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In all the brouhaha about great new sourcing initiatives and Web 2.0 tools, how much have your recruiters and hiring managers improved their ability to hire great people, not average people?

In my opinion, we’ve downplayed what it really takes to be successful in our profession — recruiting, counseling, and closing top people who have multiple opportunities, and making sure our hiring manager clients don’t blow it.

To start refocusing on the right stuff, I’d like to nominate quality of hire as the metric to assess recruiting department performance, and relegate cost per hire to the second page.

I believe cost per hire is a misguided means to judge recruiting department performance. For one, it rewards the wrong things and ignores quality of candidate and quality of hire. For another, it’s far too tactical and narrowly focused. Worse, improving costs could degrade quality.

This is a strategic mistake of huge proportions that too many HR and recruiting managers miss entirely.

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Some numbers indicate failure so clearly that you can’t help but pay attention to them.

For a minute, assume the role of a senior executive who has just been handed a business scorecard containing performance numbers in five critical business areas. After looking at the numbers below, would the data make you cringe?

• 70% of users are dissatisfied with the process.
• 50% of customers regret their buying decision.
• 46% turnover among new buyers.
• 46% failure rate of process output selections.
• A mere 19% are unequivocal successes (less than 1:5).

It’s Time to Face the Numbers and Facts…

Almost any senior executive would be alarmed upon learning that users were dissatisfied, failure rates approached 50%, and a significant percentage of your customers regretted their decisions.

Obviously, if the numbers listed above came from an important profit-impact function (supply chain, finance, customer satisfaction), everyone would be screaming for a complete rethinking of the entire process.

Unfortunately, the above metrics represent failure in the recruiting and retention elements of the talent management function. I have encountered no other business function that more completely avoids defining and measuring process failure than talent management.

Selection decisions are often about as accurate as a coin flip.

–The Recruiting Roundtable

Talent Management Failure Metrics Are In*

Here are more details on the five numbers provided above.

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As the economic turnaround picks up steam, turnover rates in many organizations are likely to skyrocket and recruiting replacement workers of the same caliber will be extremely challenging.

Study after study has confirmed the notion that many employees would have left their employers months/years ago had the option to do so been viable. The economic downturn, combined with the mortgage crisis, has forced many frustrated, disappointed, and unmotivated employees to stay put. The trend is not a new one and is consistent with past downturns.

While turnover rates are at an all-time low, they most certainly cannot be taken as an indication of a firm’s status as a desirable place to work.

Just as in years past, when job opportunities become more prevalent, employees will exercise their right to demonstrate just how much they appreciated the treatment they received throughout reductions in force, furloughs, clumsy mergers, travel freezes, and budget cuts. The level of animosity among many will render most traditional retention approaches ineffective.

Some studies indicate that as many as two-thirds of employees are ready to go. Unfortunately, few corporations are preparing today to handle the dramatic increase in voluntary terminations that will come tomorrow.

While few organizations completely decimated their staffing functions, the majority have cut back to the point where capability has been negatively impacted. Strategic programs that deliver retention have been cut, and in most cases, no one is held accountable for retention solutions. It might seem outrageous, but unless you consider the phrase “let’s keep them all” to be a retention strategy, it’s a fact that most HR and recruiting executives can not even list common retention strategies, let along devise their own.

Retention Is One of the Most Poorly Managed Goals in HR

It’s hard to argue that retaining key employees isn’t a high-value activity, and I can’t say that I have ever visited an organization that would argue otherwise. In fact, most HR leaders and recruiters talk a lot about the importance of retaining the very best employees that the organization has invested so much time, money, and development resources in. Unfortunately, talk is where most HR organizations end when it comes to formalizing retention efforts.

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One of the worst-kept secrets in recruiting is that source of hire data is inconsistently gathered and rarely accurate. To many corporate recruiters, the validity of source of hire data is a non issue; after all, once the hire is generated, their role is over.

However, if you view recruiting as a marketing and sales job (as I and many strategic recruiting leaders do), knowing what channels brought the prospect to the organization and what messages led to conversion (talented individual > applicant > candidate > hire) are by far the most critical bits of data the function can collect. Without this information, it’s extremely difficult to scientifically budget for sourcing or build strategic sourcing systems capable of impacting organizational performance.

Luckily, however, there is a simple approach that ensures much more accurate and helpful information that doesn’t rely on transaction-minded recruiters documenting the source of hire.

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It’s hard to argue against the concept of strategic integration.

Having related business units working closely together, rather than operating as independent silos, almost always increases efficiency, reduces errors, and improves overall results.

There’s no better example of what integration can accomplish than the modern-day supply-chain organization, which used to operate as four independent functions (purchasing; inventory management; warehousing; and shipping).

