AlignMark Recruiting and Selection Blog

Talent Acquisition: Measuring Quality of Hires Versus Quantity

The Society for Human Resources Management (SHRM) has stated the following fast fact: “On average, companies that did a better job of attracting, developing and retaining highly talented managers earned 22% higher return to shareholders.”

Most recruiters and staffing organizations are labeled “successful” if they fill jobs quickly, at a low cost, process high numbers of candidates, and are easy to work with.  Seldom are recruiters and staffing organizations measured by turnover or performance levels of those hired.  For example, would your organization think a recruiter was excellent if he/she was able to hire 1000 people in a month (more than anyone had ever hired before)?  Well how would that recruiter be perceived if 990 of those hired didn’t work out on the job for even 60 days?  Organizations must begin to evaluate the quality of their hires versus focusing on quantity and cost containment.

There are many ways to define quality of hire, and many organizations even vary in their definition by department or job title. But essentially, what is important to any organization is that the recruiting process consistently delivers productive employees who produce good results, are engaged in their jobs, and want to grow and learn more.

We have found the process to capture the “QUALITY OF HIRE” measure expands the dialogue between recruiters and line managers beyond efficiency numbers to a conversation around the quality of talent and the organizational impact this talent will have.

The following blog will discuss what factors to consider when measuring quality of hire, as well as when to measure and how.

 
Retention Rates – Turnover is a high cost for all companies and is impacted by so many variables. Click here to download AlignMark’s turnover calculator which considers factors such as job position, separation costs, replacement costs, training costs, productivity loss. 

Manager Satisfactions - Survey hiring managers from year to year asking:

1. quality of hire perceptions
2. quality of the competencies and skills acquired

Candidate Satisfaction - Survey candidates from year to year and ask:

1. perception of the recruiting/selection process
2. perception of how candidates were treated
3. overall company image

1. output, production compared to recent hires
2. output, production (on average) compared to last year’s hires after their first six months
3. managers’ perceptions of performance of the new hire after their first and sixth month
4. managers’ perceptions of performance (on average) of new hires at six months versus performance of new hires last year after six months
5. time to productivity (on average) versus new hires last year
6. performance of new hires (on average) in training programs, certifications, assessments versus new hires last year in their first six months. 

Longer-Term Measures (beyond 6 months)

1.  Managers’ perceptions of performance at the one month, six month, and annual intervals
2. Managers’ perceptions of performance at the one month, six month and annual intervals (on average), versus the same intervals for new hires last year
3. year-end survey of all managers on their satisfaction with the recruiting/selection process—year to year
4. the percentage of above-average performers who are still with the company (not including involuntary terminations) after one year, versus the percentage of above-average performers who voluntarily left the organization last year
5. the percentage of new hires (last 12 months) who are still with the company (not including involuntary terminations) after one year, versus the percentage who left voluntarily last year
6. the cost differential of voluntary turnover this year versus last year (see cost of turnover calculator)

Summary

What’s measured gets paid attention to.  The importance of collecting data about an organization’s most important asset--its human capital--will only continue to increase. Calculating the quality of new hires allows staffing managers to communicate the quality of their hires as well as the efficiencies of the recruiting processes. Like all human capital measures, quality of hire should not stand alone. Rather, HR professionals should use this metric in conjunction with other measures to provide a balanced assessment of their organizations’ human capital.

Sales Assessment allows for use of leading (vs. lagging) indicators

Is your sales team run by leading indicators or lagging hindsight?  All it takes is a brief look within the talent management practices of the organization to answer this question.  According to McKinsey's War for Talent surveys (200 companies, 1200 respondents) the percentage of companies engaged in positive talent leadership action and execution is very small.Indeed, when it comes to talent leadership, most organizations are failing, and failure is easily traceable to a weak mindset and belief.  In fact, 72% of managers say that winning the war for talent is critical, yet only 9% are confident that their current actions will lead to a stronger talent pool in the next three years. In summary, the McKinsey survey lists the following as views of senior managers’ beliefs about their own organizations:

• Brings in talented people……….……19%
• Develops people effectively………….3%
• Retains top talent……………….…………8%
• Removes poor performers……........3%
• Knows the A, B, and C players…….16%

Where do you think your company falls? How can you improve your leading indicators?

