Recruiting Metrics

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    Recruiting Metrics - Presentation Transcript

    1. The Top Metrics for Demonstrating the Impact of the Recruiting Function ERE Webinar Nov 29, 2007 © Dr. John Sullivan Professor, Author and Advisor to Management www.drjohnsullivan.com Dr John Sullivan [email_address]
    2. Dr. Sullivan’s background
      • Former Chief Talent Officer of Agilent Technologies , the HP spin-off with 43,000 employees
      • Selected among HR’s “Top 10 Leading Thinkers”
      • Fast Company Magazine called him the “Michael Jordan of Recruiting”
      • Staffing.org coined him “the father of HR Metrics”
      • SHRM called him “One of the industries most respected strategists”
      • He has written more than 700 articles and 7 books
      • Now Professor of Management at San Francisco State University’s School of Business
    3. BMW HP Starbucks Siemens Cisco Baxter Intel Oracle Pfizer Sprint World Bank Whirlpool Mc Donald’s Corp. Phillips Med Abbott Charles Schwab Mc Kinsey & Co J&J AOL Sun Macy’s Microsoft JP Morgan Dow Corning Deloitte Consulting Marriott NIKE Principal Financial Dell MGM Grand Chevron/Texaco Morgan Stanley SC Johnson B of A Schering Plough Yahoo Texas Instruments Coors Nestle Stanford Hospital General Mills Valero Energy GE PepsiCo Google
    4. Global reach of Dr. John Sullivan Work Published (43 Countries) Publicly Presented/Advised (23 Countries)
    5. Dr. Sullivan’s current books
    6. Dr. Sullivan has a monthly column… on the “last page”
    7. Topics for today
      • Introduction
      • Tactical recruiting metrics
      • Strategic recruiting metrics
      • Metrics that demonstrate the business impact of recruiting
      • The 13 primary metrics for measuring the overall recruiting function
      • Your questions
      • Premise for today
      • The metrics you now use have not made you
      • rich, famous or given you a huge HR budget
      • It’s time to shift metric approaches
      • When selecting metrics >
    8. You need a separate metric for…
      • You need a metric for
      • Every major program goal… and for every improvement area – For example… Reduce turnover, cut costs, increase productivity
      • Every CFO/ management funding decision criteria – For example… an ROI of above 20%, a payback period of 18 months >
    9. Top 10 CFO decision factors for HR projects
      • Low initial investment
      • High ROI
      • High success rate/ low risk
      • Immediate start up
      • Short payback period
      • Provides a competitive advantage
      • Increased productivity (Profit per people dollar)
      • Accurate results metrics and counting
      • No new headcount
      • Consequences of failure are built in (Individual accountability)
    10. Beware of “So what?” metrics
      • Avoid
      • “ So what” or “that’s interesting” metrics
      • Example – It takes 3 days to get a req signed
      • Example – Your cost per hire is up 1% (Brain surgery?)
    11. Beware of “So what?” metrics
      • Instead focus on…
      • “ Action metrics”… that change the way people act
      • They elicit the response of… “holy cow,” I better do something right now !
      • Example – Your new hire turnover rate is 99% within the first 3 months or >
    12. Would these metrics get your CEO’s attention? (Rev per employee)
      • Average $160,000
      • IBM $260,102
      • If you were IBM’s CEO Sam Palmisano, would you
      • be pleased?
    13. Would Sam be pleased now?
      • Average $160,000
      • IBM $260,102
      • HP $592,600
      • Microsoft $699,016
      • Dell $870,245
      • Google $1,056,000
      • Apple $1,169,594
      • Nintendo $2,500,000 ( $440,000 )
      • It takes 10X more employees at IBM… to produce the same revenue as Nintendo
      • There are two levels of metrics
      • 1. Tactical
      • 2. Strategic
    14. The two levels of metrics
      • “ Tactical Level” metrics (Not to be reported externally)
      • Efficiency/ diagnostic metrics (Cost metrics)
      • 2. Recruiting results metrics (Number of hires)
      • 3. “Cause” identification metrics (Why they accepted)
      • 4. Satisfaction level metrics (Manager /applicant satisfaction)
      • Now shifting to strategic level metrics
      • that will be reported to senior executives
    15. The 4 strategic level metrics
      • Strategic Level
      • 1. Predictive metrics - Alerts/ smoke detectors
      • Goal – Provide “heads up” warnings, so that managers can prevent or mitigate upcoming problems and take advantage of opportunities
      • Target - Operating managers
      • Example of an opportunity – Tiger Woods just resigned from his golf team… interested?
