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Hiring for success — what makes the difference? Why are so many organisations failing?


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Hiring for success — what makes the difference? Why are so many organisations failing?
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Hiring for success — what makes the difference? Why are so many organisations failing?

  1. 1. hiring for success improving organizational performance through better quality recruitment
  2. 2. table of contents About this research___________________________________________________2 Introduction__________________________________________________________3 Why are so many organizations failing to measure quality of hire?_____________4 Defining quality — the first step to measuring it____________________________5 The benefits of measuring quality of hire__________________________________7 The challenge of data collection_________________________________________8 Made-to-measure metrics______________________________________________9 Hiring for success — what makes the difference?_________________________10 Hiring manager and recruiter skills — keys for success_____________________11 Superior sourcing strategies___________________________________________13 A more rigorous approach to assessment and selection____________________15 Getting off to a great start — the importance of the onboarding process_______16 Hudson’s key strategies for improving quality of hire_______________________17 Case study_________________________________________________________19 Conclusions_______________________________________________________ 20
  3. 3. Today’s business leaders are at risk of focusing too much on cost and time when it comes to improving recruitment, yet the real benefits come from a commitment to quality. Leaders are critical of poor quality hiring but sometimes are more inclined to look at time and cost than anything else. Perhaps quality of hire is considered too hard to define, too complex a concept or simply just too hard to address in the short term? Despite this, we know that improving organizational performance to create competitive advantage and long-term success for any organization means having the right talent. So our starting point in this paper is not whether, but how, quality of hire can be achieved. There are a number of market dynamics adding to the complexity of the challenge: `` Talented professionals are in short supply: Demographics decree that the situation is likely to worsen. Baby boomers are starting to retire; the generations behind them are smaller in number and sought after by a more diverse range of employers. `` The global quest for talent: Employers must compete with organizations from all over the world to secure the best- in-class professionals. `` It’s a talent-centric market: The most sought-after employees are becoming increasingly selective, have high expectations when evaluating opportunities and are empowered with information about employers that was not previously available. `` Budgets are tight: Now, more than ever, organizations need to be sure they are getting value for their salary dollars. Unfortunately there isn’t always a correlation between paying an individual a high salary and that person achieving high performance. With so much at stake, organizations are asking themselves how best they can refine their talent strategies to ensure they get the maximum return from their human capital. At Hudson RPO, we believe that improving quality of hire goes to the very heart of this issue. The purpose of this report is to help organizations improve the quality of their hires. The benefits of doing so include improved commercial performance, greater efficiency, reduced staff turnover and, as a natural consequence, a reduction in the negative impact of poor hires. We hope you will find this report useful and wish you every success in your drive to attract and select the very best people into your organization. Kimberley Hubble Global RPO Leader Hudson RPO Elizabeth Boudrie Executive Director The HRO Today Institute “Quality of hire remains the most elusive talent metric for many organizations. Yet it is also the most important metric for driving sustained business success. Today’s leaders must not leave quality hiring to chance if they want to create competitive advantage for themselves well into the future.” Manuel Marquez, Chairman and Chief Executive Officer, Hudson Global, Inc. 1hiring for success
  4. 4. 2 hiring for success Hudson RPO and The HRO Today Institute conducted research across the globe to understand and improve quality of hire measurement practices. Both quantitative and qualitative research was conducted to inform the report. Employers from a total of 246 companies of varying sizes across the globe were sourced from the Hudson and HRO Today databases and surveyed about their experiences and views. The global benchmarking survey responses were collected over three months (December 2012 — February 2013). In addition, we leveraged HRO Today Institute’s global market insights and Hudson’s extensive experience delivering talent acquisition and retention solutions across the globe to add additional insights to the survey data. about this research Commercial/private sector company Other (nonprofit, government agency) 80% 20% Organization type Revenue/Budget Less than $50 million $50 million — $499 million $500 million — $5 billion More than $5 billion 30% 27% 22% 22% All percentages are rounded to whole numbers and consequently graphs may not always total exactly 100%.
