Human Resources/Leo Lingham

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Question
Good Day!

I just read your answer on one of the letter sender who send on you about recruitment process.

In lieu with this, i would like to ask you a question on how we can measure the efficiency/effectivity of Internal and External Recruitment Process.

I am hoping for your positive response on my question.

Thank you!

Answer
It has been debated many times, but the question of whether recruitment is best done with internal or external resources can only be answered at an organizational level, based upon a cost-benefit analysis.
When doing this analysis, consider which method of recruitment scores higher on the following metrics:
1.   Quality of hire
2.   Time to fill
3.   Culture fit
4.   Candidate experience/impact on EVP
5.   Cost
It’s time to take a close inspection of each of these areas.
Quality of Hire
Most internal recruiters, at least in medium- to large-sized companies, rely on Web-based systems to do the initial screening and culling of applicants. They lack incentives, and also lack penalties, for how well they recruit. With external recruiters, there are often no metrics in place at all, other than time to fill. If metrics for quality of hire are clearly tracked and compared between internal and external recruiters, it can help identify the best recruitment model for your business because you will be able to tell who is providing the highest-quality candidates.
Linking recruiter pay to quality of hire is a critical step in ensuring that recruiters make solid recommendations to line managers, who ultimately make the hiring decision. Agency recruiters can be measured based on client feedback and the number of times roles have to be re-filled at no charge to the client, which can happen if the wrong hire is made and if the client organization does not have a formal way to measure its recruitment suppliers on this metric.
If you use a hybrid model, consider measuring and comparing both your internal and external recruiters on the quality of new hires. After implementing such a metric, measure them upon their first placement, at six and 12 weeks, again at six months, and then at regular intervals.
Time to Fill
Jobs can often be filled faster by using agencies (particularly within specialized industries) because they have large applicant pools. Good recruiters will always have warm candidates they keep in touch with.
Often, when external recruiters are pre-screening and presenting candidates, it’s internal recruiting teams that hold the process up. It’s not necessarily their fault, as priorities sometimes change, putting recruitment on hold, or as role requirements are revised, but it speaks to a core challenge facing the recruitment community today.
One key reason recruitment is delayed is that budget for a role has not been approved prior to beginning the search process. As everyone knows, you shouldn’t go to market until you’re certain you need to fill a role and that money is available to do so. It seems that many companies still retain search firms, spend money on advertising positions, and start seeing candidates without a confirmed internal agreement. This has a decidedly negative impact on both the brand and the relationship with any candidates you have engaged if you withdraw from the process.
A second reason for delaying the process often has to do with how companies operate internally. While a new role may be budgeted, conflicting schedules, agendas, or priorities can mean delays in seeing candidates, or extending the number of interviews or assessments beyond what was originally planned.
Not only does this increase cost and time to fill the role, it also antagonizes candidates and may mean you secure the runner-up instead of your preferred applicant, or worse, you’re left with no suitable candidate at all, forcing you to begin the process anew.
If you’re using agencies that have pre-screened candidates for you, move those candidates through the internal process, make decisions about individual applicants, and follow up quickly. Given the shortage of candidates in the market, this should be a given.
The need for speed in recruitment, to manage costs and to fill roles, especially empty ones, must be balanced with the need to find the best candidate for the role, considering all aspects, including culture fit.
Culture Fit
Internal recruiters will be able to articulate and respond to questions about what it’s really like to work in your company in a way that external parties won’t. External recruiters will never know your business as well as your own staff, try as they may, because they don’t work in the organization on a day-to-day basis, experiencing all its nuances and political challenges. As a result, many organizations think that recruitment can be done better by an in-house team who know and live the corporate culture and understand stakeholders best.
In the model where external recruiters are placed on-site, they work with your teams every day, but they are still removed from the employee experience to a large degree. For them to hire for culture fit is a particularly difficult task.
One way to track success in this area is to measure culture fit, and there are a number of ways to do that. Compare success rates between your internal and external recruiters to see who is making better assessments of culture fit.
Candidate Experience/Impact on EVP
Every time you go to market under your own brand or someone else’s, you send messages about your organization to potential candidates. How you do this could impact the way your firm is perceived by candidates, so understanding the impact of what you do is important.
If you use blind ads through a recruitment firm, you won’t build or add to your own brand recognition. Any external agency efforts to co-brand or represent your business must be handled correctly or the brand can be damaged. For example, if external recruiters don’t respond to candidates, or not quickly enough, people will forever tie that response to your brand, leaving a negative image in their minds about your company.
Pointing would-be employees to agencies through your careers website makes an impression on candidates about your organization, good or bad. Investments in a career website are better realized if you make the effort to engage with candidates directly at some level. This direct communication puts you in control of your candidate pool and is particularly helpful when there are jobs in the pipeline that haven’t been advertised yet.
Cost
An important cost consideration is related to the number of recruits. If you don’t hire a lot of people each year, it’s probably not worth having in-house recruitment staff. If you do, it’s worth measuring the cost effectiveness of outsourcing against the cost of having an in-house team and a well-developed career site with a front- and back-end recruitment system.
Using external recruiters can be expensive if you are a small company and do a large number of hires per year. Invest in some sort of recruitment technology, as well as a good recruiter or two on site who know your business, your brand, and your culture.
Whichever method you choose, or if you use both internal and external recruiters, the most important things to remember are that you need great people for your company, you need them now, and you want to spend as little as possible to get them.
Great candidates don’t need your job. Making the process as smooth as possible will go a long way to building relationships with candidates for the long term. Star candidates often have multiple offers, and will move on if you can’t make decisions quickly enough, even if they would rather have worked for your firm.
By delaying the process, cancelling searches, and not replying at all, you are sure to damage your employer brand and your reputation in the market

