As we were presenting at one of the biggest HR conferences in the world earlier this year- one of the attendees approached our booth. We talked about different metrics and how they measure success at his company. He then shared and told us he is one of the top recruiters in his company because he fills his positions the fastest, and most efficiently. When I asked about any quality measures his company is implementing, he claimed that was the retention department’s problem.
Hiring has always been a delicate balance between quality and speed. If you are looking fill a position as fast as possible – whether it being a new candidate or an existing employee – you might be forced to compromise on the best candidate.
Our data measured help HR professionals gather, analyze and present important information regarding the hiring process. But how can we tell if we are measuring the right things? How can we be certain we are making a well-informed decision to receive the best return on investment?
WHAT RECRUITMENT METRICS CAN WE MEASURE?
There are several significant recruitment metrics in HR. The more traditional metrics (sometimes referred to as “Speed metrics”) such as Time to Fill and Time to Hire, and Cost Metrics such as Cost per hire and Sourcing channel costs. Those metrics help organizations provide a platform to measure recruiters’ accountability and performance.
The issue with the speed metrics being that it is an outdated strategy relaying on past data to make future decisions. If a company fails to adapt a more ‘quality of hire’ approach, it might be faced with a conflict between hiring managers and the business goals of the company. Metrics such as Time to Hire and Cost per Hire only look at initial hiring costs and not long-term hiring costs of unfitting candidates. When the recruiters are only focused on filling positions cheaper and faster, it actually results in costing the company much more in rehires and turnovers, resulting in hefty additional recruitment costs.
“The cost of a bad hire is always extensive. Most companies don’t know the full cost of the turnover, so they don’t apply the resources upfront to avoid it.”Arte Nathan
THE COST OF A BAD HIRE
According to a recent CareerBuilder’s survey, three out of four employers are affected by the costs of “bad hires”. Interestingly enough, the main reason for making a bad hire is hiring a candidate who did not fit all of the job requirements.
“It’s important to note that there’s a ripple effect with bad hires. Disengagement is contagious, poor performers lower the bar for other workers on their teams, and their bad habits spread throughout the organization. The best thing hiring managers can do is put in the time and effort on the front end to make sure they have the best available pool of applicants for every job opening. And, just as importantly, have good procedures in place for evaluating candidates.”Rosemary Haefner
With a total (avg) cost of one bad hire being about $15K, and the cost of losing a good hire (as a result of hiring a the wrong person) being $30K, it is critical companies rethink their measurement metrics used and redefine their priorities to their recruiters, as well as reiterate the company business goals.
CHANGING THE METRICS WITH A QUALITY OF HIRE APPROACH
In a time where there is a growing demand for HR leaders to gain a ‘seat at the table’ in order to play a more critical and strategic role at the company, recruiters need to dramatically adjust to support the need of the business and see ‘the bigger picture’. Companies should understand that recruiting metrics drives specific recruiting behaviors and to put more effort into ‘Quality of Hire’ metrics. This leaves companies with the opportunity to implement advanced technologies such as AI and Machine learning to deal with the Speed metrics, finding the best talent quickly and improve the cost metrics by optimizing budgets and using the power of data analytics to empower the HR team in their quest to hire the best candidates that will be aligned to the business goals of the company.