  5. 5. 3hiring for success This cost is just the tip of the iceberg. Hiring someone that is a poor fit for a role can have grave consequences. Such hires compromise the rest of the team, affecting their engagement and increasing levels of absenteeism, eroding standards of client service, reducing productivity and, as a consequence, profitability.3 Given the business case for improving quality of hire is so compelling, it is hardly surprising that virtually all our survey respondents understood the value of measuring quality of hire: 97% said it was ‘important’ (Fig 1). Yet in spite of appearing to recognize the value of such a practice, almost half of respondents (45%) said they had discussed the issue internally but did not have plans in place to establish an appropriate process. A smaller percentage (15%) has a plan but has yet to implement it. The smallest proportion (9%) is not discussing or planning to introduce quality of hire measures (Fig 2). Organizations that consistently make superior hires reap dividends. A study by consulting firm McKinsey & Company demonstrates the differences in productivity between average and high performers. McKinsey reported a 40% lift in productivity in operations roles, a 49% lift in general management roles and a massive 67% lift in productivity in sales roles.1 Imagine the difference between high and below average performers. Getting recruitment wrong can be very costly not only in terms of loss of productivity, but also in the high cost of turnover. It’s been estimated that the annual cost to US businesses of hourly worker attrition alone is about $350 billion, which translates to an average of $3,500 per hire for hourly workers.2 introduction How important is quality of hire to your organization? Do you measure quality of hire for your new hires? Important Not important Yes No 32% 68% 97% 3% Fig 1 1 Winning the talent war in local markets by staying global, McKinsey & Company, 2012. 2 Workforce Performance Report Q2 2013, Key factors impacting the performance — and profitability — of today’s hourly workforces, Evolv, 2013. 3 Next Generation Recruitment: Battle Strategies for the Talent War, Hudson 20:20 Series, August 2011. Do you measure quality of hire for your new hires? Discussed but no plan Yes, for some or all hires Have a plan, not yet implemented Not discussing; have no plan 45% 32% 15% 9% Fig 2 All percentages are rounded to whole numbers and consequently graphs may not always total exactly 100%.
  6. 6. 4 hiring for success This report aims to shed some light on the process. It will discuss defining quality in the workplace; the benefits of measuring quality of hire; the challenges of collecting data; and how to improve hiring processes. It also includes six strategies for improving quality of hire, plus a case study demonstrating the commercial value of committing to a quality of hire program. Clients tell us that measuring quality of hire can be extremely difficult. In order to measure something you need to know exactly what it is you are measuring; how to quantify and evaluate it; and how to collect, store and analyze the data that has been amassed. It’s a big commitment for any organization, so senior management must be aligned and understand its value. why are so many organizations failing to measure quality of hire?
  7. 7. 5hiring for success 1) Retention of new hires (82%) 2) Hiring manager feedback (74%) 3) Employee performance appraisal ratings (63%) (Fig 3). These findings are consistent across all regions and for companies of all sizes. Very few organizations are tracking measures beyond the top three. However, these are just a few of many possible quality-of-hire metrics. Organizations should be aware that there are multiple metrics that could be usefully applied to help create a fuller picture of an individual’s performance at work. The next most common measure, employee productivity, is tracked by just 34%, and other metrics are significantly less common. Only 14% and 9% of respondents track revenue and profit per employee respectively. It is important to note that while our results show new hire performance appraisal and retention metrics are very common, they do not delve into the quality of that data. This is an important point. If an organization does not collect performance appraisal information systematically or if this information is perceived to be unreliable, then it loses its value. So employers need to review the quality of their data before using it to measure quality of hire. Webster’s Concise English dictionary defines quality as a ‘degree of excellence’ or ‘high standard’. It makes sense in general terms, but to make it relevant for the workplace, employers must translate this definition into clear and measurable criteria that align to the organization’s goals and the requirements of the role. While this may be the holy grail in achieving better quality of hire, the reality is that it’s a developing practice: 60% of organizations that measure quality of hire have been doing so for less than two years and most monitor the following metrics: Defining quality — the first step to measuring it What quality measure(s) do you track? Employee performance appraisal ratings Employee productivity Promotion speed of new hires Revenue per employee Profit per employee The total may exceed 100% because respondents could select more than one option. 63% 34% 18% Retention of new hires Hiring manager feedback 82% 74% 14% 9% Fig 3
  8. 8. 6 hiring for success Similarly, using employee performance ratings without integrating retention data only tells half the tale; an organization that hires good people who leave within the first six to 12 months needs to know more. The final, and perhaps most critical, point, is that quality is relative. A quality hire in one job family will be different to another. When defining quality you need to think about it in terms of job families and select the measures relating to business performance for that segment of your workforce. It’s also necessary to cross-reference metrics to create a multidimensional view of performance when measuring quality of hire — a single metric in isolation may not reveal the full story. For example, using only data relating to retention of new hires may be unhelpful if a company does not have a strong performance culture and therefore retains poorly performing employees.
