June 24, 2009u e , 009

The Illusive Staffing Metric ‐ Quality of Hire

Your Presenters Today

Kelly Renz - SPHRVP Client Services and

Anne NimkeCo-founder & Executive

Talent LeadershipConsultant

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Pinstripe, Inc. designs, builds and manages high‐performance, large scale talent

acquisition solutions. For clients in industries that include financial services,q ,

technology, telecommunications, healthcare and others, Pinstripe’s innovative

approach to Recruitment Process Outsourcing (RPO) integrates sourcing,

recruiting, hiring, on‐boarding, and engagement into a complete, end‐to‐endrecruiting, hiring, on boarding, and engagement into a complete, end to end

outsourced acquisition and retention solution. For healthcare organizations,

Pinstripe’s Healthcare Group offers the provider‐side experience it takes to help

clients reduce their recruitment and labor costs while continuing to provide theclients reduce their recruitment and labor costs while continuing to provide the

highest quality of patient care.  Pinstripe’s Project Search Group offers on

demand hiring solutions that allow companies to choose from discrete modules of

service using just what they need when and where they need it Clients chooseservice—using just what they need, when and where they need it. Clients choose

services that best complement their existing capabilities, while controlling the

overall costs of recruitment. 

More information is available at 

www.pinstripetalent.com or www.pinstripehealthcare.com 3

Agenda and Objectives

• Quality of Hire – Definition, Importance and Business Case

• Key Levers/Touch Points that Impact Quality of Hire

E t l P iti i E l t B d W kf Pl i– External Positioning:  Employment Brand, Workforce Planning

– Candidate Interface:  Recruitment, Selection

– Post Hire Experience: Orientation On‐BoardingPost Hire Experience:  Orientation, On Boarding

– Org. Processes:  Performance Management, Talent Management

• Q&A

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Polling Question

Please describe your current role…Recruiting Manager / Recruiter 39%Recruiting Manager / Recruiter – 39%

HR Manager / Director or above – 33%

HR Generalist / HR Specialist (non recruiting) – 0%

Hiring Manager / Executive – 0%

Other – 28%

Introduction to Quality of Hire

• How do we define QoH?

• What is the business case to measure QoH?

• Example of a QoH calculation

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What is Quality of Hire (QoH)?

• QoH is the set of meaningful workforce measurements, unique to each company, that defines success in hiring and retaining the right talent to fuel the business.  

• QoH is an important component of the Talent Management strategystrategy

• These measurements need to be numerically based (or converted to numbers) and derived from business results. Some commonlyto numbers) and derived from business results.  Some commonly used metrics are:

– Performance evaluation rating system

– Productivity at a certain point of employment (after 90 days, six months, 1 year, etc.)

– Retention rates (turnover data)– Retention rates (turnover data)

– Succession planning data – promotability, diversity goals, performance management 7

What is Quality of Hire (QoH)?

• The good news is, you likely have this data somewhere already within your business.  Sometimes it’s just a matter of y y jhow to get at it

• It’s asking the business question, “What is important to us, and how do we define success?”

– How does talent fit into that definition for us?

• Evaluating current Talent Management systems and inputs are the first steps to identify what metrics are already available, or could be captured if the system was fully , p y ymaximized

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Business Case for Quality of Hire• Domestic and Global War for Talent

– Offshoring; Remote workers to electronic; Immigrants; Working 24x7; Job i ti Gl b l t l t l h imigration; Global talent supply chain

• Cost of Replacing Talent

Retiring Talent Turnover # years of work experience lost– Retiring Talent; Turnover; # years of work experience lost

– It takes 2 new employees to replace 1 skilled worker – Forrester

• Demographic Trends Point to a 11m worker shortfall• Demographic Trends Point to a 11m worker shortfall

– 15% fewer 35 to 45 year olds; Baby boomer retirements

– Vacated jobs + newly created jobs = 33 to 55m open positionsj y j p p

– 11m to 23m person talent shortage by turn of the decade

• Reengineering and automation has run its course in many firmsg g y

• Net:  The market is tough…and getting tougher9

Talent Impacts Financial Performance

• Talent is strongly linked to superior financial performance

• A Fortune 500 company can realize a $70m‐160m bottom line increase, with a 10 point increase in its , pTalent Quotient

Source of ValueSource of Value Comparing the Best and Worst HR Systems

62%38%

15%

60%

80%

100%

120%

Tangible AssetsIntangible Assets

62%38%

15%

60%

80%

100%

120%

Tangible AssetsIntangible Assets

Bottom 10% Top 10%

Employee Turnover 34.09% 20.87%Sales Per Employee $158,101 $617,576Market Value to Book Value 3 64 11 06

