Wednesday Wisdom: The Right Stuff

Dear Claudia,

We are implementing a business performance dashboard at my company, and I’ve been asked to recommend three key metrics for recruiting. The more I research the subject the harder it is to keep it to such a small number, and everyone has a different idea of what to measure and why. So what do you think is most important to measure?

Wants to Get it Right

Dear WTGIR,

Recruiting is a project-driven sport: for each requisition there is a set of requirements, a timeline, and a budget associated with delivery. Recruiters leverage this by asking Hiring Managers to prioritize those aspects, which subsequently drives the strategies and tactics used to fill the role.

With that in mind, and if I could only pick three public metrics to report to the business, I’d probably go with the following:

Time to hire:
Time to hire (TTH) tells the obvious story of putting butts in seats. It’s an easy metric for the rest of the business to understand, and directly correlates to revenue and productivity. The drawback is that this metric says what but not why – and recruiting is often martyred on the altar of “why does it take so long to hire people?” The implication is that we own the process - but the real story is more complex.

For this reason I’ve found it helpful to break TTH into smaller components that drive conversations around accountability and problem resolution. How long does it take to present a qualified candidate to a Hiring Manager? What portion of that time was spent in sourcing the candidate? Recruiter screening? How long does it take for the candidate to complete business interviews? How long does it take to negotiate, extend, and accept an offer? How long after that until the person shows up on the job, and even more importantly begins to produce the desired outcomes?

Report a single number to the business as a whole, but carry the breakdown in your back pocket.

Cost per hire:
Another familiar metric is cost per hire (CPH). I like this metric too, but the truth is that nobody can seem to agree on what it means. Is it hiring-project costs only, like advertising, recruiter fees or salaries, and interview expenses? Or does it also include more indirect costs such as time spent on interviewing, or loss of productivity or sales while the role remained empty? And what about the cost of training, the amount of time it takes to become productive in the new role, or the additional burden of turnover in the first year?

Collaborate with your CFO to define the right set of input for this metric, and then report away. You’ll tell the story of recruiting project management, but you can also use the data to drive improvements in workforce planning and budgeting.

Quality of hire:
No project is complete without a feedback mechanism to understand the impact of the hiring activity on the business. Did we get what we expected? Why or why not? How can we improve the next time?

Many companies use performance appraisals to measure this aspect, but in a formalized process it can take up to a year before the data is available. That’s a long time, and in the interim both poor hiring and high turnover can get pretty expensive.

From a recruiting perspective it can be as simple as asking business stakeholders to rate new hires periodically during the first year. I recommend you keep it simple, and target the business perception of the new hire's ability to do the job, motivation to get the job done, demonstrated results, and fit with the culture or personality of the business. If you go one step further and correlate this information with source of hire, and you’ll have a wealth of information to drive improvements in your recruiting and selection process.

This is a most excellent journey that you are embarking on, my friend. I wish you well, and hope you'll check back in the future with an update.

Happy recruiting!

**

In my day job, I’m the Head of Products for Improved Experience, where we help employers use feedback to measure and manage quality in hiring and retention. Learn more about us here.

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Replies to This Discussion

Permalink Reply by Rob Humphrey on September 2, 2009 at 1:31pm

Do think company executives really care what the cost of hire is? Really..I am curious

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Permalink Reply by Peter Ceccarelli on September 2, 2009 at 3:50pm

I agree with "fill time" and "cost per hire" as meaningful metrics, but not "quality of hire". The recruiter is not accountable for how well someone is doing on the job. The hiring manager is, and after all they are the ones making the hiring decision based on the interview assessments.

I think a meaningful metric is quality of "recruiting", or "customer service" ratings. That typically relates back to fill time and cost per hire, but even an in-house recruiting function should work just the same as a TPR or agency in order to add value. Recruiters drive a process, but if they are driving it wrong, or staying at a red light too long and not pushing the button to turn it to green, then a customer service rating by the hiring manager/team will indicate where the fix might be.

Lastly, source code is meaningful. Where are your hires coming from in relationship to where are you spending your time/money to find candidates.

▶ Reply

Permalink Reply by Claudia Faust on September 2, 2009 at 5:56pm

Company executives care about the cost of pretty much everything - and hiring is a project like any other for the business. But that is just my take...what do others have to say?

Rob Humphrey said:

Do think company executives really care what the cost of hire is? Really..I am curious

▶ Reply

Permalink Reply by Claudia Faust on September 2, 2009 at 6:41pm

Peter my friend, I'm so glad you brought up the "recruiters aren't accountable" defense. With respect, I would argue that quality of hire is a must-have on the global dashboard, precisely because it measures the results of decisions made by every contributor to the hiring process ("Did we get what we expected? Did we get value for our investment?"). Everyone owns it, and no other metric more strongly indicates the collective commitment to, or disconnect from, the hiring health of the organization.

When Finance reports on the dashboard, they don't report just those things under their control; they report revenue and expenses, the very things that every stakeholder in the business is responsible for. When business silos present only the information that makes their own turf look good, the business is crippled; on the other hand, best-in-class businesses are interested in the metrics that drive discussion and alignment with global goals and objectives.

Quality of Hire is a global metric that every stakeholder (read: recruiter, hiring manager, interviewer, and upline manager) has some responsibility for, and should have a healthy interest in. Research released earlier this year from the Aberdeen Group showed that QoH was the preferred human capital management metric assigned by executives in best-in-class organizations.

