Recruitment Effectiveness Effective work is not performing one task; it is the sum of many important things done well. So, if we want to know how effective a recruiter is, we have to talk about several key tasks. Jac Fitz-EnzIn today's competitive environment, it is widely acknowledged that people are key assets of an Organization. All other tangible assets are inert and subject to depreciation. Only the human capital has potential to learn, develop and contribute to business outcomes. And the acquisition process of these key assets has an enormous importance for the business enterprises.We all know that it is HR people job to lead the Organization in the recruitment, development, coaching and measurement of human assets and the results of their performance. According to Jac Fitz-Enz; "a great deal of the value-adding potential of all functions in the Organization depends on how effective are the human assets HR professionals help them acquire". This saddles HR people, mostly recruiters, with a great responsibility to bring up the right human capital or human potential to the Organization in order to add value to the overall business success. In this article, i am not going to describe the most effective recruitment and selection system. This is something quite unachievable i suppose. Why? It is just simply because each and every Organization has its own dynamics, conditions. And, these conditions vary from industry to another. Organizations may benchmark their systems, but should not apply one system completely the same in their own as the best fit for one may not be called as best practice for the others.Rather, i would like to describe some tools for measuring the effectiveness of the recruitment which may be applied to all selection processes. Measurement of recruitment activities may be looked as "time consuming" or "meaningless"; but the reality does not say so. According to DDI's hypothetical example, the costs of replacing 50 employees can approach "one million dollars". This was an example based on some assumptions, ok, but you will never know what is costing or how qualified is your recruitment process unless you come up with quantified data.Quantifying effectivenessAs the quotation from Jac Fitz-Enz states that effectiveness issue is the sum of some components which are costs, efficiency, customer satisfaction and quality. The measurement process should be kept as simple and as less complicated as possible. And for the sake of simplicity i will only add 6 important issues when showing the quantification. I do believe that this list should be the minimum for showing the effectiveness. HR professionals may add more items on this list but in order to get meaningful results, it is more convenient not to exclude some items.Key performance indicators for showing the recruitment effectiveness enclose; 1.Response time 2.Time to fill 3.Cost per hire 4.Offer acceptance rate 5.Quality of hire 6.Satisfaction index Response Time It is defined as the time from the day HR have an approved job requisition to the day on which qualified candidates are ready for interviews with the requesting department head. It is an easy way to show how quickly the selection system works in an Organization. It is simply calculated by;Date of first qualified candidate referred for interview - date of receipt of job requisition. Let's say that as an example the requisition date is February 4, and the first interview date is February 20. Then the response time is equal to; 20-4=16 days. Time to Fill The second time issue is the measurement of the total number of days between the approved job requisition and the date on which an applicant accepts the job offer. The calculation is exactly the same as response time with an only difference that the referral date is replaced by the offer acceptance date. Date of receipt of job requisition - date the offer is accepted. Let's assume that the job offer acceptance date is March 3; then the time to fill is March 3 - February 4 = 27 days. Cost per Hire Cost is the component about which collecting data is relatively harder, but its impact and necessity is significantly so obvious. As can be seen from the researches that it has many other subcomponents on which HR professionals must be agreed. A typical recruitment cost may be calculated by taking the sum of;Source cost (advertising, agency, consultancy fees),Screening and Selection cost (salary, benefit and overhead cost of HR people for reviewing resumes, tracking data, interviewing applicants), Management cost(salary, benefit and overhead cost of requesting department for interviewing),Travel and Relocation cost(travel and lodging costs for staff and candidates), Orientation cost(new hire training/orientation costs). Cost per hire will be calculated by simply dividing the total sum of these items to the number of new hires. Offer Acceptance RateThis ratio is simply the ratio of job offers made to job offers accepted. The measure tells HR people something about how productive recruitment system is, but also may show the competitiveness of your HR systems as a whole. Also called as "hit rate", the offer acceptance formula is; offers accepted / offers extended. If offers accepted is 40 over 60 offers extended, the percentage of offers that result in a hire are 40/60 = 67%. According to the SHRM/Saratoga Institute HR Effectiveness Report, average hit rates have been 80 to 90 percent for the period of 1984-1995 and they haven't moved more than a few percent either way from year to year.Quality of HireQuality assessment of recruitment is a collection of criterion as performance, promotability and retainability of the new hires. HR professionals may add more items to the list, but i do agree to move on with these three as they are the best way to describe a good employee. While recruiting, HR people deal with many candidates and generate many hires. In order to have a measurement of the quality of the hiring, HR should do a periodic evaluation of all newcomers. As a result, quality of hire may be calculated as the average of; average job performance realization of new hires, percent of new hires promoted or can be promoted within one year and the percent of hires retained after one year. For example, let's assume that the average performance rating is 4 out of 5; the promotability within one year is 45%; and the percent of new hires retained after 1 year is 80%. So, quality of hire will be (80+45+80) / 3 = 68%. The resulting value is a relative one and should be monitored year by year in order to have meaningful information about the quality of hires.Satisfaction IndexA less objective but more valid method is to askcustomers' opinion about the total recruitment process. I believe that in order to add value to the bottom line, HR must conduct satisfaction surveys, analyze the results and take action towards it. Satisfaction from the recruitment activities must be followed on a yearly basis.Final Words... Well, the final question is; how are we going to use all these measures when quantifying recruitment effectiveness? As I said, this was my list for measuring recruitment effectiveness, you may add more but my advise will be not to extract. Whatever you do, you should keep it simple and explainable. The more things get complicated the less people involve in it. First of all, it is advisable to set targets for each component that I've tried to describe above. Of course, your targets should be aligned with your overall business and HR strategies. Benchmark your targets with external environment but never copy and paste them into your Organizations. After setting goals, just calculate your goal achievements. In other words, if your response time target is 8 days, and the average realization of response time is 9 days, your goal achievement will be equal to 88% (1+(1-(9/ )). And once you get the goal achievement rates for each component, just take the average of these which will be resulting with your Organization's recruitment effectiveness. It is also possible to do the same thing by setting some weights to each component, and by multiplying the goal achievements with weights. Then, you may have the weighted average recruitment effectiveness as well. Whether you use weighted or arithmetic averages for calculations, just include analytics in your processes and try to quantify as many things as possible on what you are doing. That's and will be the only HR way for adding value to the overall business success for now and for the future.  |