38%62%

85%

0%

20%

40%

1982 1992 1998

g

38%62%

85%

0%

20%

40%

1982 1992 1998

g Market Value to Book Value 3.64 11.06% Jobs filled from within 31% 53%% with formal staffing plan 3% 48%% qualified for >1 job 32% 63%# Hrs training for new EEs 3 5

Hewitt Study Huselid Study

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Polling Question

Are any of your company's dealing withAre any of your company s dealing with issues related to...(check all that apply)

Skill Shortages 57%Skill Shortages – 57%

Multi-generations in the workforce – 14%

Economic downturn – 86%

Globalization – 29%

Increasingly aggressive competition – 50%

Measuring Quality of Hire (QoH)• Performance management strategies, including talent assessment, has grown over the past year in spite and as a result of the economy with 40 % of companies naming it asresult of the economy, with 40 % of companies naming it as their top HR priority (Bersin)

• Only 20%‐25% of organizations have QoH measurementsOnly 20% 25% of organizations have QoH measurements

• Only 30% of companies attempt to measure QoH (ERE)

• 70% rated QoH as important and planned to improve QoH• 70% rated QoH as important and planned to improve QoH measurements in the next 12 months (Authoria)

• For companies that do measure quality of hire, only 50% set p q y , yexpectations with Hiring Manager input (Staffing.org)

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Measuring Quality of Hire (QoH)

• QoH Formula: QoH = PR + HP + HR / N– PR = Average job performance rating of new hires g j p g

– HP = % of new hire reaching acceptable productivity with acceptable time frame

HR % f hi t i d ft 1– HR = % of new hires retained after 1 year

– N = number of indicators

Example:Example: 

1. PR of new hires = 3.5 on a 5.0 scale = 70%

2. HP % =  Of 100 hires made one year ago, 75 are meeting y g , gacceptable productivity levels = 75%. 

3. HR % = 20% turnover = 80% HR

4 N 34. N = 3

QoH calculation:  70 + 75 + 80 / 3 =  7513

Creating a numeric value from a non‐numeric source

• Common example of converting a rating to a numeric:

– ACME company uses a non numeric rating system for performance– ACME company uses a non‐numeric rating system for performance evaluations:  BE, ME, OE, EE.  To use these ratings in a QoH calculation, a numeric value must be placed on each of these.

BE 0• BE = 0

• ME = 1

• OE = 2OE = 2

• EE = 3

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QoH Levers

• What levers impact your QoH?  These are the strategic impacts on how you can drive better hiring results, improve your workforce performance, which leads to a better QoH ratiop

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The Benefits of Measuring Quality of Hire

Benefits:

1 Positive productivity

Levers:

1 Employment branding 1. Positive productivity

2. More engagement & innovation

1. Employment branding

2. Workforce planning

3 R it t d l ti innovation

3. Increase in brand equity

4 Reduction in bad hire costs

3. Recruitment and selection

4. Orientation/On‐boarding4. Reduction in bad hire costs

5. Contribution to retention

6 Improved customer impact

5. Performance management

6. Talent management6. Improved customer impact

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Polling Question

Is “Quality of Hire” measured in your company?

We measure, track and report QoH Metrics – 24%

We have a plan to begin to measure QoH – 18%

We talk about it but no tools or reporting are in place – 29%

QoH is not being discussed or measured now – 29%

Lever #1: Employment BrandingLever #1:  Employment Branding

• Branding ‐ A way to differentiate the employment experience

– Creates an emotional connection with internal/external audiences– Highlighting ‘points of difference’– Branding should be consistent with the consumer brand/culturea d g s ou d be co s s e e co su e b a d/cu u e

• Guiding Principles of branding

– COGNITIVE:  Understand ‐ Believe ‐ Engaged– BEHAVIORAL:  Deliver ‐ Tell the story ‐ Link to HR Systems

• Case Studies:  Verizon, Coca‐Cola

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19

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Developing an Impactful Employee BrandDeveloping an Impactful Employee Brand

• Brand Audit ‐ Advertising, Collateral, Speeches, Communications

• Employee Emotions ‐ Focus groups, interviews 

• Brand Essence ‐ Three to four key characteristics

• Brand Framework ‐ Statement of strategic intent

B d W k h C di th b d li ki t th• Brand Workshops ‐ Cascading the brand, linking to the person

• Business/HR Integration ‐ Integration with the culture• Business/HR Integration Integration with the culture

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Lever #2:  Workforce Planning/Retention

• Workforce Planning ‐ Forecasting human capital needs– Factors :  Current retention/turnover run rate, New business growth, / , g ,

Skill transitions, Physical location of work, Off‐shoring, economic trends, retiree’s and transfer of knowledge, etc.

