QUALITY OF HIRE:
THE ELUSIVEWORKFORCE METRIC
Presented by Mary Ann Downey
ABOUTTHE PRESENTER
Attorney by training,
Entrepreneur, Screen
Writer, Human
Resources expert;
specializing in
Organization...
ASKTHEAUDIENCE
 We are thinking about (maybe) starting to measure QoH
 We are trying to measure QoH but cannot agree on ...
QUALITYOF HIRE (QOH)AGENDA
 Introduction - What is QoH andWhy is it important to
organizations?
 How are organizations m...
MEASURINGTHEWORKFORCE
 Quality of Hire
 ExternalTalent
 Ability to effectively source, select and on-board new employee...
MEASURINGQUALITYOF HIRE
75%
16%
Should
Does
Overall
Results shown: High orVery High Extent
Source: i4cpTalent Management M...
HOWAREORGANIZATIONS USINGQOH?
 Evaluate immediate staffing outcomes
 Organization
 Recruiter
 Assess the effectiveness...
EVALUATING STAFFINGOUTCOMES
“If an employee leaves within the first year –
de facto that was not a quality hire.”
- Alexis...
DOINGTHECALCULATIONS
# of New Hire
Terminations
in Reporting Period
# of New Hires
in Reporting Period
9
New HireTerminati...
CHALLENGESTOCALCULATE
 Did not starts (DNS)
 Are they coded correctly in the system?
 Should the DNS be included?
Recom...
CHALLENGESTOCALCULATE (CONT.)
 Inherit differences between roles
 Entry level roles are “expected” to turnover faster th...
CHALLENGESTOCALCULATE (CONT.)
 Timing
 QoH does not reveal itself immediately (unless it is a really bad hire)
 Calcula...
EDUCATION INDUSTRY EXAMPLE
13
2012
Hires
as of
03/13
as of
06/13
as of
09/13
as of
12/13
2011
Actual
2010
Actual
2009
Actu...
B2B PROVIDER EXAMPLE
2012 2011 2010
Overall Termination Rate 16.6% 15.2% 14.1%
New Hire Termination Rate 24.5% 29.6% 29.0%...
OTHER METHODSTO EVALUATE STAFFING
OUTCOMES
 Performance Ratings
 Some organizations review performance rating distributi...
THE FORMULAAPPROACH
Quality of Hire = (PR + HP + HR) / N
 PR = Average job performance rating of new hires
 HP = % of ne...
QUANTIFICATION OFTHEWORKFORCE
 Assessing if the workforce is becoming more skilled and
talented
 Determine what identifi...
PREDICTING “SUCCESSFUL”STAFFING
OUTCOMES
 Frustrated with QoH being a lagging indicator – quantify in
“real” time the suc...
PREDICTING “SUCCESSFUL”STAFFING
OUTCOMES (CONT.)
 Challenges:
 Will managers and new
hires be “honest”?
 Should HR inte...
ASSESSINGTHE SELECTIONTOOL
 Examined the relationship between selection tool results and
new hire performance measures
 ...
ASSESSINGTHE SELECTIONTOOL (CONT.)
 Objective performance
 Subjective Competency
 Leadership
 Managing Execution
 Bui...
THE HIRING BATTINGAVERAGE
 Evaluating manager hiring prowess
 Idea from a JackWelch column
 http://www.welchway.com/Man...
THE HIRING BATTINGAVERAGE (CONT.)
 Example
 Give 10 “hire”
recommendations
 6 are “meeting” or
“exceeding expectations”...
WHYAREN’TWE?
 “Quality” is a subjective term – one size rarely fits all
 There is no clear measuring stick (benchmark)
...
QUALITY IS INTHE EYEOFTHE BEHOLDER.
 A “quality” hire is dependent on the role, department, and even
the economy.
 There...
WHAT ISYOUR “HIRING PHILOSOPHY”?
 Not only is “quality” dependent on the role/function/ work
team…it is also dependent on...
THE BEST BENCHMARK ISAGAINSTYOURSELF.
 Rather than looking for external benchmarks (which will differ
widely) organizatio...
CREATEA MEASUREMENT PLAN.
 For each measurement - what is the purpose?
 To investigate (diagnostic)
 Create accountabil...