The integration of these functions into a single function with cross-activity analytics and shared goals turned an “overhead function” into a profit center at companies like Wal-Mart, Toyota, and Dell. The customer-service function also demonstrated the value of integration when it created single points of contact for customers using “customer contact centers” capable of addressing a wide range of customer needs from technical support to warranty registration and billing inquiries.

The result of all these innovations was a dramatic increase in customer satisfaction and loyalty/retention. City governments also strive to increase capacity, reduce errors, and save scarce resources when they closely coordinate police, fire, ambulance, and hospital services for handling emergencies.

When executives contemplate what function would benefit the most from breaking down silos and driving integration next, talent acquisition is almost always on their list. Given that numerous organizations are currently engaged in process reengineering efforts and that the budgeting cycle for 2010 is just around the corner, what better time could there be to start integration efforts?

While recruiting continues, requisition loads per recruiter are down and non-essential programs are on hold in many organizations.

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Like prospectors during the gold rush, recruiters everywhere are flocking to social networks in search of hires. But like the experience of many during the gold rush, getting results in not easy. Reaping the benefits of social networking requires engaging with those networks. There’s plenty being written about how to do so, but to know if what you’re doing is working, consider the following metric:

EE = (1-N) X (R/P)

Where:

EE = Effectiveness of Engagement, expressed as a percentage

Engagement, in this context, means getting ready access to employees’ networks, regardless of the mechanism for doing so. Virtually 100% of employees have social networks and connect to them using different means (networking sites are not the only way to do so), but only a certain proportion of employees may be willing to give an employer access, by either making the contacts available or agreeing to forward job postings to them.

N = The proportion (%) of employee networks that an employer or recruiter has engaged with.
R = The average number of qualified referrals received per month per employee
P = The average number of postings accepted by employees to their networks per month

So if an employer is engaged with 10% (N) of employees’ social networks, and on average each employee accepts 3 (P) postings per month, and produces 2 (R) qualified referrals:

EE = (1-10%) X (2/3) = 60%

If the same results are achieved by engaging with 50% of employee networks, EE = 33%

Engagement is more effective the larger the number of qualified referrals received for the same proportion of employee networks an employer is engaged with. However, this is not a bottomless pit. Research shows that beyond a certain threshold of postings, the volume of qualified referrals starts to flatten out and even reduce.

Reality Meets Hype keep reading…

Recruiting measurement is something we all strive to perfect — that magic number that answers many of our professional life’s little mysteries; the key that opens the door to recruiting issues and then tells you how to solve them. Many of us have tried to find that ideal fit for our organizations, but seem to come up with only pieces of the puzzle. After all, there are only so many processes that can be measured — and are these all-encompassing?

Recently, Fifth Third Bank created a simpler, single metric to represent Recruiting Operations: the Recruiting Stock Price. I’m delving in-depth into that metric in two places: 1) the Fall ERE Expo and 2) in the September Journal of Corporate Recruiting Leadership. But I wanted to give this wide audience a preview. keep reading…

Recruiter of the year Dan Hilbert must have found the smartest 4th graders on the planet for his OrcaEyes focus group. He says that it took them no time at all to navigate through the OrcaEyes console, generating reports on the cost of vacancies in an Exult Energy division and on the financial impact of an 80 percent improvement in time to hire for that group.

After taking a whirlwind tour through some of the things OrcaEyes can do, I have no hesitancy in admitting that “I’m not smarter than those 4th graders.”

Of course the significance of those reports was lost on the kids. Hilbert just wanted to make sure the navigation was easy to use and the red-yellow-green alert system easy to understand. And they are.

But it’s those reports that make the $200k a 20,000-employee firm can spend on OrcaEyes seem like a bargain.

Before I get into how, here’s a bit about the what, as in just what is OrcaEyes? Hilbert describes it as HR System Management Software. You can think of it as ERP for HR. Either way, the system provides an overarching view of how human capital impacts the enterprise. It does this by connecting to a company’s existing business systems — hooking into finance, sales, operations, supply chain, or an ERP (if there is one), the HRIS, HRMS, and whatever others may be there.

OrcaEyes crunches the data it extracts from these systems and combines it — for certain uses, like recruiting and salary setting — with data Hilbert obtains from such external sources as the U.S. Bureau of Labor Statistics, Census, and private data providers. Thus, in an instant, literally, an HR recruiter and a division VP can tell the cost in lost business for staffing shortages in the North Sea unit of Exult Energy’s refining and petrochemical division.

I thought that was nice information to have, but no special feat since any CFO can do revenue averages per year-end headcount. But as every CFO and line manager knows, being down one position doesn’t translate into a direct or immediate loss of revenue. Depending on the size of the unit, other workers will pick up the load. keep reading…

(Editor’s note: This is the fourth installment in Dr. Sullivan’s series. Here are Part 1, Part II, and Part III. Next week, installment five of this series will address tools and tips you can use to improve your job rotation program.)