• What to Measure ‐ Retention and Planning– Cost of turnover, Workforce stability, Workforce capacity, Turnover 

rate/cost, Turnover reason, Top performer voluntary terminations, Key job turnover rates

– Companies lose $40k each time an employee leaves (average)

• Tools…Human Capital Forecasting, Retention Diagnostic

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Lever # 3:  Recruitment and Selection

The old adage about people being yourThe old adage about people being your

greatest asset is not true. 

People aren’t your greatest asset. 

The RIGHT PEOPLE are!

Jim Collins, Good to Great

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Who defines what’s “RIGHT”? 

• Hiring Managers define quality for recruitment….

K l d kill bilit– Knowledge, skills, ability

– Attitude, motivation

– Culture fit (organization and department)Culture fit (organization and department)

• Recruiters who feel Hiring Managers don’t 57%Recruiters who feel Hiring Managers don t 

understand recruiting57%

• Hiring Managers who feel Recruiters don’t 

understand the jobs they are trying to fill63%

understand the jobs they are trying to fill

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Meeting Manager’s Expectations

2 Candidates having the

1. The hiring manager’sexpectations weremisidentified at theoutset of the staffingprocess.

2. Candidates having the characteristics to meet the hiring manager’s pre-hire expectations were not represented in sufficient numbers in the candidate pool.3. The staffing process did

5. Productivity and results not achieved because sub-optimum hire was made..numbers in the candidate pool.3. The staffing process did

not react fast enough to hire the candidate who best met the hiring manager’s expectations before he or she found employment

p

4 The staffing process rejected candidates

elsewhere.

4. The staffing process rejected candidates who possess characteristics that would meet the hiring manager’s expectations.

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Recruitment Process

Job Recruiting Candidate Recruiter HiringJob Open

RecruitingStrategy

CandidateResponse

RecruiterInterviews

HiringDecision

• Post and Pray

• Cost effective

• Great Resume

• Fit with HM expectations

• Great interview

• Stellar experiencetalent potentialh h

• Detailed JobDescription

• Appropriate Approvals

• Volume by Source

• Screening

• Ease and Speed

• Target Audience

• Proactive / direct

• Time to Fill Speed

• Enough Quality to choose from

chemistry match

• Time to Hire Speed

Approvals

• Efficient Process

l di

• Low Cost per Candidate

• Source AnalysisProactive / direct

sourcing

• Attract TopPerformers

• High performers recognized anda priority

• Diversity

• Top performersselected

• Employer Branding  Career Site

• DescribeTop Performers

Analysis

• How many top performers responded

p

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Recruitment Quality

Recruitment – measure candidate information

• Did a top performer refer them?• Did a top performer refer them?

• How many candidates that you send to HM’s meet ALL the qualifications and competencies?

• Do your managers rate them as “high quality”?

• What awards have your new hires won?

/• How many hires are currently unemployed/temp‐hire?

• Do your offers get at least 1 counter‐offer from current employer?

• Did they get other offers from top firms?• Did they get other offers from top firms?

• Do your top performers know who these candidates are?  

• Were they a tough sell?y g

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Polling Question

What recruitment metrics do youWhat recruitment metrics do you measure now? (check all that apply)

C hi 64%Cost per hire – 64%

Time to fill – 79%

Candidate source analysis – 64%

Funnel ratios (leads to interview, interview to hire etc.) – 36%

Candidate and/or Hiring Manager satisfaction – 64%

Selection

• Selection qualifiers

Applications/Relevant Work Experience– Applications/Relevant Work Experience

– Personality, Biodata, Culture fit

– Testing ‐ Cognitive, Skills, KnowledgeTesting  Cognitive, Skills, Knowledge

– Simulations

• Validation is keyy

– Linkage of test content to job content

– Relationship of test scores to job performance

• Tools – Standard vs. Custom

– Off the Shelf ‐ Tailored (AON, DDI, Previsor, etc)

– Customized design (Boutique)

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Selection FundamentalsPredict post‐hire performance…

• Determine the aspects of job performance p j pyou wish to predict

• Identify qualifications areas you believe ll hwill predict the outcomes

• Compose test items that tap the qualificationsqualifications

• Collect data and identify “the best” test itemsitems

• Decide where to “draw the bar”and implementp

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Good People are Great for Business

Source: McKinsey and Co.