COMMITMENTTO MEASUREMENT IS NEEDED.
 TO WHAT EXTENT DOES
YOUR ORGANIZATION
HAVE A “WORKFORCE
MEASUREMENT
STRATEGY”?
20%Re...
WHAT DO HIGH-PERFORMING ORGANIZATIONS
DO?
 Create and communicate a strategic plan
 Secure appropriate buy-in from leade...
YOUR NEXT STEPS
 What is your organization’s Hiring Philosophy?
 Does your organization have an EmployeeValue Propositio...
TIPS FOR SUCCESS
 Be clear about why you are investing in measurement
 Diagnosis
 Evaluate
 Create accountability
 Pr...
EXAMPLE
2012 2011 2010
Retention of New Hires
Overall Termination Rate 16.6% 15.2% 14.1%
New Hire Termination Rate 24.5% 2...
RECOMMENDED READING
34
DEFINING HIGH PERFORMANCE
 These companies performed better over the past five years,
based on these four indicators:
1. ...
SOURCES OF POORQUALITY
Cited in: Quality of Hire –The Next Edge in Corporate Performance.Taleo (2004)
36
DRIVINGQUALITY
Cited in: Quality of Hire –The Next Edge in Corporate Performance.Taleo (2004)
37
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Mary Ann Downey ILSHRM Presentation

  1. 1. QUALITY OF HIRE: THE ELUSIVEWORKFORCE METRIC Presented by Mary Ann Downey
  2. 2. ABOUTTHE PRESENTER Attorney by training, Entrepreneur, Screen Writer, Human Resources expert; specializing in Organizational Effectiveness, Workforce Planning, HR Analytics, Diversity and International HR  Academic  Bachelor Degree in History/Economics at Illinois State University (Normal, IL)  Juris Doctorate from Saint Louis University (St. Louis, MO)  Master Degree in Human Resources and Industrial Relations from University of Illinois (Champaign, IL)  Professional  Ten years in large global organizations: Caterpillar (Peoria, IL), General Motors (Detroit, MI) and ING (Atlanta, GA)  Director for workforce productivity think tank: Institute for Corporate Productivity (Seattle, WA)  Started consulting firm in July 2011  Credentials  Licensed to practice law in state of Illinois (since 1998)  Published in People & Strategy Journal,Talent Management Magazine and Diversity Executive among others  Frequent presenter including Society for Industrial and Organizational Psychology (SIOP), Human Resources People & Strategy (HRPS) and Catalyst Award 2
  3. 3. ASKTHEAUDIENCE  We are thinking about (maybe) starting to measure QoH  We are trying to measure QoH but cannot agree on the best methodology  We started measuring QoH but cannot agree what the metrics mean  We have a QoH metric but want to take it to the “next level”  We tried to measure QoH but have given up 3 Where is your organization in the quest of measuring Quality of Hire (QoH) metrics?
  4. 4. QUALITYOF HIRE (QOH)AGENDA  Introduction - What is QoH andWhy is it important to organizations?  How are organizations measuring QoH?  What are the barriers to effectively measuring and using QoH?  Recommend steps to adopt QoH in your organization 4
  5. 5. MEASURINGTHEWORKFORCE  Quality of Hire  ExternalTalent  Ability to effectively source, select and on-board new employees  Quality of Movement  InternalTalent  Ability to develop and create opportunities for current employees (Transfers/Promotions)  Quality of Selection  Internal & ExternalTalent  Ability to effectively source/develop, select and on-board employees  Time to Full Productivity  Internal &/or ExternalTalent  Ability of a new employee to meet/exceed job qualifications 5
  6. 6. MEASURINGQUALITYOF HIRE 75% 16% Should Does Overall Results shown: High orVery High Extent Source: i4cpTalent Management Metrics Survey, May 2010 6 It is an opportunity to gain a competitive advantage. 7% 22% Does High-Performing Organizations Low-Performing Organizations