      • Example of a problem - Mgr X, your quality of hire is now at D+ level, the chance of getting your bonus is now below 33%
    16. The 4 strategic level metrics
      • Strategic Level
      • 2. “Other pocket” connect the “unintended consequences” metrics
      • Goal – To make sure that everyone knows the full unintended consequences of cost cutting
      • Target - Operating managers and the CFO
      • Example – We used the “cheapest” source of hire (Saved $1,500) but… we hired a salesperson that sold $67,000 less than the hire from the more expensive source! >
    17. Another “other pocket” example
      • Ex. 2 – Remind CFO’s of “other pocket” costs
      • Pocket #1 – Froze safety hiring (Saved $10K )
      • But look at “other pocket” costs…
      • Pocket #2 – Accident rates doubled (+$400,000)
      • Pocket #3 – Insurance rates up 23% (+$187,000)
      • P. #4 – Turnover of safety ee’s +15% (+$89,000)
      • Other pocket costs = - $676,000 >
    18. The 4 strategic level metrics
      • Strategic Level
      • 3. Split sample/ Dead bang proof
      • Goal – Unwavering proof that this recruiting program works (Does what it says it does) to get managers to pay attention to recruiting
      • Target - Operating managers and the CFO
      • Example – % of business performance improvement after the employee referral program was updated >
    19. Split sample between 2 sales groups Sales group “A” % of sales goals met 50 10 After referral update 100 % of sales goals met Before referral update… 70% of sales goals met Sales A after one year “ Control group” a constant 85% Sales group “B” 100% Before After
    20. The last strategic metric…
      • Strategic Level
      • 4. Revenue/ profit impact on the business
      • Goal - Direct proof (in dollars) that recruiting increases revenues/ profit
      • Target – CEO and senior managers
      • Example – Revenue increases and business impacts after hiring 100 new nurses using a new ATS system >
      • Example
      • Demonstrating 24 different business impacts in a recruiting example
    21. Business case - ATS
      • Note : This example is for hiring nurses in a public hospital using a new ATS e-recruiting system (Comparing last years hires to ATS hires)
      • Hiring 100 Nurses… at an average salary of 80k
      • The new ATS system costs $1,250,000
    22. 24 different recruiting business impacts
      • New hires (NH) produce 5% more output ($5 mil)
      • NH reach minimum output faster (30 days/ $250k )
      • NH have increased customer satisfaction ratings (12% / $100k )
      • NH on job failure rate is 50% lower (Customer damage ($1 mil) and replacement costs (salary wasted/ $96k )
      • NH stay 12% longer (COV $600k)
      • NH make 14% fewer errors (on patients/ $1.2 mil)
    23. 24 different recruiting business impacts
      • 50% fewer vacancies as a result of the new NH system means reduced nurse stress and as a result, nurse turnover is reduced by 4%/ $900k)
      • The ATS system hires top performers from competitors (1% net swing in revenue / $2.1 mil )
      • NH’s need less training (23 fewer hours/ $90k )
      • NH training failure rate is 50% lower ($65k)
    24. 24 different recruiting business impacts
      • NH have new skills so they can do 20% of the tasks that were formerly done by more experienced nurses ($322k)
      • ATS system requires 6% less management time (before and after measured/ $64k )
      • NH output increase means 5% of proposed new positions can be eliminated ( $240k)
      • OT & agency hiring costs reduced by 51% ( $3 mil)
    25. 24 different recruiting business impacts
      • Because ATS selects more skilled nurses, we can now expand our high margin med service offerings that were restricted because of NH nurse shortcomings (cancelled operations were reduced by 14% / $9 mil )
      • 20% less generalist time spent on recruiting ( $9k)
      • NH system also works for exec nursing positions so 32% fewer exec searches are needed ( $340k)
    26. 24 different recruiting business impacts
      • NH system hires 30 days faster (Vacancy cost/ $670k)
      • When new hires exceed 25% of the population of a unit, the average patient stay is reduced by one day (Loss in revenue $92k)
      • NH sys cuts HR out of pocket costs per hire (by 2%/ ( $2k) )
      • 50% fewer discrimination complaints ( $72k)
    27. 24 different recruiting business impacts
      • The productivity of other nurses increases where % of NH’s exceeds 10% ( $82k)
      • Written up in Nurse mag. helps build our brand (product/ employment/ ( $122k) )
      • Continuous learning /feedback element improves NH system impact 7% each year ( $1.7 mil)
    28. How much was the total business impact?
      • Total program cost = $1,251,000
      • Total 1 st year $ impact = $24,232,000
      • ROI – priceless!