My opinion: Corporate Recruiting is a more strategic contributor when it steps out of the territorial "that's not my responsibility" mode and demonstrates a commitment to speaking the truth - even when it is uncomfortable. The business has to win - not just the recruiting or HR department. If the business fails, recruiting fails too (even if it looks marvelous on the dashboard).

And TPRs, although vendors, are more trusted partners when their vetting processes include consideration and discussion of a candidate's potential for performance and retention throughout the first year. Do they own it? Of course not. But as consultants, do they have an obligation to watch for signs of potential mismatch that may lead to turnover in the first year? To the best of their ability, in my opinion, you bet they do.

Peter Ceccarelli said:

I agree with "fill time" and "cost per hire" as meaningful metrics, but not "quality of hire". The recruiter is not accountable for how well someone is doing on the job. The hiring manager is, and after all they are the ones making the hiring decision based on the interview assessments.

I think a meaningful metric is quality of "recruiting", or "customer service" ratings. That typically relates back to fill time and cost per hire, but even an in-house recruiting function should work just the same as a TPR or agency in order to add value. Recruiters drive a process, but if they are driving it wrong, or staying at a red light too long and not pushing the button to turn it to green, then a customer service rating by the hiring manager/team will indicate where the fix might be.

Lastly, source code is meaningful. Where are your hires coming from in relationship to where are you spending your time/money to find candidates.

▶ Reply

Permalink Reply by Charles Van Heerden on September 3, 2009 at 4:45am

Hi Claudia, great response and the Time, Cost Quality pyramid is a good place to start.

Retention is either a quantitive measure (say after six months) or a qualitative measure (based on a formal performance review).

I also believe it is important to measure the process by getting feedback from applicants through a survey process.

Best regards, Charles

▶ Reply

Permalink Reply by Peter Ceccarelli on September 3, 2009 at 4:48pm

The hiring manager makes the decision who to hire from a qualified pool of candidates that the recruiter has screened. The hirning manager has perhaps interviewed the candidate once or even twice, hopefully including internal business partners in the interview process. At the end of the day THEY make the decison as to which candidate is hired and once hired and onboarded, then the process of training and assimilating begins, hopefully using tools that HR has developed in order for that success to be measured and fine tuned. The success of the candidate falls squarely on the hiring manager, NOT the recruiter. I stand firm that the recruiter is NOT accountable for the success or failure of an employee. We don't manage them. We provide HR tools to coach and correct, counsel through difficulties, and praise for success during the appraisal process, if not before. So yes, we are invested from that angle for an employees success, but all parts being equal, at the end of the day the relationships success ultimately falls to the manager.

I get what you're saying in your reply discussion and obviously that happens organically for most of us who are invested in the process/company/success/failure. But at the end of the day ONE person is accountable for someones success or failure (beyond the employee) and that is the manager!

Claudia Faust said:

Peter my friend, I'm so glad you brought up the "recruiters aren't accountable" defense. With respect, I would argue that quality of hire is a must-have on the global dashboard, precisely because it measures the results of decisions made by every contributor to the hiring process ("Did we get what we expected? Did we get value for our investment?"). Everyone owns it, and no other metric more strongly indicates the collective commitment to, or disconnect from, the hiring health of the organization.

When Finance reports on the dashboard, they don't report just those things under their control; they report revenue and expenses, the very things that every stakeholder in the business is responsible for. When business silos present only the information that makes their own turf look good, the business is crippled; on the other hand, best-in-class businesses are interested in the metrics that drive discussion and alignment with global goals and objectives.

Quality of Hire is a global metric that every stakeholder (read: recruiter, hiring manager, interviewer, and upline manager) has some responsibility for, and should have a healthy interest in. Research released earlier this year from the Aberdeen Group showed that QoH was the preferred human capital management metric assigned by executives in best-in-class organizations.

My opinion: Corporate Recruiting is a more strategic contributor when it steps out of the territorial "that's not my responsibility" mode and demonstrates a commitment to speaking the truth - even when it is uncomfortable. The business has to win - not just the recruiting or HR department. If the business fails, recruiting fails too (even if it looks marvelous on the dashboard).

And TPRs, although vendors, are more trusted partners when their vetting processes include consideration and discussion of a candidate's potential for performance and retention throughout the first year. Do they own it? Of course not. But as consultants, do they have an obligation to watch for signs of potential mismatch that may lead to turnover in the first year? To the best of their ability, in my opinion, you bet they do.

Peter Ceccarelli said:
I agree with "fill time" and "cost per hire" as meaningful metrics, but not "quality of hire". The recruiter is not accountable for how well someone is doing on the job. The hiring manager is, and after all they are the ones making the hiring decision based on the interview assessments.

I think a meaningful metric is quality of "recruiting", or "customer service" ratings. That typically relates back to fill time and cost per hire, but even an in-house recruiting function should work just the same as a TPR or agency in order to add value. Recruiters drive a process, but if they are driving it wrong, or staying at a red light too long and not pushing the button to turn it to green, then a customer service rating by the hiring manager/team will indicate where the fix might be.

Lastly, source code is meaningful. Where are your hires coming from in relationship to where are you spending your time/money to find candidates.