Accurate information drives effective strategies.  This is good news for sales organizations, because, unlike many other functional areas, sales organizations already have great appreciation for accurate information. Operating metrics are a familiar form of sales information and receive intense attention in all sales organizations.  But operating metrics alone are not enough.  Sales leaders need to be passionately and diligently focused on the knowledge, skills, and abilities (i.e., the competencies) required in all their positions and they need to be likewise focused on the knowledge, skills, and abilities of their incumbents (individual contributors and leadership alike), internal candidates, and external candidates as well.  The sales organization with accurate information about their position requirements, and the corresponding level of human capital knowledge, skills, and abilities available to fill those positions, is in the best position to be more strategic and intelligent when making all human capital decisions (i.e., selection, promotion, training, succession planning, performance management, etc.). In this definition, “passionately and diligently” means an unwavering commitment to measure, measure, and measure again. Great sales organizations extend their measurements beyond operational metrics to include significant focus on key human capital metrics: skills, abilities, knowledge, engagement and retention levels, quality-of-hire, ROI, etc. These measures are examples of “leading indicators” that great sales organizations focus on and attend to as they know that such indicators do accurately predict ultimate operating metrics like revenue and profitability. All measurement should be directed at providing better information for improved decision-making.

We have found repeatedly when critical, strategic decision-making is attempted without rigorous attention to the predictive data and metrics, wrong decisions are made which will lead to poor sales performance. If a sales leader can lead their managers and sales people to arrive at a point--mentally (through initial belief and eventual successes) where there is “passionate and diligent focus,” both on the targets that will drive its future success and the competencies needed to drive that success, much progress will have been made in building this core belief. Most great sales organizations share the following beliefs:

• Better Talent equals competitive advantage
• Talent Leadership “Mindset” is the catalyst for action
• Strengthening the talent pool is every leader’s job
• Talent “Gold Standard” has been established (be a role model)
• Leaders, especially senior leaders, must be held accountable for aggressively developing center talent
• Real money must be invested in Talent Leadership
• Talent Review processes are critical

Don’t lag behind without focus on leading indicators. Hindsight with poor results is a position your sales organization does not need to face.  Below are only a few of the differences between leading and lagging indicators.  Which do you measure?

Lagging Indicators	Leading Indicators
Quantity of hires	Quality of hires
End of year results	Gap Analysis of results weekly
Time to fill a position	Skills identification and gap analysis of incumbent sales force
Percent of quota attained	Leadership Involvement
Turnover	Identification of “at risk” incumbents
Objectives Made	Engagement Levels

For more information on these and other white papers on sales assessment click here.

What is the Value of Experience in Recruiting and Selection?

During our 35 years experience in the Corporate employee selection and testing market, AlignMark has completed numerous analyses comparing results of behavioral skill assessments to measures of on-the-job performance and has likewise accumulated assessment results on literally millions of job applicants. One finding which has emerged across virtually every individual job studied, regardless of industry, centers on the value of experience and may somewhat surprise even seasoned HR professionals.

The finding across our different studies is that experience, defined as years of prior experience in a similar job, has little or no affect on neither skill assessment results nor job performance. In repeated studies of incumbents as well as applicants (sales, customer service, supervisors, etc.) whereby confidential measures of job performance were obtained along with personal demographics, job experience of individuals seldom correlated to overall job performance or their performance on behavioral skill assessments. Although easily viewed as a counter-intuitive, potential explanations include the following:

• Tenure and Experience are often different factors. Some individuals continually learn from their experiences and others do not - 5 years in B2B sales does not equate to 5 years of sales "experience."

• Tenure may produce a greater accumulation of knowledge that is not reflected in measures of "soft" skills. However, it also appears that such increased knowledge does not often translate into enhanced on-the-job performance for many individuals.

So what are the implications of such findings? For some companies they are unimportant. For example, in a study of 2,000 B2C sales professions results demonstrated no significant differences among experienced and inexperienced job applicants on selection assessments or subsequent sales results. Despite this finding, the company continues to focus the majority of its recruiting efforts on experienced sales professions and accords them preferred hiring status. (See earlier comments regarding failure to learn from experience.) For other companies, implications are embraced more positively and result in challenging existing experience requirements, etc.

