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HR not measuring up

Inappropriate ‘quality of hire’ gauges can mask department’s failings in contributing to the bottom line

Measuring performance on a constant basis is an unquestioned requirement for every business - indeed every department. In some cases, the metrics - accounting compliance, audit rules and quarterly results - are imposed by external authorities or required by international standards. In others, the targets and gauges an organisation uses are essentially a matter of choice.

They might be based on industry best practice or the recommendations of highly paid management consultants. Alternatively, they could simply be the result of in-house custom and practice, modified over the years to incorporate changes brought about by factors such as the advent of new technology, what competitors are known to be doing, or bright ideas either passed down from the boardroom or bubbling up from below.

What that means, though, is that companies can end up using all kinds of self-selected internal measures that may, in fact, not be fit for purpose. Reports are compiled, feedback sought, numbers calculated, and questionnaires completed. The data and subsequent analysis, however, can leave managers and leaders none the wiser and, therefore, no better off in terms of improving the overall business or its individual parts.

A clear instance of this which relates specifically to metrics for HR departments has been highlighted in a recent study called "Hiring for Success", put together by Hudson RPO (Recruitment Process Outsourcing) and the HRO (Human Resource Outsourcing) Today Institute. The basic aim of the study was to benchmark practices for measuring "quality of hire". To do this, the survey sought the views of talent leaders and hiring managers in companies of all sizes in countries around the world.

The thought that set things rolling was that HR "results" may be measured, but usually it is not done in the best or most appropriate way. Sales people are judged by sales, traders by their ability to turn a profit, and teachers by the grades of their pupils.

But ask about the success of an HR department's hiring practices and all you are likely to get are a few statistics about the average length of the recruitment process, salary trends for certain roles and, maybe, some percentages on comparative retention rates for this year and last.

There is very little to tell you if the HR team is actually hiring the best candidates for the company or the position. Indeed, all too often, stories emerge of interviews for roles with no clear job description. Recruits walk out within the first three months because the job is "just not right" for them. And new hires who do stay the course - thereby benefitting from the employer's separate investment in training and mentoring - later look back with amusement or amazement on their own recruitment and on-boarding experience.

Improving those areas of HR performance - and being able to measure the progress - can have a large impact on corporate effectiveness and the bottom line.

"Multiple millions are spent on hiring but, in many organisations, it seems that nobody systematically measures the quality of candidate being placed," says Sydney-based Kimberley Hubble, global RPO leader at Hudson RPO. "Companies seem more interested in measuring cost per hire or time per hire, but the real benefits come from a commitment to quality of hire throughout the recruitment process."

Emphasising that there is no "one size fits all" answer, Hubble urges employers to come up with more stringent methods and metrics. These should be suitably tailored for internal needs and take due account of the industry, current corporate objectives, management style and culture, and realistic expectations.

A good starting point is to ask how many of last year's hires got an above-average rating from a line manager in their performance appraisal - or an above-average satisfaction rating if dealing with clients. That is an early indication that new arrivals are already contributing financially - in the broadest sense - to the business.

"We ask how people are performing in relation to other members of the team," Hubble says. "Measuring at the six-month mark, rather than waiting longer, is a step in the right direction."

At that point, too, the signs to look for are different from those assessed in a recurrent annual appraisal.

"Of course, retention is a red flag, but you need other metrics and not just the usual 'one to five' rating, where most managers go for a three," Hubble says. "After six months, you can get a purer measure of quality of hire. In any other business, you are accountable for your investments and HR managers should be as well."

The measures, which can perhaps consider such things as speed of assimilation, involvement, and co-operation with colleagues, may be quite subjective. However there is no harm in stepping away from today's frequent over-reliance on hard data churned out by a computer system that can monitor "on time performance" - such as who is in the office by 9am - but not, for example, lunch hours surrendered to getting a key client presentation completed on schedule. This sort of action is a truer indication of which people are really pulling their weight and are prepared to go the extra mile.

Hubble says HR managers and heads of talent acquisition tend to put this whole issue into the "too hard" basket. They hire and then basically hand over responsibility for whatever happens next to somebody else.

"I would be looking closely at the quality of people I was bringing in," Hubble says. "You can say you are under resourced or don't have the right technology, but that shouldn't stop anyone. It is worth getting the measures and systems right to understand the business-critical roles in your organisation and what people really need to succeed in them."