Andersen Alumni recently published partner Jim O’Malley’s Article, “How Recruiting Can Take A Page from Accounting, Embrace Measurement and Metrics.” Read the full article below.
Lord Kelvin, born 1824, was an Irish physicist and engineer. Ahead of his time, he was obsessed with measurement and wrote: “When you can measure what you are speaking about, and express it in numbers, you know something about it. When you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely in your thoughts advanced to the stage of science.”
Today, business have embraced Kelvin’s wisdom and it’s widely accepted that ALL areas of a business lend themselves to measurement. Unfortunately, HR/Recruitment functions were slower to come to this realization. Historically, many of us believe that this was based on the (mistaken) perception was that HR, by definition, exists to advocate for employees.
So, when HR finally came to its senses a couple of decades ago and businesses concluded that being merely “warm and fuzzy” was no longer acceptable, some of us in HR/Recruiting quickly latched onto metrics that, at the time, seemed like reasonable things to measure. Within recruiting, many started collecting data such as “cost-per-hire”, “time-to-fill” and “source-per-hire”. As we advanced our view of what to measure, others started to track the recruiting department’s workload, hiring manager satisfaction, the effectiveness of outreach/brand awareness, applications-per-hire and even the percentage of hires that are proactively sourced (which seems to imply that it only requires an individual recruiter’s ingenuity to find the hired candidate!). However, metrics such as “value-of-hire” and “quality-of-hire”, focusing on the value that a particular hire brings to the business, were talked about, but rarely instituted.
Today, fortunately, there is widespread recognition that the most recruitment valuable metric – and the one that really matters – is quality-of-hire (QOH). Other measurements may help you evaluate the efficiency of your recruitment function, but that’s about it. They won’t reveal much more than whether recruiters are working as effectively as you’d like. What you really need to know is whether the work recruiters do is materially raising the bar on the quality of people joining your organization.
The problem, of course, is actually measuring QOH. There is no “one-size-fits-all” algorithm. QOH will mean different things for each business and possibly even for each individual contributor within each business unit. Measurement is perhaps best done by vertical. For instance, within a typical professional services firm, the measurement of an individual in an internal finance position requires different tools than a director or a partner. However, at the vertical level, it’s difficult to determine who you benchmark against. Is it all the internal finance people within your company; within your industry or ALL the finance people with a particular title/level? QOH is also pretty subjective. Do you base it on a performance evaluation system? When do you measure it? At six months into the job? 12 months?
Questions abound. And there are no easy answers since the metrics and measurement process must be tailored to your organization. However, several overarching principles can be helpful in establishing QOH and other related metrics for your business. David Earle of Staffing.org in his white paper for Jobvite Recruiting Analytics: 5 Ways to Benchmark Success is right on target when he recommends asking the following questions:
- Will everyone who sees them understand what they mean?
- Have they been compiled cooperatively, based on dialogue between recruiting and internal stakeholders?
- Does everyone agree that they are important?
- Do they speak directly to recruiters’, hiring managers’ and executive management’s objectives?
- Can they be easily accessed and compiled consistently and accurately?
When seeking input from within your organization, don’t neglect to look beyond your usual internal clients for expertise. The absolute best source of information is the individual ultimately responsible for the organization’s financial performance and metrics: the CFO. In my experience, even the most well-intentioned (or perhaps ignorant) recruiters overlook the value of soliciting input from the person whose job it is to constantly measure overall business results and who, by the way, certainly appreciates the magnitude of employee costs.
Once you’ve established the metrics, ensure that the process of tracking and analysis isn’t overly complicated or unwieldy. Recruiting tools and technology have made this much easier. The same technologies can also support and enable decision-making for strategic workforce planning and can be used to gather critical talent-related business intelligence. In fact, in recent years, this has evolved into a profession right in front of our eyes.
Finally, Lord Kelvin also said, “If you cannot measure it, you cannot improve it”. Which leads me to offer one last piece of advice: always follow-through on what you learn from your metrics – whether it’s good, bad or ugly – to improve your processes.
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