Those things being said, I clearly do not advocate universally abandoning experience requirements. Indeed, some experience requirements may be useful for decreasing voluntary turnover associated with mismatched job expectations, etc. However, at the same time, I do advocate differentiating "time" from "experience".

Click here for more information or White Papers on these topics and other recruiting and selection practices.

Recruiting Practices: What it takes to hire the "Right Talent"

Despite thousands of applicants applying to organizations with job opportunities, businesses today are facing a long-term talent shortage unlike anything experienced over the past several decades. Leading editorials as diverse as The Economist and CNN Money have pointed out that the problem is the shrinkage in highly skilled work force, increasing worldwide demand for highly skilled knowledge workers and globalization of the economy will create difficulty for even the most creative and successful businesses in managing their talent pipeline.

Over the next 10 years, the demand for talented people will far exceed the availability of skilled workers - at all levels, and in all industries. Before proceeding further, let’s put things into perspective. The recruitment and staffing department within each organization is responsible for recruiting the primary assets of the company – its workforce. For a company to make sure that their recruiting department is effective and efficient, proper performance metrics must be employed along with the aid of tools and techniques to source and screen talent.

How do I know I have a problem?

• I have fewer applicants than I’d like showing up at my door
• Resumes never give me the right picture
• I am spending too much time calling each candidate
• I am spending too much time talking to candidates that are not really qualified
• My applicant to hire ratio is very low
• Line organizations constantly differ with the candidates that are shortlisted

As we speak with staffing and talent acquisition executives from around the world, they all express frustration in creating a measurable means that drives one main objective – getting the right candidate for the job. In order to achieve this objective we must first look at how the recruiter of today is being measured and its implications on how he/she sources. We have noticed that organizations measuring their recruiters in traditional methods and processes are losing out in the war for talent.

According to us recruitment has 3 key areas to focus on that every recruiter and recruitment manager need to live by.

1. Attracting talent exhaustively
2. Screen talent systematically
3. Measuring talent for knowledge, skills, abilities, and other factors such as fit.

What am I doing wrong?

Recruiters today are being trained to “screen out” applicants, thus making their roles very transactional. Measuring the number of transactions a recruiter could perform in a specific amount of time led to the creation of the most commonly used metrics: Cost-Per-Hire. Many organizations continue to employ these same metrics on today’s recruiter with poor results and low “client” satisfaction.

Cost-Per-Hire, the most common measurement applied to recruiting, only looks at the initial cost and not the long-term cost associated with hiring the wrong candidate. Focusing purely on initial cost will drive recruiters to focus on making more hires as opposed to making better hires and loosing focus on the three elements of recruitment practices. This metric can inadvertently create conflicts between recruiting and hiring managers by driving the recruiter to ‘sell’ candidates internally that may not be appropriate but come at a low cost.

To summarize: “How recruiters are measured is having its impact on the quality of hires”. But smart recruiters and recruitment managers can change the way they hire and be accountable for quality of hires while continuing to make more hires through a very systematic approach. To achieve this recruiters should spend more time with pre-qualified candidates and leverage technology that simplifies processes and systematically follows the 3 key areas of focus; attract, screen, and measure.

How do I address that problem?

The smartest employers, who hire the best people, recruit a pre-qualified candidate pool of potential employees before they need to fill a job. The earlier you adopt these practices, the better your organization will do in the war for talent

For more detail on addressing this or other recruiting issues please contact us or download some of our recruiting white papers.

Contemplating the terms "Hiring" vs "Recruiting"

Seth Godin, the marketing “GURU” and author of the book The Purple Cow provides a succinct difference between the terms recruitment and selection.
“Hiring is what you do when you let the world know that you're accepting applications from people looking for a job. Recruiting is the act of finding the very best person for a job and persuading them to stop doing what they're doing and come join you.”

• Hiring is easy and fast and is basically a retail operation.

• Recruiting is artful and slow and is essentially a direct marketing effort.

Recruiting raises the bar because it demands you have a job worth quitting for. The recruiter doesn't solve an urgent problem for the person being recruited, in fact, they create one. That person already has a job (hence no problem). The problem being created is that until they change over to your job, they'll be unhappy. That's a huge hurdle for a job to overcome, which leads to this key question:

Is your job opening so good you could recruit great people for it?”

