How job recruitment optimises your human capital

It takes time for a company to get a positive return on investment (ROI) on every single new hire. How does one reconsider recruitment strategies and business practices to bring about a favourable return?

What are the costs?

As more and more employers recognise the value of human capital as a significant investment, recruiters and CFOs are looking at the factors that contribute to reducing the cost per hire and achieve a favourable return on investment. The expenditure of hiring a new employee usually covers a wide range of areas, from job advertising costs, in-house HR recruitment resources, onboarding, induction and training, and coaching. As it can take months for a new hire to be equipped with the necessary skills to achieve optimal job performance, the salary and benefits of a new hire before they are up to full productivity should be taken into account. While time required to equip a new hire is crucial, the length of stay — which tends to be shorter today with the growth of a Millennial workforce — in a new position matters. Job hoppers can come at a very real cost for a company.

Measuring HR effectiveness: a case study

Unlike the sales performance of a company, which can be easily calculated, the performance of HR tasks such as hiring is a bit difficult to measure with a standard metric — due to the intangible nature of human assets. However, recruiting expert Maia Josebachvili says that, with an innovative tool, Employee Lifetime Value (ELTV), it is possible to measure HR effectiveness.. ELTV measures the total net value over time that an employee generates during his or her job life cycle at a company through assessments of how quickly they acclimatise to the job and start contributing to the company, how much they progress in the job, and how long they stay. Josebachvili also suggests a number of good HR practices that can drive ELTV, one of which is hiring top performers. This is because, she says, a good hire tends to have a higher output when they start the job, which leads to positive impact on the returns on human capital investment.

Smart recruitment to hire top performers

There are a number of ways to reduce your costs in hiring a perfectly matched employee:

• A good start — the emergence of “pay for performance” job board advertising services allows recruiters to achieve higher efficiency right from the start of the hiring process and increase overall ROI effectiveness. Instead of a traditional lump sum payment without guarantee of results, recruiters can pay according to the engagements a job post can generate. This offers extra flexibility for recruiters to secure top candidates with their preferred budget.
• Diversified recruiting tactics — applying a variety of talent acquisition methods to maximise returns. You can place your job openings on a dedicated career page within your corporate website, or recruit with social media. In comparison to the time and resources involved in external recruitment, building an internal talent pool or employee referral scheme can be more cost-effective.
• Understanding a candidate’s job performance traits — there are certain personality traits that are strongly related to the quality of hire. A quick learner may take a shorter time to get on with a new role, while someone who possesses leadership qualities might be able to unlock more of the potential of existing team members. The more consideration given to such traits when deciding on a candidate, the more likely you are to find the right fit.
• Use the right tools — consider using recruitment software or analytics to provide insights into the hiring process. Utilising insights to improve workflow can speed up the hiring process.
• Enhance your employer branding — a strong brand can attract top talents and bring out the best in them.