  9. 9. Although employee productivity is not one of the top three most used metrics, 70% of companies that do measure it report that doing so has resulted in a marked increase in productivity. It is difficult to determine whether quality of hire programs are solely responsible for lifting new hire retention levels, performance appraisal scores and positive hiring manager feedback on new hire quality. Other factors including changes to leadership, organizational strategy or the competitive environment may have played a part. Nevertheless, all respondents were confident that measurement made a significant difference. This raises the question of why so many resourcing functions are still focused on efficiency, service and cost metrics in favor of quality- oriented metrics. Most key performance indicators for resourcing functions focus on metrics such as time to fill, time to shortlist, conversion rates from shortlist to offer, hiring manager and candidate service satisfaction and cost per hire. In addition, the cost-per-hire metrics rarely take into account the true costs of getting recruitment wrong, such as the costs of turnover or the costs of hiring poor performers. Cost metrics are therefore more transactional than strategic in nature. A clear majority (85%) of organizations that measure quality of hire and take action as a result believes doing so has a positive impact (10% or more improvement) on hiring quality. Close to half (45%) believe there is a significant impact (improvement of more than 25%) (Fig 4). Small- to medium-sized organizations are most likely to have experienced a positive impact as a result of measuring quality of hire: over 60% say they have seen a significant impact (more than 25% improvement). Larger organizations report experiencing slightly less impact: only about 35% say they have experienced marked improvements. Of the top three quality of hire metrics used, (retention of new hires, hiring manager feedback, and employee performance appraisal ratings) it appears that retention of new hires is most significantly affected by the introduction of quality of hire measures: 62% say there is a dramatic impact (more than 25% improvement). Employee performance appraisal ratings and hiring manager feedback are also boosted with the introduction of quality of hire metrics: 56% and 52% respectively report a significant impact. The benefits of measuring quality of hire 7hiring for success How much impact does measuring the quality of hire have on actual quality of hire? No impact Up to 10% 11%–25% 26%–50% More than 50% 4% 11% 40% 29% 16% Fig 4
  10. 10. 8 hiring for success 3) Inaccuracy of data collected 4) Difficulty in manipulating data and reporting it 5) The organization does not prioritize capturing and analyzing the data. Sometimes the data required to measure quality of hire is captured in several different systems and these systems are either stand-alone or insufficiently integrated. For example, performance appraisal and retention data may sit in the HRIS, financial data generally sits in the financial systems and hiring manager feedback and other hiring metrics typically sit in the Applicant Tracking System (ATS). Unless these systems are set up to talk to each other, or unless the data feeds into a common data warehouse, the systems will not be able to provide a fully integrated picture of individual performance. Some system failings may be due to lack of compliance among users. For example, if staff are not required to input the necessary data, or are unclear about why this is important, they probably won’t do it. However, as real time information becomes increasingly available through new technology platforms, companies committed to improving their quality of hire will employ appropriately skilled professionals to deal with data collection and analysis. Furthermore, the consolidation of structured and unstructured data from different systems within a single data warehouse — so it can be viewed as one data unit — has the potential to generate much more meaningful findings. For example, companies may be able to analyze the qualities most characteristic of high performers and adapt their candidate screening procedures as a result. Organizations investing in the systems and people needed to mine this big data will be most likely to uncover the richest business insights. This data will impact decision-making at the highest levels and give them the greatest commercial advantage. One of the key reasons organizations are unable to measure quality of hire effectively is that their Human Resources Information Systems (HRIS) are simply not up to it. Only around a third (35%) say their systems work ‘very well’ or ‘fairly well’ in delivering the data needed. The remaining two thirds say their systems are ‘okay’ (31%), ‘poor’ or ‘very poor’ (34% total). The largest and smallest organizations are