The Illusive Staffing Metric: Quality of Hire
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The Illusive Staffing Metric: Quality of Hire

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Leading up to the recession, research indicated that a few, but growing number of companies were starting to measure “Quality of Hire.” A lot of the research in this area points out the positive ...

Leading up to the recession, research indicated that a few, but growing number of companies were starting to measure “Quality of Hire.” A lot of the research in this area points out the positive benefits of employing a quality of hire approach as part of an overall talent management strategy.

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The Illusive Staffing Metric: Quality of Hire The Illusive Staffing Metric: Quality of Hire Presentation Transcript

  • June 24, 2009 u e , 009 The Illusive Staffing Metric ‐ Quality of Hire
  • Your Presenters Today Anne Nimke Kelly Renz - SPHR Co-founder & Executive VP Client Services and Consultant Talent Leadership 2
  • Pinstripe, Inc. designs, builds and manages high‐performance, large scale talent acquisition solutions. For clients in industries that include financial services, q , technology, telecommunications, healthcare and others, Pinstripe’s innovative approach to Recruitment Process Outsourcing (RPO) integrates sourcing, recruiting, hiring, on boarding, and engagement into a complete, end to end recruiting, hiring, on‐boarding, and engagement into a complete, end‐to‐end outsourced acquisition and retention solution. For healthcare organizations, Pinstripe’s Healthcare Group offers the provider‐side experience it takes to help clients reduce their recruitment and labor costs while continuing to provide the clients reduce their recruitment and labor costs while continuing to provide the highest quality of patient care.  Pinstripe’s Project Search Group offers on demand hiring solutions that allow companies to choose from discrete modules of service—using just what they need, when and where they need it. Clients choose service using just what they need when and where they need it Clients choose services that best complement their existing capabilities, while controlling the overall costs of recruitment.  More information is available at  www.pinstripetalent.com or www.pinstripehealthcare.com 3
  • Agenda and Objectives • Quality of Hire – Definition, Importance and Business Case • Key Levers/Touch Points that Impact Quality of Hire – E t External Positioning:  Employment Brand, Workforce Planning l P iti i E l t B d W kf Pl i – Candidate Interface:  Recruitment, Selection – Post Hire Experience: Orientation On‐Boarding Post Hire Experience:  Orientation, On Boarding – Org. Processes:  Performance Management, Talent Management • Q&A 4
  • Polling Question Please describe your current role… Recruiting Manager / Recruiter – 39% HR Manager / Director or above – 33% HR Generalist / HR Specialist (non recruiting) – 0% Hiring Manager / Executive – 0% Other – 28%
  • Introduction to Quality of Hire • How do we define QoH? • What is the business case to measure QoH? • Example of a QoH calculation 6
  • What is Quality of Hire (QoH)? • QoH is the set of meaningful workforce measurements, unique to  each company, that defines success in hiring and retaining the  right talent to fuel the business.   • QoH is an important component of the Talent Management  strategy • These measurements need to be numerically based (or converted  to numbers) and derived from business results.  Some commonly  to numbers) and derived from business results. Some commonly used metrics are: – Performance evaluation rating system – Productivity at a certain point of employment (after 90 days, six months,  1 year, etc.) – Retention rates (turnover data) Retention rates (turnover data) – Succession planning data – promotability, diversity goals, performance  management 7
  • What is Quality of Hire (QoH)? • The good news is, you likely have this data somewhere  already within your business.  Sometimes it’s just a matter of  y y j how to get at it • It’s asking the business question, “What is important to us,  and how do we define success?” – How does talent fit into that definition for us? • Evaluating current Talent Management systems and inputs  are the first steps to identify what metrics are already  , p y y available, or could be captured if the system was fully  maximized 8