This series of articles started out listing the pain points that many organizations are experiencing today as a result of rotation-based development initiatives rooted in history and antiquated by Henry Ford’s standard.

It then progressed into program goals and key elements that characterize more modern second-generation programs under development. Last week’s installment explored the many program variations that are expanding the scope of rotation programs, making them more relevant as tools capable of addressing retention, motivation, and productivity improvement.

This week’s installment looks at emerging best practices and program metrics that can be used to assess your program’s performance.

Best Practices in Job Rotations and Internal Movement

Over the years, many firms have used job rotations in a variety of formats.

The most famous firm that has used internal movement for development is General Electric, but other firms have developed some best practices that can also provide learning.

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(Editor’s note: This is Part III in Dr. Sullivan’s series. Here are Part 1 and Part II; next week in the conclusion to the series, look for best practices and program metrics.)

When corporate revenues are down or stagnant, talent managers typically shift their focus away from volume hiring to developing and improving existing employees.

Executives are always challenged to make the correct “buy or build” decision, but when hiring is frozen, organizations must place an increased emphasis on internal movement and job rotations to close critical gaps in talent supply and demand.

Unfortunately, many rotation programs are doomed from the start to produce mediocre results, because they employ a “one-size-fits-all” model that guarantees lower program participation rates.

As with most products and services, offering different program variations makes it more likely that your target employees will find a job rotation that fits their needs as well as the organization’s. Since the war for talent began more than a decade ago, the type of job rotation formats have expanded dramatically. It’s important to be aware of the various development opportunities available and the benefits and risks associated with each.

Here is a list of 26 different types of internal movements to consider.

Obviously, not every firm can offer employees all of these options, but it is not uncommon to develop programs that incorporate a handful.

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What does a modern recruiter need to be good at? Is it all about knowing how to leverage social media, or are the traditional skills of cold-calling, screening resumes, conducting interviews, and closing candidates more important?

I have just been at the Australasian Talent Conference in Sydney, Australia, for the past week and what was most interesting was to listen to the issues and concerns of those recruiters who have not been laid off and whose organizations are still hiring.

They are faced with challenges that many of the ERE writing team have talked about over the past year. keep reading…

It was agreed by all that the meeting was to be held in the strictest secrecy.

Only first names were to be used, and nothing was to be put in writing. Even though I was the head of recruiting and staffing for a large, multi-national company, I was putting my team in serious jeopardy just by having this conversation. Fortunately, the liaison was successful — we were not caught that day, and so far no one has discovered that we met together.

What am I describing? An international spy ring? The sale of competitive intelligence? keep reading…

About two-thirds of companies use “time to fill” as a metric, a measurement that Stephen Lowisz, for one, pooh-poohs.

Tony Blake, of last night’s recruiting-department-of-the-year award-winner DaVita, says the “infamous time-to-fill metric is somewhat of a necessary evil in recruiting.”

But, Blake said today at ERE’s Spring conference, a better metric is “time to find.” This is the time beginning when a job request comes in, ending in the time the recruiter sends the candidate to the hiring manager.

“If it took five weeks to fill the job,” Blake says, “but if they sent the job to the hiring manager after seven days, the time-to-find is seven days. The great sourcers on our team are literally sending great candidates in the first 10-14 days of the process.”

By lowering registered nurse time-to-fill 15.1%, DaVita saved $5.5M in potential overtime and contract nursing costs, while filling over 3,300 registered nurse positions.

More often than not, it is the simplest things in life and in business that produce the biggest impacts. Having spent more than 30 years analyzing corporate recruiting practices and strategy, I have noticed there are some rather basic questions that, if only posed, would have a profound impact on the effectiveness of most recruiting endeavors.

Unfortunately, the questions are rarely asked, resulting in inefficient, ineffective practices.

Do not pose these questions periodically; incorporate them into your approach to build an engaging candidate experience, a more compelling offer presentation, and ultimately, a more productive hire.

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Coming up on the second weekend of the NCAA tournament, I am happy to report that I’m in first place in my pool of 35 basketball fanatics. I won two years ago and I’m looking to repeat the performance. The funny thing is that I don’t even follow the sport. My personal secret is my professional weapon: pre-project research.

Research is an oft-forgotten yet essential business tool and can save money, time, and resources. While the cost of entry for my basketball pool was only $25, the stakes are significantly higher when assessing the costs to launch a new branding campaign, career site, or national recruitment program. Small mistakes can create long-term headaches like high turnover, poor performance, or dropped conversion rates.