most likely to be satisfied with their HRIS’ ability to deliver the necessary data to assess quality of hire. This is simply explained — the largest have the most sophisticated systems and the smallest have the least complicated needs. In fact, for many small organizations, data can be collected manually, which is just not possible for medium to large organizations. According to survey respondents, the top five reasons HRIS does a poor job providing data about hire quality are: 1) The system does not capture the necessary data 2) The organization cannot integrate the HRIS with systems that do capture the necessary data The challenge of data collection Top three data sources Recruitment systems generally house data on the number, location, role type and source of new hires as well as resumes, competency ratings and test results. They may also include metrics such as time to hire, interview/placement ratios and hiring manager satisfaction. HRIS usually cover employment and promotions history, performance appraisal data and retention and engagement statistics. Finance systems often contain employee-related finance data such as revenue or profit per employee, or performance related to budget.
  11. 11. 9hiring for success Companies should also consider that there are other metrics, beyond the top three, which may be greater predictors of success in a job. As we’ve seen, only 14% and 9% of respondents track revenue and profit per employee respectively (see Fig 3). Yet for job families like sales, a financially oriented metric such as revenue or profit per employee could be more useful than performance appraisal data and may have more credibility with business leaders. Collecting this data may not be easy and is likely to require commitment and collaboration between the HR or talent acquisition and finance teams. It’s also worth noting that actively measuring performance seems to have a beneficial effect in itself: 70% of respondents said including employee productivity as a quality of hire metric has delivered significant improvements in this area (Fig 5). Companies need to consider developing specific metrics to fit each job group or family. Currently most employers that measure quality of hire do not differentiate between quality of hire measures for executives, managers, professional, sales and customer service staff and so on. To deliver the greatest value, quality of hire must be assessed with metrics including those that are specific to the role being measured. Made-to-measure metrics How much overall impact would you say measuring the quality of hire has had on specific quality measures? 2% 9% 27% 29% 3% 7% 38% 27% 33% 25% 28%34% 28% Retention of new hires Hiring manager feedback Employee performance appraisal ratings Employee productivity No impact More than 50% Up to 10% 11%–25% 26%–50% 6% 8% 23% 35% 35% 4% Fig 5
  12. 12. 10 hiring for success and the widespread use of psychometric assessments and other behavioral simulations to add more rigour to the selection decision. Asia Pacific is still a region heavily reliant on the use of professional recruiters, whether via recruitment agencies or RPO providers, so this may account for the importance placed on recruiter skills relative to other factors. In North America, the most pressing factors were identified as the recruitment preparation process, followed closely by hiring manager skills and the selection process. This region’s focus on the preparation process may be in some part due to the sheer size of the market and the critical importance of differentiating one organization’s roles from others to make it stand out from the pack. The relative importance of hiring manager skills over recruiter skills may also reflect North America’s slightly reduced reliance on third party recruiters in favor of in-house recruitment models. Across Europe, the most pressing factors influencing quality of hire are perceived to be skills-related — both hiring manager skills and recruiter skills. Respondents in this region also stress the importance of the recruitment preparation process. This involves clarifying the requirements of the role, agreeing on a sourcing strategy and engaging high quality recruiters who can add value to the process at every stage. Given the fairly strict employment legislation and the challenges involved in terminating non-performers throughout this region, it is surprising that the selection process was not rated more highly. Survey respondents indicated hiring manager skills have a very significant impact on quality of hires: 61% cited it as the most important factor, closely followed by recruiter skills (59%) and thorough preparation for the recruitment process (58%) (Fig 6). Asia-Pacific respondents ranked the selection process as the most important factor influencing quality of hire, followed by recruiter skills and then the orientation/onboarding process. This finding is supported by the importance placed on competency-based behavioral interviewing practices in this region Hiring for success — what makes the difference? Which factors have you found to have had the greatest impact on quality of hire? Orientation/onboarding Selection process Recruitment preparation process Recruiter skills Hiring manager skills 45% Employment branding 41% Candidate source 29% 54% 58% 59% 61% The total may exceed 100% because respondents could select more than one option. Fig 6
