups brought in during the same quarter. They measure this group versus their peers at three, six, and nine month intervals.
In another example, we measured quality of hire of a sample of new outside sales employees who took an online pre-employment assessment versus previous new hires who did not.
In a third example, we compared the quality of hire of new college graduates versus all other sources of hire that same quarter. In both cases, we compared performance and retention of the case study group and the other sources of hire at the three, six, and nine-month intervals. The measurements proved that both the new college graduates and the group who took an online assessment were performing significantly better than their peers. These findings were relayed to the executives. Because they could "factually and quantitatively" see that our work was affecting their success, they provided funding for more investment in these important initiatives.
Many of you may be asking yourselves, "But how do I measure quality of hire for positions that are not metrics based, like engineering or production?" It can be done. Let me give you an example. Let's say we want to measure the performance and retention of hires from an online job board versus other type hires for the first quarter of 2005. We give their hiring managers a questionnaire with what they expect their new hire to achieve at the three, six, and nine-month marks. At each milestone, we check in with them to determine if their new hire is meeting or not meeting the expectations they set. We then calculate the quality of hire based on their responses, and use it to compare the job board new hires versus the other sources of hire. (For longer-term studies, you can compare annual performance review scores and retention against sources of hire.)
Recruiting is absolutely critical to the success of a company. If we hire poor performers, the company suffers. If we hire mediocre performers, the company stumbles along. If we hire awesome performers, the company is a leader. It is our job to be tactically superior. It is also our job to give our executives confidence in our strategic importance. We must develop, work on, and track initiatives that will make a difference.
When it comes to reporting, we need to report the progress of our initiatives to executives and hiring managers.
Reporting cost of turnover, showing quarterly trends on how we are improving average days to fill (because now this number means lost revenue to them), and demonstrating quality of hire by source puts us firmly in a seat as their business partner.
Presenting facts and statistics are vitally important to executives who think in quantifiable facts and dollars!
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