Using Analytics to Improve Your Hiring Process and Measure Quality of Hire

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As part of SHRM’s webcast series, Talroo sponsored a webinar hosted by Scott Mondore, managing partner at SMD. We all want to improve our quality of hire metric, and Scott walked us through the steps of using analytics and leveraging data sources-along with a thorough job/competency analysis to identify the critical knowledge, skills, abilities, and competencies of hiring success. He also outlined a business partner roadmap you can use to validate the selection process and demonstrate its impact on critical business outcomes. Providing such data to senior leaders and skeptical front-line managers helps to gain buy-in and ensure that the standardized processes are followed when making future selection decisions.

Calculating the True Cost of Quality of Hire

Through the use of advanced analytic techniques, modeling frameworks and data, predictive services can be built to link employee behavior, activities, traits and performance to desired business outcomes. Hiring is one area where predictive analytics can produce benefits and recruiting leaders are already leveraging data in all areas of hiring, from sourcing to screening to onboarding.

A poor quality of hire metric can be extraordinarily costly for a company when it comes to employee turnover. SHRM estimates that it costs $3,500 to replace an $8 per hour employee. SHRM’s figures were actually the lowest of 17 nationally respected organizations that calculated such costs. Other sources say that it costs between 30% and 50% of a departing worker’s annual salary to replace entry-level employees, 150% to replace middle-level employees, and up to 400% for specialized or high-level employees. (Source: Inc. Magazine) These figures are based on both direct and indirect costs. Costs directly attributable to hiring include recruiter costs, third-party advertising agency, formal on-boarding and signing bonus. Indirect costs include lost productivity due to various factors, including the new hire’s learning ramp-up time and effort spent by hiring managers.

How to Pinpoint Business Competencies and Processes to Build Hiring Profiles

How can we build an effective hiring process if we don’t know what skills, competencies, experiences, attitudes, education that actually drive business results? By identifying the drivers of critical business outcomes - for example, when hiring for a sales position, you can focus on the most important skills required. In screening, using predictive profiles to measure indicators such as:

  • Employee attitude
  • Competencies
  • Personality factors
  • Technical skills
  • Experience
  • Knowledge

Simply having a standard competency model isn’t enough to improve your quality of hire. According to Scott, it’s imperative to assess your current workforce on their competencies, then connect their scores to their actual performance/business outcomes. Pinpointing these business-driver competencies should frame your entire hiring process.

Once you’ve uncovered the competencies that drive the best hiring decisions, your metrics should then focus on:

  • Scores in the hiring process on key competencies
  • Percentage of candidates/hires coming from best labor pools
  • Scores in the hiring process on business-driver aspects
  • Time-to-proficiency
  • Six-month performance scores

When defining and standardizing your methodology for conducting interviews, using defined, observable behaviors and a scoring system is the best way to measure competencies, or the behavioral component of performance management. Behavioral-based interviews are ideal for improving analytics in your hiring processes because they are:

  • Proven track record for predicting future performance—validity is high
  • Legally defensible
  • Reliability is high
    • Consistency among different interviewers and over time
  • Use interview questions that elicit descriptions of the candidate’s behavior in specific situations:
    • Tell me about a time when you…
    • Tell me how you would handle the following situation...
  • These questions elicit more descriptions of specific behavior in situations like those on the job

Create an observation checklist for hiring managers participating in the interview process that allows them to score behaviors like conflict management, problem solving, flexibility and communication. You can set these up as yes/no behavioral assessments or develop a 1-5 scoring system for possible consideration. This helps differentiate quality candidates using multiple interview screenings by different hiring managers along with your human resources team.

Creating Structure with Recruiting Metrics and Measurable Processes Like Interviews

Using structured and measurable interviews can be a game-changer when it comes to improving the gold standard quality of hire metric. As you’re developing this process, consider incorporating internal surveys - so you can immediately and at regular intervals follow a candidate’s progress from his or her manager’s satisfaction with their performance, as well as new employee surveys about their candidate and onboarding experience. It might seem like a lot of data to process, but each of these analytics can be the one that identifies weaknesses in your quality of hire KPI.

If you missed the original webinar, you can get access to the recording here.

Topics: Talent Acquisition

Updated November 27, 2018