  13. 13. 11hiring for success `` Have a well-articulated value proposition that you can market to quality candidates, helping you sell to the highest calibre candidates. `` For particularly senior or critical appointments, get buy-in on the job and person profile from all key stakeholders. Often great candidates are lost during the recruitment process because key people cannot agree on what type of person they are seeking. The job and person profile should be socialized and agreed upon by all who have a vested interest in the decision. Managers must share a vision of the job and what success looks like to align their views on candidates they interview and ensure the new employee can achieve success. `` View the recruitment process as a sales process. You are competing for great talent with many competitors, so it is important to communicate what sets this opportunity apart and why candidates would want to work for your organization in this specific role. `` Similarly, create a sense of urgency in the recruitment process and maintain excellent communication from start to finish. Great candidates are impressed by a robust process conducted efficiently. A long delay caused by hiring manager unavailability does not give a candidate confidence that the organization is disciplined or serious about the appointment. `` Be open and provide specific details about the role to candidates. Potential employees must have enough information to have a very clear idea of what doing this job would be like — and to be able to imagine themselves doing it. `` Be objective. Most of us are drawn to people like ourselves, which is a natural inclination but not helpful during the recruitment process. Hiring managers need to take steps to address bias of this kind and ensure assessment methods are objective rather than subjective. Hiring manager and recruiter skills were selected as the most important influences on quality of hiring globally. Given that finding, how can they drive quality hiring outcomes? Hudson RPO’s experience of recruiting tens of thousands of candidates worldwide, combined with the survey results, has enabled us to identify the key ingredients for success: `` Be really clear about the job and person — this should cover the following critical elements: — What the role involves (function, objectives, reporting lines, key tasks). — How performance is measured, including what success in the role looks like at 6, 12, 24 months or longer. — A person profile that defines the skills, knowledge, behaviors and attitudes needed for success in the job and fitting with the culture. Hiring manager and recruiter skills — keys for success
  14. 14. 12 hiring for success `` Lastly, as candidates often make critical decisions about their fit within the organization and role within the first three months, it is important for the organization to ensure this process is managed effectively so that the new employee experience is first class from day one. Nothing impacts a new employee’s engagement levels more fundamentally than turning up to work on their first day with no welcome, no desk or computer and no training scheduled. All is not lost if your hiring managers do not have such systems in place yet. Here are some simple strategies to help lift their skill levels: `` Provide formal training in recruitment skills, especially interviewing techniques `` Buddy up the least skilled managers with the most skilled recruiters for co-interviewing and one-to-one coaching `` Create some competition — share quality of hire results and other hiring metrics across relevant peer groups so hiring managers understand how they are performing relative to others `` Consider outsourcing elements (particularly role groups, divisions or even steps in the recruitment process like sourcing or assessment). `` Ensure you understand your candidates’ hot buttons as these are factors that will influence them to accept your offer. Is it purely money they are after or is the ability to work from home two days a week the clincher? Some people need the trappings of status, while others simply want to work with a friendly, close-knit team. `` Understand what other roles they are exploring and how they rate these opportunities relative to yours. Practice closing the negotiations to ensure that, when the real offer comes, you increase the chances of acceptance.
