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Recruitment Four Meter Model Measuring Recruitment Program Effectiveness

Recruitment Four Meter Model Measuring Recruitment Program Effectiveness. October 25, 2006 Mauro Meneghetti Jaime Steffensen www.wmc.ca. CV-C:DATAPPTMAURORECRUITMENT METRICS V7. Western Management Consultants . Human Resource Management: Leadership development

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Recruitment Four Meter Model Measuring Recruitment Program Effectiveness

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  1. Recruitment Four Meter Model Measuring Recruitment Program Effectiveness October 25, 2006 Mauro Meneghetti Jaime Steffensen www.wmc.ca CV-C:\DATA\PPT\MAURO\RECRUITMENT METRICS V7

  2. Western Management Consultants • Human Resource Management: • Leadership development • Job evaluation and classification • Compensation, employee benefits and salary administration • Performance planning and review systems • Personnel planning and management systems • Performance evaluation • Training and development programs • Employee attitude / satisfaction surveys • Executive Search: • Candidate sourcing, interviewing and screening • Candidate testing and evaluation • Comprehensive reference verification • Candidate negotiation

  3. The “Alberta Advantage” • Led Canadian Growth at 6.8% • 3.5% unemployment – lowest in Canada (avg. 6.1%) • 90,000 new FT jobs in 2005 • 400,000 new jobs expected by 2014, but …….. only 300,000 new workers • 42,000 moved to Calgary last year • Source: Alberta Venture + Calgary Economic Development

  4. Projected Demand is Massive

  5. The “Alberta Advantage”?? The Result? • Labour widely seen as the key pressure point • Fewer workers • Employee-driven work ethic • “Perks” escalation • Poor service / attitudes • Growing emphasis on efficient and effective recruitment, and on-boarding • Source: Alberta Venture + Calgary Economic Development

  6. Three Trends • “Race for the Basin”: • Capital budgets have grown by factors of 2 and 3 times • Keen and growing focus on cycle-times, speed of execution • Energy Sector “Maturing”: • Increased emphasis on process • Growing interest in measurement and accountability • Outsourcing of all or part of recruitment • Trends in Calgary point to an increased focus on NUMERICAL METRICS, creating an industrialized process aimed at reducing costs, cycle time and increasing productivity and ROI measures • *September 2006 “Business in Calgary” magazine

  7. “To continue to be heard at executive table, the Human Resources Team must establish effective processes, set performance targets and track results.” Mauro Meneghetti Western Management Consultants

  8. Measuring Recruitment

  9. Key Considerations • Size of the Organization • Degree of Centralization • Role of HR in recruitment • Systems Maturity

  10. Criteria for HR Measures • Strategic importance • Financial significance • Widespread impact • Operational relevance • Targets must reflect organizational and role differences • Focus on items that are controllable and variable

  11. Recruitment Metrics – How to Choose • “Excellence in recruiting and retention can increase your organization’s market value by 8 percent” *Yeung and Berman, Pfeffer, Ostroff, and more… • Talent no longer refers to “innate ability”, but is a new management buzzword used to refer to “brainpower” (either natural or trained), and is used by some to refer to their entire workforce and others to refer to the management of specific competencies. The bottom line is, however it is defined – there is a TALENT SHORTAGE looming *The Economist, Oct 7, 2006

  12. What Firms are Measuring Today: 2001 • Cost of Employee Behaviors (absenteeism, smoking, etc.) • Turnover costs • Employee Replacement Costs • Economic Benefit of additional recruiting • Economic Benefit of various training levels • Economic Benefits of high, medium and low performance on a particular job 2006 • Time to Fill • Offer Acceptance Rate • Training Investment (ROI) • Cost of Hire • Employee Replacement Costs • % of employees trained • % employee utilization • Voluntary & Involuntary separation rates *The HR Scorecard, Becker, Huselid & Ulrich * The Wynford Group, Human Capital Benchmarking Survey

  13. Common Issues • Too hard to measure • Lack of process focus; results in inability to repeat, build on accurate data • Incomplete picture • Not “actionable” • Still a feeling of “lots of people available”

  14. The 4-Meter Model for Recruitment STRATEGIC ALIGNMENT RECRUITS PROSPECTS HR OPERATIONS

  15. Strategic Alignment

  16. Prospects

  17. HR Operations

  18. Recruits

  19. The 4-Meter Model for Recruitment: • Hiring rate • Executive satisfaction • R.O.I. by employee category STRATEGIC ALIGNMENT • Response rate (attraction power) • Query response time • Referral rate • Acceptance rate RECRUITS PROSPECTS • On-boarding time • Conversion rate on Internal referrals • Candidate satisfaction (with recruitment process) • Early days turnover ratio • Job progression rate HR OPERATIONS • Internal client satisfaction • Gap-to-Hire cycle Time • % Appropriate closure • Cost per recruit

  20. Criteria for HR Measures • Strategic importance • Financial significance • Widespread impact • Operational relevance • Targets must reflect organizational and role differences • Focus on items that are controllable and variable

  21. Implementing with Success… • Stakeholder buy-in • Communication throughout the organization • Consistent application • Support for change must come from HR • DATA is key • accurate, timely and repeatable

  22. Questions ??

  23. How to Calculate Common Metrics: • Formulas necessarily differ from organization to organization and MUST consider both hard and soft costs that impact the organization most profoundly. • These are just the “formulas” – creating the numbers that fill the formulas is the trick!

  24. The Cost of Turnover • Direct Costs • Separation Costs: • Exit Interviews – interviewer’s / interviewee’s time • Administrative Costs – destroying files, removing individual from electronic records etc. • Unused Vacation Time (payouts) • Lost Client Revenues - service fewer clients during vacancy and training periods • Overtime Pay – paying other employees to assume leaver’s work • Case consultation (transferring clients from leaver to others) • Replacement Costs: • Advertisements, Recruitment Tactics (job fairs, referrals etc.) • Application Processing (administrative and professional time) • Entrance Interview (Interviewer’s/Panelist’s time) • Selection Process (Interviewer’s/Committee’s time) • Miscellaneous Costs (tests, travel, relocation, reimbursements etc.) • Training Costs: • Formal Orientation (Instructor’s and Trainee’s time) • Formal Job Training (Instructor’s and Trainee’s time) • Off-Site Training (Course costs and Trainee’s time) • On-the-Job Training (Trainee’s time to develop proficiency)

  25. The Cost of Turnover (continued) • Opportunity Costs / Soft Costs • Lost time • Morale • Intellectual capital losses (ideas, plans, concepts…future streams of revenue). • Total costs estimated to be between 1.5 – 2.5 X the employee’s salary (FOR EACH LOST EMPLOYEE!!)

  26. Our Client’s experience • Cycle time (actual time to fill positions from ad to “bum in seat”) • Controllable turnover • Acceptance rate (offer acceptance/decline rate) • # of recruits/month - # of vacancies • New hire determination ratios • Aged requisitions • Early days turnover

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