Employee turnover costs are often described with generic numbers such as “$X,000.00 per employee” or “X% of annual salary” (actual dollar amounts and percentages vary from source to source). It is tempting to go with simple sound bites like these, but keep in mind that they are based on averages. These overall tendencies probably don’t accurately describe your specific organization, department, or team.
The following is a simple but detailed method of computing the cost of employee turnover. The main factors in this calculation (aside from specific costs) are time and money involved with a departing employee, such as:
- Time spent on filling the vacant position;
- Hours/weeks in lost productivity before the employee leaves
- Time that coworkers and the manager/supervisor combined will need to make up for the vacant employee (overtime, added shifts, etc.);
- Number of hours in lost productivity resulting from orientation and training of a new employee; and
- Time spent on admin and hiring tasks (advertising, resume screening, interviewing, onboarding).
We can directly translate between time and money (time = $) to provide specific costs by multiplying hours by hourly wage for different types of employees, tasks, and responsibilities. The numbers that you provide can either be averages for your organization, department, or team, or they can be specific to a single turnover event. The calculation will total all the time and costs spent with every employee turnover so you can determine what the final cost is for your business.
Here are the steps to calculate all of this: keep reading…
I’ve been missing from these pages for awhile, but I asked if I could return and request the help of some real recruiters. I heard some of the best hang out here at ERE.
Here’s the idea. I’m working with a bunch of people and companies putting together a comprehensive batting average for recruiters that combines all the critical factors, metrics, and competencies into one useful statistic. This will become known as the RBA — the Recruiter’s Batting Average.
Please look this first list over, suggest other factors that should be included, why some shouldn’t be considered, and which ones you think should be weighted more heavily than others. keep reading…
In a world where it’s easy to get a “snapshot assessment” of your personal physical health or your organization’s financial or IT security effectiveness, what could be more valuable than an easy-to-conduct executive level “snapshot assessment” of talent management and HR?
Unfortunately I have found that most in HR are satisfied with a subjective or low-level tactical assessment, which instead of business impacts, covers spending efficiency, lean staffing, and whether managers and employees are satisfied with us.
In order to be considered as credible, instead this snapshot must be strategic, and it should mirror the executive snapshots that are available in finance, customer service, and IT. In order to assess how well you’re doing, a benchmark number must also be provided so that you can compare your results to your direct competitor firms. I have included six simple measures that by themselves are enough to give you a snapshot but accurate view of talent’s business impact. keep reading…
With a self-assigned grade of B, and an even lower C+ from the hiring managers whose jobs they fill, recruiting leaders from companies large and small heard the news there’s much to do to improve those scores, and that the road is not going to get easier in the year ahead.
Speaking to the opening session of the ERE Recruiting Conference & Expo here in San Diego, ERE’s CEO Ron Mester told the hundreds of talent acquisition leaders in direct language that “You have a lot of work to do to improve … No one should be satisfied with a C+ or a B.” At another point in his hour-long presentation of a broad and extensive ERE survey of recruiters, their leaders, their bosses, CEOs and hiring managers, Mester said it will take a rethinking of the process to get to an A. “Rethink it,” he urged. “Challenge everything that you’re doing today.”
Unveiling some of the findings of the late March survey completed by more than 1,300 during his State of Recruiting presentation, Mester turned a spotlight on the disconnect between what the respondents agree should be the key measures of recruiting’s performance and what recruiting leaders and their teams believe is where the actual emphasis lies. keep reading…
The idea that you can create a template that will work forever doesn’t happen in any business … There’s some really, really bright people in this business. You can’t do the same thing the same way and be successful for a long period of time. — Billy Beane
I am a strong advocate of what I call “parallel benchmarking,” which is borrowing the proven best practices from completely different industries and functions. This article advocates the borrowing and the adaptation to talent management of what are known as “proprietary metrics” from the baseball industry. Proprietary metrics get their name because they cover metrics that are so powerful that they are “owned” and their components are therefore not shared. In baseball, there are dozens of proprietary metrics, while in the corporate world of talent management, they are surprisingly rare. Corporate examples of these proprietary metrics include Google’s “retention metric” for predicting which employees are about to quit and its “hiring success algorithm” for predicting the characteristics that lead to new hire success on the job.
Baseball Has the Most Advanced Metric Model to Learn From keep reading…
Those who follow my articles know that I frequently write on the positive trends and the big ideas that recruiting leaders need to be aware of. However, I have not often written about the biggest strategic challenges or problems that corporate recruiting leaders face. Of course no one wants to dwell on the negative. But since I am predicting that during the next few years we will all encounter a completely transformed world of recruiting, it only makes sense to at least be aware of our largest current and upcoming challenges. If you don’t act proactively to mitigate these major challenges, they unfortunately may grow out of control, causing exponential damage to your firm.