  15. 15. 13hiring for success Organizations headquartered in North America are most likely to say they have identified such a link. Just over half say they’ve made a connection, compared with 39% of those based in EMEA and 31% headquartered in the Asia-Pacific region. Of those that have identified a link, the most commonly cited source of quality hires is employee referral. Hudson RPO counsels clients that referral candidates should be assessed just as rigorously as any other applicant for a role. This is particularly important when a company pays for referrals. If a candidate already knows someone within the organization and has insights into the company and role, they are likely to be better positioned in the screening process, but that doesn’t necessarily mean they have the best skill set for the opportunity. Similarly, organizations should not assume candidates are likely to be good quality when they may have been put forward by someone who is not necessarily an excellent employee themselves. The passive candidate market is often cited as a rich source of superior hires. Passive candidates are defined as those not actively looking for alternative career opportunities, but who are open to a new role should an attractive opportunity be presented to them. According to the Corporate Leadership Council, passive candidates typically achieve 9% higher performance and 25% better retention levels than active candidates recruited via other channels. Common sense suggests that the other important source of quality hires is your own employee base. Promoting proven performers has many significant benefits — the time to productivity is quicker, the cost is lower and it can have a positive impact on the engagement and morale of other employees. So learning how to mobilize your talent on a global scale is essential. Surprisingly, candidate source did not emerge as a major driver in the quality of a new hire when compared to other factors, such as hiring manager and recruiter skill and the quality of the hiring process. Hudson RPO’s research shows that less than half of organizations have identified a connection between candidate source and quality of hire. While 45% say they have identified links, 38% say they have not. The remaining 17% do not know (Fig 7). superior sourcing strategies Yes No Don’t know 45% 38% 17% Have you identified any link between source of hire and quality of hire? Fig 7
  16. 16. 14 hiring for success exceptional skills in using emerging online channels with a global reach, such as LinkedIn. The best recruiters are those who can put themselves in the shoes of their ideal candidate — and use the insights this process brings to get closer to them. If you think your sourcing channels could be improved, consider: `` Reviewing source of hire reports to understand your starting point. What is currently working and what isn’t? `` Asking placed candidates where they first heard about the opportunity and ensure this information is uploaded to your ATS. Then extend the question to all applicants. `` Identify your most business-critical and regularly recruited roles and build talent pools so that you move to a more proactive model. `` Be open-minded. Take the time to look at the backgrounds of your high performers. We often find their experience doesn’t live up to the expectations of hiring managers. Are you narrowing your field on the wrong factors? `` Think about appropriate feeder roles (the job the right person may have been doing a year or two ago) and competitors who employ those skills. `` Get social and make it easier for your networks to help you recruit. `` Engage external expertise to review your existing sourcing channels and propose practical ways you can optimize these for your organization. One of the issues in assessing the source of superior candidates is that it can be difficult to pinpoint precisely where their application originated. For example, digital footprints can be misleading; someone who applied to a company directly via its corporate website may have first heard about the opportunity through their networks or via a job board and then looked up the website. Asking the question: ‘Where did you first hear about this role?’ is necessary to create a reliable source of hire data. Using external recruiters, such as RPO providers or specialist recruitment consultants, was also thought to be a good source of quality hires. Hudson RPO believes that the quality of hiring is largely influenced by the skill of the recruiter. However, sourcing superior talent today involves the use of innovative channels tailored to the role. These include a strategic long-term approach to talent-pooling and
  17. 17. Reference checking (‘always’ or ‘often’ used by 95% of employers), resume screening (‘always’ or ‘ often’ used by 75%), and background interviews (‘always’ or ‘often’ used by 75%)5 are the most common techniques used in the selection process. These are the simplest and quickest assessment processes but are the least effective tools to assess high performance. Hudson RPO recommends assessing candidates against criteria proven to accurately predict high performance in a role. Hudson RPO uses a suite of tools including psychometric tests; verbal, numerical and abstract reasoning assessments; behavioural tests; and live tests including simulations and role-playing to determine the technical and behavioural competencies, skills and experience required for the job. Hudson RPO also measures candidates’ motivational and behavioural capabilities. Our research