Nowadays, hiring the best talent is about more than just interviewing a few candidates and hiring the one you have the best feeling about.
What’s worse, retaining your most talented employees once they’ve been hired has become even more difficult over the last few years.
In Deloitte’s Global Human Capital Trends 2015 study -- a survey of more than 3,300 organizations from 106 countries -- 87 percent of respondents cited “retention, engagement, and culture” as the as the most important issue facing their organization today.
To solve retention and engagement issues, organizations need to put a stronger emphasis on hiring metrics that produce high quality, highly engaged new hires.
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Typical hiring metrics like cost-per-hire and time-to-hire focus more on the hiring process, rather than what drives the business. So, even if you hire a candidate quickly and efficiently, there is no guarantee the candidate will be effective.
Instead, focus on metrics that provide insight into quality of hire and productivity. Here are four metrics you can use to maximize quality of hire and decrease new employee turnover in 2016:
1. Sourcing Mix
While your sourcing mix may seem like a process-focused metric, it also can give you insight into the quality of candidates you’re considering. Successful managers understand where their best hires come from and know when their sourcing mix is out of whack.
One strategy for determining if your sourcing mix is affecting your quality of hire is to compare the number of referrals and direct-sourced candidates you receive for each position to the number of candidates you’re receiving from sources like online job boards and social media postings.
For the best quality of hire, you should be getting at least two referral or direct-source candidates for every job board candidate you receive. If you don’t have at least a one to one ratio, it means you’re not allocating your resources effectively.
Another way to make sure you’re allocating resources effectively, to find the highest quality candidates, is to keep track of how many candidates you interview per new hire. As a general rule, try to keep this number at five or below. More than this suggests your HR department may not have a grasp on what’s actually needed for the position, or the job description may not be attracting the right kind of candidates.
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Remember, it’s about quality, not quantity. If you’re interviewing too many candidates-per-hire, then your pre-hire process isn’t filtering out unqualified candidates well enough. Make sure your job descriptions are accurate and your HR department isn’t putting too much emphasis on skills and experiences over potential and fit, to lower your interview-per-hire ratio.
3. Time to Acceptable Productivity
The goal when you’re filling a position should always be to hire a candidate who can become productive as quickly as possible. If you’re not using this important metric to determine quality of hire, then you’re missing an opportunity to gain valuable insight into the success of your hiring process.
Before listing a new position, speak with the manager and other upper-level team members to determine acceptable measures of productivity and how long it should take to reach them for a new hire.
By making these expectations known during the orientation and onboarding process and monitoring new hire productivity levels, you can determine which new hires are meeting your standards and which are falling behind. You can also use this metric to compare your sourcing and hiring processes, to see which processes provide the best results.
4. Revenue Generated per Employee by Job Function/Department/Team
This metric may just be the holy grail of quality-of-hire.
Why? Like time to acceptable productivity, this metric measures the quality of hire based on how that employee is contributing to the organization. The key is to break it down into a unit that is small enough to measure, to understand the impact of your hiring decisions. The assumption here is that all work actions contribute to revenue. So, revenue becomes the proxy for customer satisfaction, better attendance, improved net promoter scores, etc. If your hiring process enables you to hire people that outperform in each of these work processes, revenue should increase. Now you have a way to measure business outcomes.
As an internal recruiter at a successful organization, you should already be base-lining these metrics to help you understand the financial impact of a good hire versus a bad hire. If you’re continuously seeing employees who do not, it may be time to reexamine your sourcing mix or HR department efficiency.
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Successful talent retention strategies begin with the hiring process. When you focus on metrics that increase quality of hire, you’re more likely to recruit skilled candidates that can make an impact at your organization for years to come.