      • Additional business impact recruiting metrics
    29. A “before and after” metric that demonstrates the impact of diversity recruiting
    30. Before and after – Illustrating diversity business impacts
      • Emergency room team diversity impacts
      • A team of 10 (with no diversity) had two diverse people added (ADA, EEO, Gay, Age)
      • Within three months because of:
      • Better communications
      • Less fear
      • Increased trust and
      • Better understanding of patient needs
      • The following changes occurred >
    31. Illustrating diversity business impacts Better patient satisfaction + 36% Number of mis-diagnosis < 27% Service delays (waiting for an interpreter) < 8% Patient complaint rate < 48% Team turnover rate < 8% Teams on other shifts had no measurable changes Estimated $ impact… Priceless
    32. The negative revenue impact of… excessive position vacancies (Slow hiring)
    33. The costs of a position vacancy for a radiologist
      • Lost revenue from an vacant radiologist position
      • We can’t bill them out at $4,950 a day
      • We can’t do two voluntary operations at $20k
      • Operations take 5% longer because of understaffing, so we have 5% higher operational costs ($3,400)
      • The error rate of the overstressed radiology staff goes up 1.7% (Insurance, law suits, turnover)
      • Estimated dollar impact per day… $29,500 >
    34. The costs of a position vacancy for a radiologist
      • It takes us 43 days to fill a vacancy…
      • And 25 days of that is due to manager caused delays
      • Even if the hiring managers cut their slack hiring time by only 40%...
      • That would mean over $300,000 in increased revenue for the facility
      • Increasing your business impact
      • by shifting sources
    35. Changing the source… impacts your results Primary source: 2003, Major US Healthcare chain, source comparison study Source impact New Old Improvement Source Source Cost $2,796 $1,877 - $919 Offer Acceptance Rate 95.4% 81.2% + 14.5% Voluntary Turn < 1 yr 9.3% 22.1% + 2.3X 1% increase in retention is equivalent to over $400k in operational performance, costs and lost salary Voluntary Turn > 1 yr 3.2% 12.5% + 3.9X Termination rate < 1 yr 1.2% 4.4% + 3.6X Performance Increase 14.36% Baseline
    36. Get your managers attention with a correlation
    37. Correlation between hiring speed and attaining a manager’s business results Hiring speed – average days to fill % of a manager’s business results that were achieved There is a .99 Correlation between hiring speed and a manager’s business results 100% 60 days 30 days 10 days 0% 50%
    38. Demonstrate that you make a direct profit
    39. Great recruiters make a profit! HealthEast once operated a rent a radiologist service
      • Now let’s shift to…
      • The 13 metrics that I recommend
      • for the “over-all” recruiting function
    40. The first 4 are quality of hire measures
      • Performance of the hire (on the job performance ratings (or performance appraisal) after 6/12 mths)
      • New hire failure rate (% of new hires in key jobs had to be terminated or asked to leave)
      • Vol. turnover of new hires (the % that voluntarily quit within their first year or average tenure compared to a standard)
      • High level diversity hires (The percentage of hires in professional, managerial & key jobs that are diverse (Using a global definition))
    41. 13 primary recruiting metrics
      • “ Need”/ Start dates met (the % of key positions filled by the managers designated “need” date) Santa
      • New hire “time to productivity” (Time it takes for new hires to meet the minimum output standard)
      • Give away/ take away ratio (The # of employees in key jobs that we “poach” from a firm compared to the number they “poach” from us)
    42. 13 primary recruiting metrics
      • Manager & new hire satisfaction (% of key managers, new hires in key jobs and applicants for key jobs that are satisfied with the hiring process)
      • Employment brand strength ( Differentiated name recognition among possible candidates)
    43. 13 primary recruiting metrics
      • Referral rate (What percentage of all hires come from referrals?)
      • Note: Referrals, besides producing top performers, they also indicate company pride & help extend your employment brand)
      • 11. Quality sources used? (What % of applicants for key jobs came from top sources?)
    44. 13 primary recruiting metrics
      • 12. The quality of non-hires – A great hiring system doesn’t “miss” hiring top people. Great systems measure the % of superstars missed , as well as the number of “exceeds qualifications” that were “not hired” from our top 5 competitors
      • 13. The total dollar impact of great recruiting on the business this year (Also it’s ROI compared to other OH and business functions)
      • Final steps
    45. Final steps
      • Partner with the CFO’s office
      • Let the CFO pick & present your metrics (3x5)
      • Get the help of the CFO and cost accounting to convert HR metrics into $ of revenue impacts
      • Hire interns to do your calculations (Do own Taxes?)
      • Use sampling tools & avoid “counting them all”
      • Use professional estimates… when the CFO will allow it
    46. Don’t be subtle if you want managers to pay attention to metrics!
      • Reward managers for great recruiting & retention
      • Integrate/ embed your key metrics into already existing business performance & financial reports
      • Provide more than history… include alerts and a “heads up” so that managers can act in time
      • Show that the very best managers utilize metrics
    47. Did I make you think? How about some questions Hundreds of articles on all aspects of HR by Dr. Sullivan can be found at… www.drjohnsullivan.com

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