Systems should be:
• efficient – cost effective in
methods and sources
• effective – producing enough
suitable candidates without excess
and ensuring the identification of
the best fitted for the job and the
organisation
• fair – ensuring that right through
the process decisions are made on
merit alone.

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we should keep the foundation that’s already been built and add new recruiting metrics to it for better results.
Recruiting metrics allow us to take a more analytical approach to hiring. Tracking day-to-day details are what eventually make up the big picture. Measuring what we do creates focus and accountability.  It helps us to target efficiency, headcount, cost and the more tactical pieces that make up the effectiveness of a recruiting function.
Simply put, metric tracking should be used to measure and improve recruiting effectiveness and efficiency.  Keep in mind with some quality-based metrics this can be difficult to track due to timelines and subjectivity.  However, while quality is a huge driver in hiring, those in the trenches of recruiting need to rely on the number driven metrics for their own productivity and efficiency. So, while you should take in account the facts, do not for one minute discount quality.
Ultimately, identifying the right recruiting metrics for your business should boil down to two steps:
•   Step 1: Choose right metrics that make sense to your organizational goal and business strategy.
•   Step 2:  Ensure alignment and that the team understands the meaning and purpose of each specific metric and how to measure for standardization.
top 10 recruiting metrics you should consider tracking:
•   Open requisitions by recruiter
•   Closed searches and reason for the close
•   For every open requisition track:
o   # candidates sourced
o   # candidates interviewed
o   # offers extended
o   # accepted
•   Time-to-hire
•   Source of hire
•   Retention Rate
•   Quality/productivity per-hire
•   Cost-per-hire
•   Manager satisfaction
•   Applicant satisfaction
Here’s why I think those recruiting metrics are so important:
Open requisitions by recruiter: Know what the team is working on. This will keep everyone on the same page and allow management to see the capacity for taking on new searches.
Closed searches and the reason for the close: Not all searches close because of an acceptance. In some cases, there is restructuring, reprioritizing, and other factors that lead to closing a search. It is necessary to have answers to why each search closed, and to track the frequency. These details will allow you to see if there is a breakdown in the selection process when taking on a search.
Recruiting metrics by requisitions: This will allow you see the intricacies of recruiting behind a search, and will help to track efficiencies, impediments and productivity. It will give you the opportunity to look objectively at each search and change tactics for improvement. It will also help you to track important ratios such as the number of candidates sourced to interviewed, interviewed to offered, offered to accepted.
For example, if it takes you 10 first interviews to move one candidate along in the process, look at what’s wrong. It’s possible you are not screening thoroughly enough, or you may be looking for specific traits that are not “requirements.”  Have three offers extended and no acceptances? Time to look at your offers and ensure they are competitive in the market.
Time-to-hire: You should track this in three ways:
•   The date the search opened to the date of an accepted offer.
•   The number of hours spend on each requisition. Why? This will help you compare the length of the search with other factors such as the workload of the recruiter, and will allow you to find an ideal workload balance.  For instance, spending five hours versus twelve hours per week on a search with heavily impact these numbers.
•   The breakdown of time-to-hire. This will help you also measure time from source to first interview and then interview to offer.  This will show you a breakdown of the hiring process, specifically the timeline of your internal interviewing schedule.
Source of hire: Track the number of successful hires from targeted sources to measure the effectiveness of those sources (referrals, LinkedIn,internal and external job boards, sourcing tools and college fairs are the main sources of candidates). Tracking the candidate source over time will help you to modify the list of sourcing resources you are using based on the effectiveness and cost.
Retention rate: Making the wrong hire is costly and so is needing to replace a strong employee who leaves. Watch the retention rate for new hires and use it to improve both recruiting and retention policies within your company.
Quality/productivity of hire: This can be difficult to accurately measure because it may be based on subjective feedback as well as time within a role. Still, it is important to keep track of candidate success once they are on-boarded.
Cost-per-hire: This is probably the most talked about metric. It measures the amount of financial investment your company makes to attract and recruit new hires.  It can be argued that the productivity of the hire offsets the recruiting cost, but I won’t go there in this post.
To measure accurately, narrow the focus of the metric to track the cost-per-hire only as reflected in the hiring process. The number will fluctuate based on the volume of searches because of fixed recruiting costs (mainly subscriptions for sourcing and job postings).
Manager satisfaction:  Get feedback on each search from hiring managers. This will help you to see what worked, what didn’t and what you can improve internally for the next search.
Applicant satisfaction: In other words, how is your candidate experience? Create a standardized survey that measures the candidate’s experience based on their impression of the selection process. Feedback will help to improve future candidate experience, which is key in recruiting for all applicants whether selected or not.
Overall, implementing standardized recruiting metrics will help you to improve the productivity, efficiency and effectiveness of your talent team.
What recruiting metrics are you using?