  7. 7. HOWAREORGANIZATIONS USINGQOH?  Evaluate immediate staffing outcomes  Organization  Recruiter  Assess the effectiveness of a tool, process change or candidate source  Quantify the workforce qualities  Predict (and intervene) in staffing outcomes  Evaluate manager talent identification prowess 7
  8. 8. EVALUATING STAFFINGOUTCOMES “If an employee leaves within the first year – de facto that was not a quality hire.” - Alexis Fink PhD, Organizational Consultant, Intel Corporation formerly with Microsoft Corporation
  9. 9. DOINGTHECALCULATIONS # of New Hire Terminations in Reporting Period # of New Hires in Reporting Period 9 New HireTermination Rate # of New Hires - # of New HireTerminations in Reporting Period X 100 X 100 New Hire Retention Rate # of New Hires in Reporting Period
  10. 10. CHALLENGESTOCALCULATE  Did not starts (DNS)  Are they coded correctly in the system?  Should the DNS be included? Recommendation: Exclude from new hire calculation but calculate DNS separately  Interns/Temporary Employees  Are they coded correctly in the system?  Should temporary employees be included? Recommendation:What is most important to your organization - that the numbers “tie” or perception of the calculation? 10
  11. 11. CHALLENGESTOCALCULATE (CONT.)  Inherit differences between roles  Entry level roles are “expected” to turnover faster than more professional or senior roles  Effort to recruit roles differs based on required skills and availability  Be conscious of these differences when comparing rates against different business units, recruiters, etc. Recommendation: Calculate byJob Code, Family, Bands or (in the US) EEO-1 category 11
  12. 12. CHALLENGESTOCALCULATE (CONT.)  Timing  QoH does not reveal itself immediately (unless it is a really bad hire)  Calculating requires looking backward for at least two years  Reorganizations  Organization structures are dynamic which makes year-over-year comparisons difficult  Do not create reporting by leaders (people) or by artificial organization structures  Geography  Functions  EmployeeType Recommendation:Create exclusive QoH reports which are updated quarterly to spot trends and can be analyzed based on history (apples-to-apples) 12
  13. 13. EDUCATION INDUSTRY EXAMPLE 13 2012 Hires as of 03/13 as of 06/13 as of 09/13 as of 12/13 2011 Actual 2010 Actual 2009 Actual Overall Termination Rate 13.8% 11.7% 7.2% Number of New Employees Hired 640 580 525 410 Number of 1st year Terminations 186 152 134 89 New Hire Termination Rate 29.1% 26.2% 25.5% 21.7% Northeast Region 211 44.0% 39.5% 37.8% 32.2% Southeast Region 160 28.8% 30.2% 31.8% 27.9% Midwest Region 141 12.8% 10.1% 8.9% 7.2% West Region 128 22.7% 15.1% 13.8% 11.6% Faculty 448 24.1% 26.3% 25.1% 20.3% Campus Staff 152 46.1% 32.6% 31.8% 32.1% Corporate Staff 40 20.0% 12.1% 10.8% 13.5% 2013 Hires Q1 2013 Q2 2013 Q3 2013 Q4 2013 2012 Actual 2011 Actual 2010 Actual 2009 Actual 7 35 39 44 29 4.5% 5.5% 6.7% 8.4% 7.1% 14.9% Did Not Starts 155
  14. 14. B2B PROVIDER EXAMPLE 2012 2011 2010 Overall Termination Rate 16.6% 15.2% 14.1% New Hire Termination Rate 24.5% 29.6% 29.0% Number of New Hires 1,617 1,337 1,213 Number of First Year Terminations 396 395 351 Overall New Hire Term Ratio 1.48 1.95 2.06 Entry-Level Positions 27.8% 33.9% 39.4% Established Positions 18.1% 17.7% 16.2% Executive & Management 10.0% 12.0% 22.0% Professional 17.5% 16.2% 15.5% Technicians 21.2% 23.6% 22.5% Sales Workers 25.5% 39.0% 42.1% Administration 27.5% 26.1% 24.1% Number of Interns Hired 62 40 30 Number of Intern Conversion 32 14 9 Intern Coversion Rate 52% 35% 30% 14
  15. 15. OTHER METHODSTO EVALUATE STAFFING OUTCOMES  Performance Ratings  Some organizations review performance rating distribution exceeds expectations, meets, needs improvement  Challenge is confidence in performance rating process  Promotions  Some organizations review how quickly or number of promotions  Challenge is intervening circumstances/time between hiring decision and promotion 15