The Top 10 Highest-impact Strategic Recruiting Challenges keep reading…
Recruiting is finally moving away from transactional thinking and beginning to understand how to better connect and engage with relevant candidates. We are not there yet, and I may be too optimistic, but many recruiters are making the transition to engage candidates and improve their experience and are therefore making more hires, increasing candidate satisfaction, and bringing in people who become productive faster and stay longer. An exemplar here is Google that has dropped many of its previous job requirements and adopted ones based on data and results.
We are moving slowly through the hype of technology into the deeper waters of understanding candidate psychology and motivation. Over the next five years I expect to see much less focus on tools and technology, and much more use of them to really engage candidates and improve the experience they have in finding the right use of their skills.
Here are the four trends I see unfolding. They will not all be competed in 2014 but they will certainly be well underway in many organizations. I’d love your comments and feedback.
What could be more important than having everyone on your team focused and on the same page? Unfortunately, in my interactions with corporate recruiting leaders, I am frequently surprised to find that they don’t have a formal set of strategic goals for their talent acquisition function. That’s a major problem because you certainly can’t be strategic unless you have a formal written strategy (most don’t) and a corresponding set of goals to make it clear to everyone what you’re trying to accomplish. Not having clearly defined, measurable, and communicated strategic goals can add to the confusion about “what is important” and “what is less important.”
While having goals provides focus and direction, their absence can cause team members to wander and to waste time and resources in low-value areas. So if you want your team to be laser focused on the important things, have clear goals that clarify your purpose and that specify what you’re trying to accomplish and what great results would look like.
In that light, this article provides a list of the strategic goals that truly effective corporate recruiting leaders can choose from. Reaching many of these recruiting goals is more complicated because the factors involved in reaching them are not 100 percent controlled by your team. However, it’s time for recruiting leaders to learn to follow the standard business practice of assuming the captain-of-the-ship role which assumes responsibility for meeting goals that you don’t have 100 percent control over.
The Possible Strategic Goals for the Recruiting Function keep reading…
Forward-looking executives seeking truly big ideas understand the value of the Davos World Economic Forum, where only thought leaders and the most senior executives at top global firms are invited to attend. If there were to be a Davos-type “big-idea session” covering strategic recruiting, this article covers the big idea topics that I would propose for the agenda.
The hectic world of day-to-day recruiting is often dominated by having to solve tactical functional problems like cutting cost per hire or identifying the correct recruiter req load. However if you are a recruiting leader who wants to make quantum improvements of more than 25 percent in your results, step back and focus exclusively on a few big ideas. Big ideas by definition are potentially high-impact strategic actions that are barely emerging, that are extremely difficult to implement, and that may become essential as the business or recruiting environment evolves and changes. Also because they require a dramatic change in thinking, almost all big ideas are instantly rejected by shortsighted individuals in recruiting.
The Top 15 Future-focused Big Ideas for Recruiting Leaders to Contemplate keep reading…
I know half the money I spend on advertising is wasted. I just don’t know which half.
For many marketers — and recruiters — that famous statement attributed to 19th century department store merchant John Wanamaker is still true, even with all the technology and measurement tools available in the early 21st century. How many recruiters can say they are getting the most out of the opportunities to drive new efficiencies through technology available today?
It is never easy to change old methodologies. However, recruiters have a significant opportunity to adopt best practices from another function that was forced to reinvent its core strategies in the face of technology disruption and changing consumer behavior: marketing. keep reading…
The most costly recruiting error in recent history was revealed last week.
On Wednesday, Facebook announced its nearly $19 billion purchase of the instant-messaging firm WhatsApp. But the real news about the acquisition relates to the colossal recruiting failure that occurred a handful of years earlier (as reported by Forbes) when both WhatsApp founders Jan Koum and Brian Acton applied for a job at Facebook and were rejected (Acton was also rejected by Twitter).
As Brian Acton put it ,“We’re part of the Facebook reject club.” You could easily argue that this colossal “hiring miss” cost Facebook billions, and as a result, this hiring error has to rank near the top “not hired” errors, only rivaled by HP’s rejection of Steve Jobs for not having a college degree. If you are a corporate talent manager, this and similar errors should now become a critical part of your business case for fully funding an effective recruiting team and flawless hiring process.
The Top Eight “Billion-dollar Hiring Miss Lessons” for Talent Leaders keep reading…
A couple years back I was asked to outline “the future of talent management” in a talk at Google headquarters. Then as now, I predicted the future of talent management will follow the “professional sports model,” which many of you undoubtedly witnessed during yesterday’s Super Bowl.