So before the next round of hoops begins, lets take a moment to look at some of the different kinds of research there are, and when it makes the most sense to launch yours. keep reading…

Analytics is a hot idea that will likely be topical for a decade more, much like competencies and employment brand were (and are). The best selling book on the subject is Thomas Davenport’s Competing on Analytics. The term “analytics” — if you want a really sophisticated definition — just means “let’s crunch some numbers.” One of the reasons it’s topical is that our internal systems are capturing far more numbers than ever before.

In recruiting, to the extent analytics have been used, the focus has been on internal recruiting processes. Recruiting departments want to reduce cost-of-hire and time-to-fill and thus may apply some number-crunching to find where they can make improvements. However, the big payoff comes when recruiting can affect operations by improving quality of hire. The recruiting function needs to make the effort to shift its focus from the comfortable world of its own operations and instead spend more time in partnership with the business units to see how recruiting can make a difference there.

Nowhere is analytics more important than in the recruitment of front-line workforces. Robert Yerex, chief economist at the workforce-management vendor Kronos, points out that in many industries the number of front-line workers is so large that you can easily get enough data for sophisticated analysis, and even small improvements add up to very large savings. The recruiting function is a particularly important part of HR for the front-line workforce because these workers typically don’t stay that long. The organization is counting on recruiting to get people who hit the ground running and fit sufficiently well that they don’t leave after the first few weeks. If recruiting fails at this then it creates a huge cost for the organization.

There are many ways analytics can help recruiting functions improve the quality of front-line workers (and we’re getting into details in the April 2009 issue of the Journal of Corporate Recruiting Leadership). Let’s just look at one (as shown in the graphic above as an example) to give you a flavor.

A simple analysis of retention by source of hire can show recruiting how they should aim its sourcing efforts and even lead to quantifying how much extra value one source creates compared to another due to higher retention. This analysis might completely overturn conclusions of a typical cost per hire analysis since retention can be so valuable to a company that it overwhelms the different in cost in using a particular source.

The stuff’s just now beginning to hit the fan over the incendiary comments of Rutgers University academic Richard Beatty to a conference of CFOs Monday.

Under the title “Memo to CFOs: Don’t Trust HR” CFO magazine says the professor blasted the human resources profession for working without useful analytics, and contributing so little that, in the words of the article’s author, “typical human resources activities have no relevance to an organization’s success.”

Beatty dismissed efforts at employee engagement as having “no evidence” to show it produces a meaningful return. Training to improve low performers he all but called a waste of time saying “Low turnover isn’t necessarily a good thing. Think about where you might want to disinvest.” And efforts to become an employer of choice he called “silly.”

As you might expect, HR professionals were quick to take issue with the professor’s remarks.

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As the economy tumbles, and companies right-size their recruiting departments, the bottom-half is the first to go. Under this scenario, those formerly in the relatively secure 2nd quartile are now in the bottom-half. So be wary or get better.

With this sobering news in mind, I offer those of you in all quartiles this short, 10-point personal evaluation guide. While some of them are a bit crazy, they’re based on comparing your performance to the best in the business. It will tell you quickly whether you’re in the top 25% and how to stay there.

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Here’s what companies are offering in severance pay, according to a study by Right Management.

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Most recruiters will say that making quality hires is their top priority, but they often fail to back up those claims by accepting accountability for the post-hire performance of the candidates they source. Recruiters cite limited authority over hiring decisions or training and supervision as barriers to accountability; meanwhile, managers say recruiters should be accountable for quality because they control the slate. To break the stalemate, recruiters must embrace each manager’s business objectives as their own and recognize both their accountability and authority for hiring top performers.

At Advanced Technology Services, Jim Hefti, VP of HR, took time-to-fill off the table, while holding the company’s recruiters accountable for first year employee turnover. He also gave the recruiters the authority to reject a candidate at any stage of the hiring process. How did the company’s managers react?

“They don’t like it, but they’ve learned to accept it,” says Hefti. “Our first year employee retention rate has improved by 3% to 5% and time-to-fill actually improved when we stopped focusing on the number of candidates we were submitting and started focusing on submitting quality candidates.”

It was just as difficult for recruiters to embrace their new responsibilities, according to Holly Mosack, ATS recruiting manager, but she says recruiters diligently educated managers that quality hires result from sound hiring processes, not massive quantities of interviews, and they persevered through the first six months. Then, both groups saw their first glimpse of improved first year turnover statistics, and they haven’t looked back.

Hefti also installed a talent management structure that makes performance management the joint responsibility of HR and managers. New hire performance is evaluated at 90 days. An HR talent manager gets involved if a new hire is not meeting or is not projected to meet performance expectations. Every time a new hire quits, or fails to meet his or her performance goals, recruiters, managers, and talent managers meet jointly to review what happened and make adjustments in hiring profiles, training, or supervision.

Managers’ satisfaction with the recruiting department is measured through a separate annual survey, because Hefti focuses on tangible measures and accountability that drive the company toward its business goals.