  • Business Case for Quality of Hire • Domestic and Global War for Talent – Offshoring; Remote workers to electronic; Immigrants; Working 24x7; Job  migration; Global talent supply chain i ti Gl b l t l t l h i • Cost of Replacing Talent – Retiring Talent Turnover # years of work experience lost Retiring Talent; Turnover; # years of work experience lost – It takes 2 new employees to replace 1 skilled worker – Forrester • Demographic Trends Point to a 11m worker shortfall Demographic Trends Point to a 11m worker shortfall – 15% fewer 35 to 45 year olds; Baby boomer retirements – Vacated jobs + newly created jobs = 33 to 55m open positions j y j p p – 11m to 23m person talent shortage by turn of the decade • Reengineering and automation has run its course in many firms g g y • Net:  The market is tough…and getting tougher 9
  • Talent Impacts Financial Performance • Talent is strongly linked to superior financial  performance • A Fortune 500 company can realize a $70m‐160m  bottom line increase, with a 10 point increase in its  , p Talent Quotient Source of Value Comparing the Best and Worst HR Systems 120% 100% Bottom 10% Top 10% 15% 80% 38% Employee Turnover 34.09% 20.87% 62% Tangible Assets 60% Sales Per Employee $158,101 $617,576 Intangible Assets g Market Value to Book Value 3.64 3 64 11.06 11 06 40% 85% 62% % Jobs filled from within 31% 53% 20% 38% % with formal staffing plan 3% 48% % qualified for >1 job 32% 63% 0% # Hrs training for new EEs 3 5 1982 1992 1998 Hewitt Study Huselid Study 10
  • Polling Question Are any of your company's dealing with company s issues related to...(check all that apply) Skill Shortages – 57% Multi-generations in the workforce – 14% Economic downturn – 86% Globalization – 29% Increasingly aggressive competition – 50%
  • Measuring Quality of Hire (QoH) • Performance management strategies, including talent  assessment, has grown over the past year in spite and as a  result of the economy, with 40 % of companies naming it as  result of the economy with 40 % of companies naming it as their top HR priority (Bersin) • Only 20%‐25% of organizations have QoH measurements Only 20% 25% of organizations have QoH measurements • Only 30% of companies attempt to measure QoH (ERE) • 70% rated QoH as important and planned to improve QoH 70% rated QoH as important and planned to improve QoH  measurements in the next 12 months (Authoria) p q y , y • For companies that do measure quality of hire, only 50% set  expectations with Hiring Manager input (Staffing.org) 12
  • Measuring Quality of Hire (QoH) • QoH Formula: QoH = PR + HP + HR / N – PR = Average job performance rating of new hires  g j p g – HP = % of new hire reaching acceptable productivity  with acceptable time frame – HR % f HR = % of new hires retained after 1 year hi t i d ft 1 – N = number of indicators Example:  Example: 1. PR of new hires = 3.5 on a 5.0 scale = 70% 2. HP % =  Of 100 hires made one year ago, 75 are meeting  y g , g acceptable productivity levels = 75%.  3. HR % = 20% turnover = 80% HR 4. N = 3 4 N 3 QoH calculation:  70 + 75 + 80 / 3 =  75 13
  • Creating a numeric value from a non‐ numeric source • Common example of converting a rating to a numeric: – ACME company uses a non numeric rating system for performance ACME company uses a non‐numeric rating system for performance  evaluations:  BE, ME, OE, EE.  To use these ratings in a QoH  calculation, a numeric value must be placed on each of these. • BE 0 BE = 0 • ME = 1 • OE = 2 OE = 2 • EE = 3 14
  • QoH Levers • What levers impact your QoH?  These are the strategic impacts  on how you can drive better hiring results, improve your  workforce performance, which leads to a better QoH ratio p 15
  • The Benefits of Measuring Quality of Hire Levers: Benefits: 1. Employment branding 1 Employment branding 1. Positive productivity 1 Positive productivity 2. Workforce planning 2. More engagement &  3. Recruitment and selection 3 R it t d l ti innovation 4. Orientation/On‐boarding 3. Increase in brand equity 5. Performance management 4. Reduction in bad hire costs 4 Reduction in bad hire costs 6. Talent management 5. Contribution to retention 6. Improved customer impact 6 Improved customer impact 16
  • Polling Question Is “Quality of Hire” measured in your company? We measure, track and report QoH Metrics – 24% We have a plan to begin to measure QoH – 18% We talk about it but no tools or reporting are in place – 29% QoH is not being discussed or measured now – 29%
  • Lever #1:  Employment Branding Lever #1: Employment Branding • Branding ‐ A way to differentiate the employment experience – Creates an emotional connection with internal/external audiences – Highlighting ‘points of difference’ – Branding should be consistent with the consumer brand/culture a d g s ou d be co s s e e co su e b a d/cu u e • Guiding Principles of branding – COGNITIVE:  Understand ‐ Believe ‐ Engaged – BEHAVIORAL:  Deliver ‐ Tell the story ‐ Link to HR Systems • Case Studies:  Verizon, Coca‐Cola 18