shows that the alignment of these two areas is the most accurate predictor of whether a candidate could be a high performer in a role: 91% of hires were rated good or excellent when formal procedures were used to measure motivation or cultural fit. If you think your assessment and selection practices need improvement, here are some recommendations: `` Spend time interviewing and assessing high performers to see what makes them tick `` Introduce more rigour to the process with psychometric assessments, simulations and other objective measures `` Create better quality job and person profiles and establish these in a centralized library for ease of access by others on the team `` Provide structured training or one-to-one coaching on interview skills for hiring managers `` Develop a more compelling employer value proposition to present to candidates during the recruitment process. Having established a clear idea of what they are looking for, hiring managers need to ensure that their recruitment processes are sufficiently rigorous to identify those candidates that best match the profile of the person they seek. More than one in four companies (28%) believe they should do more to test and discover candidate competencies and abilities. A further 28% said that with hindsight they would do more to test and understand candidates’ competencies and abilities to ensure the value of their investment.4 In order to achieve more positive hiring outcomes, employers must make hiring decisions based on more than assessments of past experience and technical skills. Often people are hired on the basis of their technical skills and experience, but are fired due to attitudinal or behavioural issues. In addition, ensuring the right career, motivation and culture fit between the candidate, the role and the company is critical to success and to retaining the person in the organization long term. A more rigorous approach to assessment and selection 15hiring for success 4 Salary & Employment Insights 2012, Human Resources, Australia/New Zealand, Hudson, February 2012. 5 Next Generation Recruitment: Battle Strategies for the Talent War, Hudson 20:20 Series, August 2011.
  18. 18. 16 hiring for success When the employee has completed their probation, a formal onboarding interview should take place. This is the opportunity for organizations to find out what the employee’s experience of the company has been like. Key questions should include: `` What was it that attracted you to this company and job in the first place? `` What made you choose to accept this position and not another one? `` Has the recruitment process impacted your desire to work here? And, if so, how? `` What has the experience been like since joining? Did the reality live up to the promise? This information can be used to understand the organization’s value proposition and help communicate it more effectively to future candidates. It can also provide valuable feedback to HR about alignment between promise and practice, indicating specific tactics they can employ to ensure the organization delivers on its promises. The onboarding process is a key step in achieving better quality hires — and encompasses every aspect of the candidate’s experience from the time they first encounter the organization, to receiving a job offer, to the first few months of their employment. Paying attention to a new employee beyond the initial recruitment process, in the period up to joining and in the first three months of their new role, is critical. This is the period when their impression of a company is formed. It can have an enormous impact on their motivation, their performance in a job and their likelihood to stay with their new employer. Getting off to a great start — the importance of the onboarding process
  19. 19. Based on the research findings and discussions with organizations worldwide, Hudson RPO has identified six key steps to delivering a successful quality of hire program: hudson’s key strategies for improving quality of hire Identify and understand business- critical job families Determine the most relevant metrics for quality of new hires in your organization 2 3 Create a compelling business case 1 Secure executive team support for a quality of hire program by demonstrating the commercial benefits such an initiative could bring. In order to build the case, establish: `` Which roles within the organization are critical to driving the top line, client satisfaction and client retention? `` Which of these roles are regularly recruited? (It makes more sense to demonstrate a quality of hire model with a role that is recruited frequently.) Use broadly accepted models to analyze financial impact. For example, studies show that high-performing sales people can create revenues 67% higher than their average- performing counterparts. Those in talent acquisition roles may benefit from partnering with finance to ensure a strong financial business case is developed. Better still, calculate some rough figures of the differences in sales performance between your own high and average performers. This prevents the exercise from being too theoretical and allows you to use real-life examples that everyone understands. It is vital to determine which jobs have the most significant impact on organizational performance. Resist the temptation to measure everything at the outset. It is better to choose a smaller number of regularly recruited business-critical role families and implement a robust program, than to assess the entire organization with a raft of generic measures and risk diluting the benefits. Encourage debate about the best measures for each role family to ensure the most appropriate metrics are used. Ensure the data your organization chooses is high quality and incorporates multiple elements that validate one another. For example, a set of qualitative and quantitative metrics for a sales person may include financial measures, performance appraisal ratings, retention data and client feedback. 17hiring for success
