Resourcing as a function must become better at demonstrating the value it brings to an organisation. It needs to do this if it wants to evolve as a function and become a true trusted advisor to the business. While some businesses are on this journey, and quality is the driver, many remain in their default setting; cost reduction.
Central to Resourcing’s success will be the ability to evidence the quality of hires being made and the impact these hires are having on the business’s financial bottom line. We believe that with rapid advances in technology and the rise of Big Data and HR Analytics, there is a huge opportunity for Resourcing to successfully achieve this. Data is also the biggest threat Resourcing faces as unless it can get in control and understand its impact, enterprise wide analytics functions will start to lead the agenda.
These are the thoughts and takeaways from the latest Resourcing Think Tank held on Tuesday 14th June hosted by Avanade’s Els Hol-Ferman (Talent Acquisition & Integration Director (EALA)). This Think Tank sought to discuss ‘The Evolution of Resourcing and its Impact on Quality of Hire’.
The following summary has been prepared to reflect a segment of the discussion held amongst senior HR and Resourcing professionals from leading national and international businesses. Specific company details, experiences and examples have been omitted from this summary as all discussions are held under ‘Chatham House Rules’.
How do you measure Quality of Hire?
This is the problem faced by many. How do we actually measure Quality of Hire? What tangible data do we have that will account for a successful / unsuccessful hire? The first thought we came up with was who is it that we are measuring for? We found that different people have different opinions on what a good / bad hire consists of. If this is the case for many, should that mean that we as a Resourcing department guide the business to what we feel is a Quality Hire? For example, by using specific data points and tangible measures to demonstrate to the business what a Quality Hire looks like, such as:
- % of Candidates to Interview
- First 12 Month Attrition
- Declined Offers
- % of Promotions
- % of Internal Mobility
Tracking the above data points can enable us to actually measure what a Quality Hire looks like.
What stage does it leave Resourcing and become Line Manager Responsibility?
Resourcing teams will look after candidates and new starters for the first 12 months (on average). During this time it is key to have a strong relationship with the Line Manager through regular Development Meetings, for example to drive a better understanding of the new starter. Ultimately this should lead to lower attrition and increase ‘quality’. During Development Meetings you will be able to see if the new starter is a good fit for that team or better in a different team with a different culture (increasing internal mobility and decreasing attrition). You may have a situation where a new starter is not hitting specific targets, but once you really understand the starter, you learn their vision and understand they are growing into the role and will be a quality hire in the future. If you do not have development meetings and a good relationship with the Line Manager, you could potentially lose this insight.
Why do people leave in the first 3 months? Is it the wrong role? Wrong manager? Wrong company? It could be any of these reasons. What we as Resourcing professionals can do is attempt to limit the number of leavers. If you meet with the Hiring Manager during the recruitment process, you are 86% more likely to fill the role. If you do not meet the decision maker, this falls to below 20% as you may not understand exactly what it is the hiring manager is looking for. Other factors which will increase success include understanding the team culture, what the role entails, different personalities within the team, and conducting psychometric tests to help you understand if a person will be a good fit for a business. The key to a successful psychometric test from the employer’s point of view is clearly defining the data that you are looking for and ensuring that it is being read by someone that can fully interpret the data, understanding this will lead to a useful Quality of Hire metric.
Asking candidates to rate the recruitment process on a scale of 1-10 (10 being the best) at specific intervals can provide interesting data if managed in the right way. Respondents who rate either a 9 or 10 are seen as promoters of the business which, again, can also contribute to lower attrition and should also have a positive impact on referrals.
Quality vs. Cost Per Hire
In theory, the more you spend the higher standard of candidate you should get. However, a bigger fee is not necessarily a guarantee of quality. It may come down to choosing between hiring someone at a lower cost who has the potential to be a future leader, or paying a higher fee to get a well established candidate through the door. For example, an experienced employee at Deloitte could move to Ernst & Young to do the exact same role but may not settle and be deemed a bad hire, despite having the necessary technical skills to perform the role. This then links back to culture, personality, and the previous measures that we have discussed.
As a result of the candidate driven market, candidates believe that they do not have to accept the first offer that they receive. They often believe that they can justify a bigger salary, especially when it can be seen that counter offers are happening more and more as businesses understand that losing a high performing employee is detrimental to the business in more ways than one.
Looking at the long term effect recruitment has on a business, should you look to invest and upskill your current recruitment team rather than pay high agency fees? Would internal control result in a better candidate experience?
Cost Per Hire
A small majority of companies have the luxury of a business unconcerned with the cost per hire, assuming the candidate is of high enough calibre. However for the majority of businesse, even though everyone wants the best candidate possible, budget constraint is a real concern. This link takes you to Resourcing Insight’s Talent Acquisition Calculator which takes your original Talent Budget and works through different scenarios to show you what difference your budget actually makes to the bottom line of your business. This gives you a real insight into how your talent acquisition affects the business, whether that be good or bad.
Cost of a Bad Hire
One way to demonstrate to the business the importance of budgets and having specific metrics in place to measure the Quality of Hire is to show how much a wrong hire costs. If we can enlighten a business, through tangible data, on how much it actually costs to make poor hiring decisions and / or not give the new starter the best experience possible, we can help prioritise Quality of Hire on our Resourcing agenda.