“people are our most important resource.”  With that in mind, it is easy to understand why organizational recruiters, external executive search and recruitment professionals and the recruitment process itself are all very important elements of ensuring an organization has “the right people in the right place at the right time doing the right things.”

Therefore, much attention should be paid to ensuring that the recruitment strategies of an organization are effective. The challenge however, is developing measurements that can assess the success of the recruitment strategies and, for that matter, the recruitment team. Thankfully, over the years, researchers and practitioners alike have created several metrics that can assist in the assessment of the recruitment process and function. Some of these include:

Value of recruitment strategy – most organizations use multiple strategies for sourcing their candidates. Whereas these strategies are often costly, it is wise to evaluate which strategy resulted in the most candidates.  This may well provide you with guidance as to which strategies to use for specific jobs and/or for all of your jobs. It creates an opportunity to better target candidates and will result in a more cost effective approach. One note to be mindful of is that quantity does not always equate to quality.

Time to fill position – it is well known that recruitment costs often equate to three times the salary for a position. Overtime and lack of service are the most frequent causes of the cost increase and therefore examining the length of time it takes to fill a position is a valuable metric to examine.  Lengthy timeframes might suggest the job is hard to fill as the skills might be in short supply. The results of this review will help determine if extra help such as using an external search professional is more appropriate for hard to fill jobs.

Vacancy rates – conducting an examination of your overall vacancy rates as compared to your full staff complement may provide you with good information. You may find that the recruitment department is understaffed or the recruitment process itself is challenged by several roadblocks which should be fixed. An examination of vacancy rates helps to identify which departments are experiencing the most difficulty and can assist you to adjust your recruitment strategies.

Turnover rates – high turnover rates in any job category suggest a number of difficulties. The job tasks may not be well defined, resulting in the wrong type of skill being recruited. The candidate assessment tools may also need revision. It is also wise to assess the costs of turnover.

Selection ratios – another valuable tool, selection ratios, can help define the success of recruitment strategies. A selection ratio is simply the number of people hired divided by the number of applicants.  This calculation can help you analyze many things: A very small number may mean that you did not attract the right applicants, resulting in an unproductive hiring process. On the other hand, a large number (closer to 1) may show that you did not attract enough applicants to effectively hire the right people.

Quality of hire – this metric allows for the assessment of the quality of the candidate. Is the successful candidate fully qualified and/or will the organization be required to invest immediately in order to increase their skills.

Retention rates – assess the retention rates of new hires. How long does a candidate stay in the position? What happens to them, are they promoted or do they leave? If they leave the role and the organization, then it is time to re-analyze the job to ensure the skills required are accurate and that an incumbent can experience job satisfaction for a longer period of time.

Recruitment Cost Ratio – total costs include costs for advertising, job fairs, recruiter salaries and travel costs, signing bonuses, candidate compensation and any other expenses incurred during the recruitment process. This provides an organization with the total sum of money spent on recruiting for each new employee. This assessment will assist recruiters to justify costs and/or to seek new opportunities to cut costs.

The recruitment process has been developed to ensure that organizations have “the right people in the right place at the right time doing the right things”. Therefore, both the recruitment process and the skill of the recruiters need to be assessed on an annual basis. To do so, establishing meaningful metrics are key.
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Leo Lingham

Expertise

human resource management, human resource planning, strategic planning in resource, management development, training, business coaching, management training, coaching, counseling, recruitment, selection, performance management.

Experience

18 years of managerial working exercise which covers business planning , strategic planning, marketing, sales management,
management service, organization development

PLUS

24 years of management consulting which includes business planning, corporate planning, strategic planning, business development, product management, human resource management/ development,training,
business coaching, etc

Organizations
Principal---BESTBUSICON Pty Ltd

Education/Credentials
MASTERS IN SCIENCE

MASTERS IN BUSINESS ADMINSTRATION

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