  20. 20. Take action and review the program annually 6 Once you know what is influencing the quality of your hires, you can take concerted action to replicate this in all hires. Be prepared to challenge the status quo and seek external advice and help as needed. Don’t think you need to do everything yourself. Document a specific project plan and keep people up to date on what is happening. Revisit your quality of hire program each year to ensure you are studying the right roles, using the best metrics, collating and analyzing the most appropriate data and driving real change as a result. Most importantly, revisit the business case and quantify and report the benefits the program has delivered for your organization. Collect and analyze the data 4 Collecting data from multiple systems across recruitment, HRIS and finance will deliver the richest insights and consequently the greatest value. Using only data that can be easily produced by a single discipline limits the scope and worth of conclusions. When analyzing the data, be sure to draw conclusions that are statistically significant. Analysis may also help determine additional performance indicators that could be incorporated into the quality of hire program. Report your findings to the business and make specific recommendations for change 5 To understand the implications, present the key findings to people who are sufficiently senior and can influence change in the way things are done. Be sure to have a clear plan supporting the necessary changes as well as an estimate of the resources needed and investment required. 18 hiring for success
  21. 21. 19hiring for success Client: A multinational pharmaceutical company Hudson RPO implemented a quality of hire program for the Australia-New Zealand team of a large multinational during a 15-month period. case study Leveraged and improved the brand experience for existing and potential employees `` Conducted a series of workshops focused on defining the company’s employer brand in comparison with eight competitors `` Workshops uncovered the need for better communication of internal career opportunities `` Strategy developed to enhance the employer brand and improve communications Financial Benefits `` Cost per hire savings: USD 1,389 `` Total savings of USD 245,853 `` Lower staff turnover: 14% for 2008/9 compared with 23% in 2007/8. `` Reduction in staff turnover resulted in lower costs for induction training, combined with increase in internal hires, delivering total savings of USD 465,000. outcomes `` Employee engagement score up by 20% in 12 months `` Employee referrals up 17% over two years `` Internal mobility up by 10% over two years `` 100% of new hires surveyed reported satisfaction with the recruitment process step 1 Improved efficiency, quality and retention `` Sales team recruiters spent four days per year with a sales representative from a different product area `` Recruitment team researched factors including competencies, experience and attributes that predict high performance for key role families within the organization outcomes `` Improved performance among new hires (10% at six-month review) `` Hiring manager interview-to-hire ratio up to 2:1 from 10:1 in previous year `` Improved performance of sales representatives: 18% higher customer call rates than group average step 2
  22. 22. 20 hiring for success With the timeliness of this challenge in mind, Hudson RPO has identified six key strategies for improving quality of hire: 1) Create a compelling business case 2) Identify and understand business- critical role families 3) Determine the most relevant metrics for quality of new hires in your organization 4) Collect and analyze the data 5) Report your findings to the business and make specific recommendations for change 6) Take action and review the program annually. Hudson RPO can help you implement these strategies to make consistently superior hires and reap commercial dividends including: `` Better business performance `` Greater efficiency `` Lower attrition rates `` Reduction in the costs associated with low quality hires. The world of work is changing fast. Organizations face new challenges and opportunities each business day. Equipping themselves with the best people, the highest quality of hires for their business environment, is the only way to meet these challenges and maximise business opportunities. Hudson RPO knows that quality of hire is still a developing practice; nearly 60% of our survey respondents said they had been measuring quality of hire for less than two years. Nevertheless, companies should recognize that the time to act is now; they need to start evaluating the quality of their hires — or risk being left behind. conclusions ©Hudson Global, Inc, April 2013
  23. 23. If you would like to find out more, please contact the Hudson RPO representative in your region: Global & Asia Pacific Kimberley Hubble Global RPO Leader +61 416 270 642 Americas Josh Sorkin Executive Vice President +1 312 795 4279 Europe Darren Lancaster Managing Director +44 20 7187 6041