  16. 16. THE FORMULAAPPROACH Quality of Hire = (PR + HP + HR) / N  PR = Average job performance rating of new hires  HP = % of new hires reaching acceptable productivity with acceptable time frame  HR = % of new hires retained after one year  N = number of indicators Example:  PR =Average 3.5 on a 5.0 scale = 70%  HP =Of 100 hires made one year ago, 75 are meeting acceptable productivity levels = 75%  HR = 20% turnover = 80% HR  N = 3  Quality of Hire = (70 + 75 + 80) / 3 = 75 Source: Steve Lowisz, President and CEO, Qualigence, Inc.; http://www.recruitingtrends.com/quality-of-hire-the-top-recruiting-metric/ 16
  17. 17. QUANTIFICATION OFTHEWORKFORCE  Assessing if the workforce is becoming more skilled and talented  Determine what identifiable traits would factor into a “workforce capability” equation  Years of Experience  Type of Education  Quality of Education  Credentials  Scored former and new employees to determine if the workforce was getting “better” 17
  18. 18. PREDICTING “SUCCESSFUL”STAFFING OUTCOMES  Frustrated with QoH being a lagging indicator – quantify in “real” time the success of the hire  Survey hiring manager about the process and the early performance of the new hire  Would you hire this person again?  Survey the new hire about the process and the culture of the organization  Would you accept this position again? 18
  19. 19. PREDICTING “SUCCESSFUL”STAFFING OUTCOMES (CONT.)  Challenges:  Will managers and new hires be “honest”?  Should HR intervene in a “At Risk” situation?  “Survey” fatigue? 19 BOTH PARTIES SAY “YES” BOTH PARTIES SAY “NO” PARTIES DISAGREE GOOD HIRE AT RISK HIRE BAD HIRE
  20. 20. ASSESSINGTHE SELECTIONTOOL  Examined the relationship between selection tool results and new hire performance measures  Evaluation forms sent to hiring managers between 3-9 months after hire (dependent on employee segment)  Compared objective and subjective quality data against the selection tool results to validate the results and recommend future strategy 20 Use performance criteria to evaluate selection tool results.
  21. 21. ASSESSINGTHE SELECTIONTOOL (CONT.)  Objective performance  Subjective Competency  Leadership  Managing Execution  Building Relationships  GeneratingTalent and Organization Capability 21 Data Gathered  Learning and Applying Personal Experience  Subjective Quality  Ability/Job Fit  Motivation Fit  Speed to Performance  General Performance  Rehire Likelihood
  22. 22. THE HIRING BATTINGAVERAGE  Evaluating manager hiring prowess  Idea from a JackWelch column  http://www.welchway.com/Management/People- Management/Hiring Right/The-Hiring-Batting-Average.aspx  Every candidate is evaluated by 3 people beyond the hiring manager  The evaluators give each candidate a “hire”/ “don’t hire” recommendation  Six months later the hiring manager evaluates new hires with a “exceeds,” “meets” or “below” 22
  23. 23. THE HIRING BATTINGAVERAGE (CONT.)  Example  Give 10 “hire” recommendations  6 are “meeting” or “exceeding expectations”  .600 hba 23 Calculate hiring recommendations with performance.  Benefits  Identify talented “talent spotters”  Empower and engage current employees  Improve the on-boarding process for the new hire
  24. 24. WHYAREN’TWE?  “Quality” is a subjective term – one size rarely fits all  There is no clear measuring stick (benchmark)  It takes resources and effort to measure  The accountability hot potato – if the metric is “bad” – who is “at fault” – Staffing or Management? 24 So, if we all agree that we should measure QoH, why aren’t we?