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  • Developing an Impactful Employee Brand Developing an Impactful Employee Brand • Brand Audit ‐ Advertising, Collateral, Speeches, Communications • Employee Emotions ‐ Focus groups, interviews  • Brand Essence ‐ Three to four key characteristics • Brand Framework ‐ Statement of strategic intent • B dW k h Brand Workshops ‐ C Cascading the brand, linking to the person di th b d li ki t th • Business/HR Integration ‐ Integration with the culture Business/HR Integration Integration with the culture 21
  • Lever #2:  Workforce Planning/Retention • Workforce Planning ‐ Forecasting human capital needs – Factors :  Current retention/turnover run rate, New business growth,  / , g , Skill transitions, Physical location of work, Off‐shoring, economic  trends, retiree’s and transfer of knowledge, etc. • What to Measure ‐ Retention and Planning – Cost of turnover, Workforce stability, Workforce capacity, Turnover  rate/cost, Turnover reason, Top performer voluntary terminations, Key  job turnover rates – Companies lose $40k each time an employee leaves (average) • Tools…Human Capital Forecasting, Retention Diagnostic 22
  • Lever # 3:  Recruitment and Selection The old adage about people being your The old adage about people being your greatest asset is not true.  People aren’t your greatest asset.  The RIGHT PEOPLE are! Jim Collins, Good to Great 23
  • Who defines what’s “RIGHT”?  • Hiring Managers define quality for recruitment…. – K Knowledge, skills, ability l d kill bilit – Attitude, motivation – Culture fit (organization and department) Culture fit (organization and department) • Recruiters who feel Hiring Managers don’t Recruiters who feel Hiring Managers don t  57% understand recruiting • Hiring Managers who feel Recruiters don’t  63% understand the jobs they are trying to fill understand the jobs they are trying to fill 24
  • Meeting Manager’s Expectations 1. The hiring manager’s expectations were misidentified at the outset of the staffing process. 2. 2 Candidates having the characteristics to meet the hiring manager’s pre-hire expectations were not 5. Productivity and results not represented in sufficient achieved because sub- 3. The staffing process did numbers in the candidate pool. optimum hire was made.. p not react fast enough to hire the candidate who best met the hiring manager’s expectations before he or she found employment elsewhere. 4. 4 The staffing process rejected candidates who possess characteristics that would meet the hiring manager’s expectations. 25
  • Recruitment Process Job Recruiting Candidate Recruiter Hiring Open Strategy Response Interviews Decision • Detailed Job • Post and Pray • Volume by Source • Great Resume • Great interview Description • Cost effective • Screening • Fit with HM  • Stellar experience • Appropriate  expectations talent potential Approvals • Ease and Speed • Low Cost per  chemistry match h h Candidate • Time to Fill Speed • Efficient  • Target Audience • Time to Hire  Process • Source  • Enough Quality  Speed • Proactive / direct Proactive / direct Analysis to choose from • Employer Branding   l di sourcing • Diversity Career Site • How many top  • High performers  • Attract Top performers  recognized and • Top performers • Describe Performers responded a priority selected Top Performers p 26
  • Recruitment Quality Recruitment – measure candidate information • Did a top performer refer them? Did a top performer refer them? • How many candidates that you send to HM’s meet ALL the qualifications and  competencies? • Do your managers rate them as “high quality”? • What awards have your new hires won? • How many hires are currently unemployed/temp‐hire? / • Do your offers get at least 1 counter‐offer from current employer? • Did they get other offers from top firms? Did they get other offers from top firms? • Do your top performers know who these candidates are?   • Were they a tough sell? y g 27
  • Polling Question What recruitment metrics do you measure now? (check all that apply) Cost per hi – 64% C hire Time to fill – 79% Candidate source analysis – 64% Funnel ratios (leads to interview, interview to hire etc.) – 36% Candidate and/or Hiring Manager satisfaction – 64%
  • Selection • Selection qualifiers – Applications/Relevant Work Experience Applications/Relevant Work Experience – Personality, Biodata, Culture fit – Testing ‐ Cognitive, Skills, Knowledge Testing  Cognitive, Skills, Knowledge – Simulations • Validation is key y – Linkage of test content to job content – Relationship of test scores to job performance • Tools – Standard vs. Custom – Off the Shelf ‐ Tailored (AON, DDI, Previsor, etc) – Customized design (Boutique) 29
  • Selection Fundamentals Predict post‐hire performance… p j p • Determine the aspects of job performance  you wish to predict • Identify qualifications areas you believe  will predict the outcomes ll h • Compose test items that tap the  qualifications • Collect data and identify “the best” test  items • Decide where to “draw the bar”and  p implement 30