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Lever #4: Employee Orientation Why Bother?

Your employees are getting oriented to your company whether you h !

Lever #4:  Employee Orientation – Why Bother?

have a program or not!  

The orientation they are getting MAY NOT be the one you want or intend.

Case Studies: • Employees who complete orientation reach full 

productivity 60 days faster  

• 69% more employees were still employed after 3 years if they completed orientation

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Sample New Employee Orientation ProgramsPhase Accepted Offer

Pre‐StartGetting Started Formal Training Coaching and 

MentoringMeasuring & Evaluating

Process Manager On Site HR Manager of New Peers of New On site HR and/or

Sample New Employee Orientation Programs

ProcessOwners

Manager,On‐site HR, Peers

On‐Site HR Manager of New Employee

Peers of New Employee

On‐site HR and/or Corporate HR

Tactics • New Employee PacketW l L

• First Day Orientation• Paperwork

• Immersion Experience

•Meet in lobby• Coordinate tours

• Survey and interview all 

•Welcome Letters• Set Tone• Pre‐startOn‐boarding• Internal and Industry reading

•Welcome Video or Guest Speaker

• Executive Introductions

• Industry Overview

• Celebration!• Hands on training, rotation & shadowing

• Company goals and 

• Establish 

networks

• Generate 

familiarity with 

resources and

participants•Measure tangible results:

•Cost• TimeIndustry reading 

material • Company, Department & Job Overview

• Facilitate understanding

strategies• Reference material • Group meetings and print materials

• Job Training

resources and 

systems

• Allow “off the 

record” questions

• Check in 

• Quality• Turnover• Productivity• Job Satisfaction• Evaluate new  g g

periodically hire assimilation

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Lever #5:  Performance Management

• Guiding Principles

– Business process, not an HR process

– Cascading of business (AOP) goals into individual accountabilities

– Annual rhythm/cadence

– Performance Parts:  Objective Setting, Mid‐Year/Year End, 1‐1s

– Career Parts:  Skill Assessment, IDP, Career (Link to OHRP)

– Calibration

• Tools

– DON’T: make it about the form or the technology

– DO: make it about the conversation

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Lever #6:  Talent Management

• Traditional Talent Management:– Focuses on endpoints of traditional talent management process 

Hiring Turnover

• Today’s Talent Management MUST:– Be integrated with the business– Link Business Priorities + Critical Workforce Issues– Drive results by enhancing organization’s

C bilitCapabilityCommitment andAlignment

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Hewitt's Talent Quotient 

• Prioritization of investment dollars in people programs 

• An objective ranking of the firm's track record in attractingAn objective ranking of the firm s track record in attracting and retaining pivotal employees compared with other organizations 

• An understanding of flight risk of pivotal employees based on demographics and diversity factors 

b d l f l b l• Fact‐based evaluation of people programs to bolster information from employee opinion surveys

Talent Management

• What are we talking about?

– Succession Planning

– Bench strength (Length of time in position, Promotability Slates/Charts, Key back ups)

H it l t i ( ) SWOT l t– Human capital metrics (year over year), SWOT analyses, etc.

– Current and future organization chart

– Special emphasis areas (high potentials diversity language etc )Special emphasis areas (high potentials, diversity, language, etc.)

– Employee Profiles, Next moves/timing

– Action Plans (RIF, Reorganizations, M&A)

• Tools

– Customized solutions – Talent Management Solutions abound

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Polling Question

Our organization’s focus onOur organization s focus on talent management is:

Very uninvolved – 0%

Uninvolved – 18%

Informed but not involved – 36%

Involved – 27%

Very involved – 18%

Summary• Talent Management is the goal…and the imperative!

• There is not ONE PERFECT METRIC– Start with the basics – move to greater sophistication

– Choose metrics that are meaningful to your organization

– Create a Metrics DashboardCreate a Metrics Dashboard 

– Profile “top performers”

• Begin with the end in mind– Tie measurements to Business Outcomes/Financial Impact

– Assess your “Levers of Quality of Hire”

• Report findings 1. Employment branding• Report findings– Regularly

– Consistently

2. Workforce planning3. Recruitment and selection4. Orientation/On‐boarding5 P f– Comparatively and 

– Communicate Broadly39

5. Performance management6. Talent management

Thank you for your time and attention!

Anne Nimke   Kelly Renzi k @ i i l k @ i i lanimke@pinstripetalent.com krenz@pinstripetalent.com

877‐797‐3379 877‐797‐3379

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