While it is good to understand the difference between the processes of Recruitment and Selection, most Recruitment resources are under immense pressure to ensure that right candidates are identified for the job opening. Given today’s speed of business and volumes involved in recruitment, the entire process of hiring can be compared to a typical sales process where the focus is on numbers and not on quality of hire. It is important that Recruitment Managers and the Business heads conduct periodic reviews of the Pre Hire assessment of the candidate and compare the same with performance reviews and ratings. This would give the organization a broader understanding of the efficiency of the recruitment process in a qualitative manner, thereby providing the management a deeper understanding of why skill and competency gaps exist in the organization.

Levels of Recruitment

Organizations are built like the proverbial pyramid and 80% of annual recruitment numbers correspond to entry level resources. To ensure that demand does not overshoot the supply of such skilled resources, many organizations today follow various processes to hire employees. They can include strategies such as job fairs, campus recruiting, and finding people currently working with experience.

Assessments and Interviews

There are various assessments that can be employed to ensure that you are recruiting the right candidate. This could range from aptitude and skill based assessments to full blown assessment centers along with psychometric tests. Structured interviews should be an integral part of any recruitment process and the rigor associated with the same, ensure highly comparable and objective measurement of a candidates skills and abilities.

The Challenge

Most organizations today are faced with the problem of dearth of specific skills and competencies across a specific Business Unit or Management level. While competency mapping and performance reviews help identify existing skills and abilities of employees, they still do not address the immediate and real problem of having someone with the required skills to ensure the business if not affected. Most organizations today respond to such situations by creating a Job Requisition and ensuring that someone with suitable skills is found to bridge the gap.

What organizations and Recruitment functions fail to see is that after a certain period, which may vary from business to business, another competency gap will be created and the entire cycle will be repeated from scratch. It is important that businesses evaluate employees on a periodic basis, but it is even more important that the same be compared with the employee’s pre hire evaluation. This would provide the business and HR with vital data on how much off tangent were they in evaluating the candidate and could help them take suitable steps to mitigate the risk in future.

Integrated HR systems which captures information right from initial  assessments and interview feedback till the time an employee exits the organization, provides the HR team with actionable and reliable information that can be used to better the process of recruitment, as well as employee performance, thereby ensuring that the recurring cost associated with continuous recruitment can be reduced.

For a better understanding or more information on this topic please don't hesitate to Ask Us about Recruiting or download our latest worksheet to determine what recruiting is costing your organization.

 

GenWeb: What today's newest generational group means for recruiting

 We've all heard about Gen X, Gen Y, Boomers, etc. and each of these generations have certain characteristics that "bond" them together with the most obvious one being age. Today a new generation has evolved that has nothing to do with age. We'll refer to the newest Generation as Generation Web or "Gen Web" as its members are bonded together by a single factor - Technology.

Everyone talks of baby boomers retiring and the future shortage of qualified workers in the labor market. Well in almost all cases it's the new "Gen Webbers" that will fill this gap, regardless of their age. Given the current economic condition, workers from all generations that join Gen Web will be asked to fill tomorrow's jobs. Fortunately the time it takes to be part of Gen Web can be relatively short, as today the majority of jobs are becoming more and more dependent on technology. This trend will only continue, and in fact, accelerate faster in the near future. As a simple example for boomers - remember when you first used a computer, laptop or cell phone - for the younger generation, remember when you first began to text message or use MySpace. Technology weaves us all together, especially when it comes to recruiting and business.

So what are the implications of this for business? The need for this new generation in the workplace will force businesses to change many of their HR practices. The ways in which companies recruit, hire people, train and develop their employees, and manage them on the job will take on a very different look versus today (yes even today.) We're already seeing the rapid increase in the use of social networking to find new sources of candidates and passive job seekers. This trend will continue with new ways of training and sharing information, new ways of collecting performance data on workers, etc.

And we're not just seeing the need for technology in the workplace. New ways of communications, gathering information, reading books and newspapers will all continue to evolve. And as the technology evolves, so will the needs and skills of this newest Gen Web generation. Grandparents will join in this generation to communicate with their Grandchildren. Politicians will connect with their constituents. And Business will use technology to better connect to its customers, suppliers, and employees.