Recruiters have not paid very much attention to the quantitative side of quality of hire. We frequently talk about hiring manger satisfaction and other subjective measures of quality, but I don’t know of any recruiting function that has even tried to measure, quantitatively, the value or contribution of people who have been hired.
I have used examples in the past that place a value on a function within an organization in terms of its cumulative contribution to sales, number of patents produced, or depth of contact with a customer.
Yet, it has been hard to bring this down to an individual level and precisely say that employee A contributed X dollars of value. We never get to this level of precision (or even want to), but we are getting closer to understanding and measuring the skills and attributes that contribute to overall organizational success.
For example, which recruiter is the “best” in your department? Which assessment test provides a higher quality candidate? How much do diverse hires contribute to success? How many good candidates were rejected because of faulty assessment practices or inappropriate tools? We could add many more questions to this list, but getting answers even to these few is a challenge.
The answers require a standard that you would like to achieve, or a quantified definition of such concepts as “best” and “successful.” Once those have been defined, then the challenge is to find a process and tool to measure them.
Some firms, from Best Buy to IBM, are starting to do just this. They are applying quantitative measurements to talent management, recruiting, and HR. They are reaping profits and cost savings from doing so. As other organizations catch on to this, measurement will become a part of HR and recruiting. And this will put many recruiters and HR professionals in a strange space — that of determining with some level of certainty which people perform better than others, which managers have lower turnover, and which functions add the most value (revenue/loyalty/patents).
Most people are uncertain about quantitative measurement, not usually understanding what it means, and not quite believing that individuals can be assessed in such a way. And, measuring individuals’ outputs and contributions had been problematic.
By assessing for very specific capabilities and skills, we may be able to vastly improve the sales, innovation, and product development in our organizations. Imagine being able to says with a high level of certainty that a set of specific skills, obviously combined with organizational fit, would provide a more productive employee than some lesser set. We do this more or less subjectively today, but these tools would give us greater certainty and help remove favoritism and chance from the equation.
Today, we are starting to see sophisticated algorithms and software, some new HRIS tools along with CRM and specific measurement software that make it easier to gather data and mine it. Longitudinal studies can be carried out and base levels can be established so that the impact of future changes can be observed and correlated. Trends can be analyzed and patterns predicted. Some of the tools resemble those being used by Netflix and Amazon to recommend products (and predict which products will be most successful).
OrcaEyes is just one organization that is offering tools and services to help quantify the people side of business.
One of the best ways to begin getting familiar with what’s going on is to at least skim through one of these resources.
Books are appearing which educate and explain the hows of measuring people and their performance. One example, Investing in People: Financial Impact of Human Resource Initiatives, is an SHRM-inspired book written by two big names in the HR measurement area: Wayne Cascio and John Bourdreau. In chapters titled “The High Cost of Employee Separation,” The Payoff from Enhanced Selection,” and “Costs and Benefits of HR Development Programs” they lay out an accessible framework for presenting HR data in a way that business managers can appreciate.
Another book, Reinventing Talent Management: How to Maximize Performance in the New Marketplace, was written by William A. Schiemann. Schiemann runs a consultancy that focuses on measurement. This book introduces the concept of “people equity” and shows how some employees are far more valuable than others. He also shows how to build equity and improve business performance in ways traceable to people.
Another excellent book, Talent is Overrated, by Geoff Colvin, does not take a quantitative position but does provide a different perspective on how to look at people both within your organization and candidates. His focus is on looking at what people can do and on how to become better at what you do. While not a book on prediction, it is informative and challenges some of our preconceived notions about people.
My own prediction is that quantitative HR is quietly going to replace most of traditional touchy-feely HR within a decade. This will transform organizations and how we think about work.
People are the now the most expensive asset that an organization has. Selecting the right people, the best people, is going to be more emphasized than in the past. I can envision CFOs and other executives using these quantitative tools to lessen the need for more people, to improve efficiencies, and to raise productivity. Mass hiring of lower quality people ended with this recession. Now the focus is on finding fewer people of higher quality with better skills. Our only challenge is to figure out what that means and how to measure it.