  • Good People are Great for Business Source: McKinsey and Co. 31
  • Lever #4:  Employee Orientation – Why Bother? Lever #4: Employee Orientation Why Bother? Your employees are getting oriented to your company whether you  have a program or not!   h ! The orientation they are getting  MAY NOT be the one you want or intend. Case Studies: • Employees who complete orientation reach full  productivity 60 days faster   • 69% more employees were still employed after 3 years if  they completed orientation 32
  • Sample New Employee Orientation Programs Sample New Employee Orientation Programs Phase Accepted Offer Getting Started Formal Training Coaching and  Measuring &  Pre‐Start Mentoring Evaluating Process Manager, Manager On‐Site HR On Site HR Manager of New  Manager of New Peers of New  Peers of New On‐site HR and/or  On site HR and/or Owners On‐site HR,  Employee Employee Corporate HR Peers Tactics • New Employee  • First Day Orientation • Immersion  • Meet in lobby • Survey and  Packet • Paperwork Experience • Coordinate tours interview all  •W l Welcome Letters L • Welcome Video or  • Celebration! • Establish  participants • Set Tone Guest Speaker • Hands on training,  • Measure tangible  networks • Pre‐start • Executive  rotation &  • Generate  results: On‐boarding Introductions shadowing familiarity with  • Cost • Internal and  Industry reading  Industry reading • Industry Overview • Company goals and  • Time resources and  resources and material • Company,  strategies • Quality systems Department & Job  • Reference material  • Turnover • Allow “off the  Overview • Group meetings and  • Productivity • Facilitate  print materials record” questions • Job Satisfaction understanding g • Job Training g • Check in  • Evaluate new   periodically hire assimilation 33
  • Lever #5:  Performance Management • Guiding Principles – Business process, not an HR process – Cascading of business (AOP) goals into individual accountabilities – Annual rhythm/cadence – Performance Parts:  Objective Setting, Mid‐Year/Year End, 1‐1s – Career Parts:  Skill Assessment, IDP, Career (Link to OHRP) – Calibration • Tools – DON’T: make it about the form or the technology – DO: make it about the conversation 34
  • Lever #6:  Talent Management • Traditional Talent Management: – Focuses on endpoints of traditional talent management process  Hiring  Turnover • Today’s Talent Management MUST: – Be integrated with the business – Link Business Priorities + Critical Workforce Issues – Drive results by enhancing organization’s Capability C bilit Commitment and Alignment 35
  • Hewitt's Talent Quotient  • Prioritization of investment dollars in people programs  • An objective ranking of the firm's track record in attracting An objective ranking of the firm s track record in attracting  and retaining pivotal employees compared with other  organizations  • An understanding of flight risk of pivotal employees based  on demographics and diversity factors  • Fact‐based evaluation of people programs to bolster  b d l f l b l information from employee opinion surveys
  • Talent Management • What are we talking about? – Succession Planning – Bench strength (Length of time in position, Promotability Slates/Charts,  Key back ups) – H Human capital metrics (year over year), SWOT analyses, etc. it l ti ( ) SWOT l t – Current and future organization chart – Special emphasis areas (high potentials diversity language etc ) Special emphasis areas (high potentials, diversity, language, etc.) – Employee Profiles, Next moves/timing – Action Plans (RIF, Reorganizations, M&A) • Tools – Customized solutions – Talent Management Solutions abound 37
  • Polling Question Our organization s focus on organization’s talent management is: Very uninvolved – 0% Uninvolved – 18% Informed but not involved – 36% Involved – 27% Very involved – 18%
  • Summary • Talent Management is the goal…and the imperative! • There is not ONE PERFECT METRIC – Start with the basics – move to greater sophistication – Choose metrics that are meaningful to your organization – Create a Metrics Dashboard Create a Metrics Dashboard  – Profile “top performers” • Begin with the end in mind – Tie measurements to Business Outcomes/Financial Impact – Assess your “Levers of Quality of Hire” 1. Employment branding • Report findings Report findings 2. Workforce planning – Regularly 3. Recruitment and selection – Consistently 4. Orientation/On‐boarding – Comparatively and  5. 5 Performance management P f 6. Talent management – Communicate Broadly 39
  • Thank you for your time  and attention! Anne Nimke   Kelly Renz animke@pinstripetalent.com i k @ i i l krenz@pinstripetalent.com k @ i i l 877‐797‐3379 877‐797‐3379 40