It seems that often the key measure of success in recruitment is to reduce the cost of hire as far as possible. Cost of hire is easy to measure, and as the saying goes, what gets measured gets managed.
On the other hand if you speak to anyone in a business, from the CEO to managers and including the recruitment department, they will say that quality of hire is the critical issue. So why do so few organisations have a clear measure of quality of hire, and why are even fewer able to link the quality hires back to the recruitment process?
Although you can argue that the actual hire is decided by the manager, and therefore is somewhat out of the control of recruitment, I would suggest that if the quality bar should be set so that the hiring manager only sees people of the right quality, and therefore the onus still rests on the recruitment department.
The ideal is to have a clear definition of what quality looks like for your organisation across a range of factors (intellect, values, motivations and behaviours) and test for them as part of the recruitment process. Once you have set the quality bar you can optimise your processes to deliver hires as fast as possible and at the lowest cost – but you have to recognise that cost and time to hire are secondary factors to quality.
Alternatively you can track the performance of the candidate hired (using performance appraisals) back to the recruitment process that found them. Then you will be able to see whether the recruitment department, or even a particular channel is producing the right quality. You might find, for example, that the people you hire from job boards are cheap but perform badly – if you know this is the case you can change that channel.
This second approach introduces a delay between the use and the assessment of the channels, so I would generally favour the first approach – if you can get the business to agree a definition of what good looks like.
So ideally you have a clear quality standard you are recruiting to and you are assessing candidates at the point of hire and as they progress through the organisation. Then all you need to do is measure the cost. This is also a tricky issue. Cost of hire calculations often, for reasons of simplicity, just look at directly measurable costs such as advertising and recruitment fees. However, this is to omit some of the much larger costs relating to mis-hires: the costs of remedial training, under performance and employee churn.
To properly measure the effectiveness of your recruitment team, you therefore need to have a much more detailed approach than just looking at cost of hire. You may also find that in order to deliver the right quality the upfront costs increase but the overall cost of hire, once you factor in the post-hire costs, falls. Doing it right is difficult, but ultimately rewarding.
Companies succeed or fail according to the quality of their staff, so if there’s any department that it’s worth investing in assessing, it should be the recruitment function.