  25. 25. QUALITY IS INTHE EYEOFTHE BEHOLDER.  A “quality” hire is dependent on the role, department, and even the economy.  There are a number of factors that if improved can signal a quality hire  LongerTenure  Promotable (Time to Promotion)  Increase Productivity  Manager Satisfaction/Assessment  Additional Credentials  Compensation/Cost 25
  26. 26. WHAT ISYOUR “HIRING PHILOSOPHY”?  Not only is “quality” dependent on the role/function/ work team…it is also dependent on organizational hiring philosophy…  If your organization has invested in a number of assessment tools both skill and personality based…then your “quality expectation” will be higher than an organization that hires for “culture” such as Zappos or Southwest which expects and encourages employees to “wash out” early. 26
  27. 27. THE BEST BENCHMARK ISAGAINSTYOURSELF.  Rather than looking for external benchmarks (which will differ widely) organizations should look  Across similar business units  By geography  Over time (year over year)  By hiring manager 27
  28. 28. CREATEA MEASUREMENT PLAN.  For each measurement - what is the purpose?  To investigate (diagnostic)  Create accountability (scorecard)  Evaluate performance (scorecard)  To monitor (dashboard)  A good measurement can only have one master  Need a one/two reporting period “grace” period before instituting accountability/ performance measures 28
  29. 29. COMMITMENTTO MEASUREMENT IS NEEDED.  TO WHAT EXTENT DOES YOUR ORGANIZATION HAVE A “WORKFORCE MEASUREMENT STRATEGY”? 20%Results: High or Very High Extent Source: i4cp Talent Management Measurement Survey, May 2010  Organizations get what they put into measurement.  Dedicate resources  Buy-in to survey  Commitment to act (judiciously) 29
  30. 30. WHAT DO HIGH-PERFORMING ORGANIZATIONS DO?  Create and communicate a strategic plan  Secure appropriate buy-in from leadership  Segment the workforce and concentrate on the problem or value-added positions  Dedicated (and highly skilled) resources  Statistician  IO psychologist  Customize measurement criteria by segment  Align HR function around the measurement plan 30
  31. 31. YOUR NEXT STEPS  What is your organization’s Hiring Philosophy?  Does your organization have an EmployeeValue Proposition?  What is your organizations viewpoint on talent identification and development?  Who is interested in Quality of Hire?  Head of HR  Recruiting Leader  Senior Leadership Team  Line Management  Are employee segments already identified?  How sophisticated is your human capital data?  Create and document your Measurement Strategy 31
  32. 32. TIPS FOR SUCCESS  Be clear about why you are investing in measurement  Diagnosis  Evaluate  Create accountability  Predict  Determine feasibility for your organization  Capture a baseline measurement  Set goals or create hypothesis (what will good look like)?  Tailor reports to audience need and appetite 32
  33. 33. EXAMPLE 2012 2011 2010 Retention of New Hires Overall Termination Rate 16.6% 15.2% 14.1% New Hire Termination Rate 24.5% 29.6% 29.0% Number of new hires 1,617 1,337 1,213 Number of first year terminations 396 395 351 Overall: New Hire Term Ratio 1.48 1.95 2.06 Performance Performance is assessed by Hiring Manager - 4 months after start date % of New Hires that Exceed Expectations 15.0% 12.5% 11.5% % of New Hire that Meet Expectations 74.5% 75.0% 73.5% % of New Hires that Do Not Meet Expectations 10.5% 12.5% 15.0% Culture Fit Culture Fit is assessed by the Employee & Manager through Opinion Survey % of "Good" Hires 79.5% 78.5% 76.0% % of "At Risk" Hires 13.0% 15.5% 15.0% % of "Bad" Hires 7.5% 6.0% 9.0% Employee Development & Mobility Working for Organization 75.5% 70.5% 56.5% Progression Promotion n/a 10.6% 15.9% Transfer/Promoted n/a 2.7% 7.9% Consolidated Quality of Hire Report  This is the cover sheet for a series of reports that are produced on an annual basis  This report requires the following HRIS data  Hire Date  Term Date  Promotion  Transfer  This report uses data acquired from opinion surveys  Hiring Manager  New Employee 33
  34. 34. RECOMMENDED READING 34
  35. 35. DEFINING HIGH PERFORMANCE  These companies performed better over the past five years, based on these four indicators: 1. Revenue growth 2. Market share 3. Profitability 4. Customer satisfaction 35 i4cp defines high-performance organizations consistently outperform most of their competitors for extended periods of time.
  36. 36. SOURCES OF POORQUALITY Cited in: Quality of Hire –The Next Edge in Corporate Performance.Taleo (2004) 36
  37. 37. DRIVINGQUALITY Cited in: Quality of Hire –The Next Edge in Corporate Performance.Taleo (2004) 37

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