Some in HR carelessly make the mistake of instantly dismissing sports analogies as irrelevant, but those individuals fail to understand that the NFL and its teams are multibillion-dollar businesses with the same economic bottom line and the need to dominate competitors as any other corporate businesses. So if you want some talent creds, tell your boss that you watched the Super Bowl not just for enjoyment, but also in order to learn some valuable talent management lessons. My top eight talent management takeaways from the Super Bowl are listed below. keep reading…
What could be more important than having everyone on your team focused and on the same page?
Unfortunately, in my interactions with corporate recruiting leaders, I am frequently surprised to find that they don’t have a formal set of strategic goals for their talent acquisition function. That’s a major problem because you certainly can’t be strategic unless you have a formal written strategy (most don’t) and a corresponding set of goals to make it clear to everyone what you’re trying to accomplish.
Not having clearly defined, measurable, and communicated strategic goals can add to the confusion about what is important and what is less important. While having goals provides focus and direction, their absence can cause team members to “wander” and to waste time and resources in low-value areas. So if you want your team to be laser focused on the important things, have clear goals that clarify your purpose and that specify what you’re trying to accomplish and what great results would look like.
In that light, this article provides a list of the strategic goals that truly effective corporate recruiting leaders can choose from. keep reading…
Almost every manager, when asked, readily agrees that weak employees underperform average employees by a significant amount. We certainly know from sports teams, where performance is easily measured, that there is a huge performance differential (often double or triple) between the below average, average, and top performers in the same position.
From a talent management perspective, if the “performance differential” between the average employee and the worst employee is small (less than 5 percent), it doesn’t make much sense to spend a lot of money on performance management programs. However, when weak performers produce more than 33 percent below the average, it makes clear business sense to invest in great performance management and recruiting in order to fix or replace weak performers.
And when your calculations reveal that employee actions can have a multimillion-dollar impact (in the negative direction, with the Edward Snowden NSA document leaking case, or in the positive direction, with the US Airways Sully Sullenberger safe landing on the Hudson River), you quickly realize the need to quantify the dollar impact of these bottom- and top-performing employees.
Begin Working With the King of Metrics keep reading…
I recently led a session at a recruiting conference in which I asked how many of the talent acquisition professionals present had to give an account of or provide a forecast for their budget– which was on average between $75,000 and $100,000 per year. Almost no one raised their hand!
Surely there are some organizations that are more ROI-focused and demand more from their recruiters, but this is clearly not the norm. The norm is comprised of vague projections, with little to no accounting for the return on those budget dolloars.
Can you imagine any other department in a business having zero accountability for how it spends its money? How would it go over if, for instance, the sales department said, “We don’t think it’s necessary to explain what we spent our budget on. We spent it, and we need more next year. Thanks.”? It would go over about as well as a lead balloon. The typical budgetary process does not support dart-throwing.
So, why is this allowed in the recruiting function? There are several culprits behind these low expectations. keep reading…
The New Year is the perfect time to reexamine and refocus your talent efforts. The coming year will see a surge in economic growth, but it will occur in a business environment with continued volatility. Succeeding in this environment will require a new approach. So before all of the activity that accompanies any new year begins, take at least an afternoon off for some “strategic thinking and planning time.” In order to guide your thinking, I propose 10 talent resolutions or focus areas which are likely to have high strategic and business impacts.
10 Strategic Action Areas in Talent Management keep reading…
The combination of the popular “Despicable Me” movies and the Christmas season made me think about who in the recruiting process should get “a lump of coal” in their stockings for their naughty behavior. Obviously any list like this that identifies problem-causers involves some generalizations, because there are always some individual exceptions. However, in any field there are individuals who hold certain job titles that all-too-often remind me of the lead character Gru in the Despicable Me movies.
Those who qualify for the Despicable Me label on my list include recruiters, other individuals who impact recruiting, and even a few recruiting tools. I’d like to open what I hope is a continuing discussion with my personal “Despicable Me top 10+ list”. The list is broken into two categories: recruiters and those who contribute to the recruiting effort.
You May Be a Despicable Me Recruiter If You Are … keep reading…
Data analytics are getting more important. Companies are using data to better understand and improve their customer relationships, operational, business, and workforce outcomes, and competitive positioning.
This is no different for HR and even more specifically talent acquisition. Quality of hire is the critical decision-support metric that can help HR and hiring leaders determine if they are bringing the right workforce into your organizations to drive business results.
To add to my article on hire quality, I put together this video. keep reading…
There are two fundamental issues with the current quality of hire measures: the timing of the assessment and the definition itself as it relates to mid-senior level hiring.
For these more senior hires, it’s astonishing to observe that companies wait for six months or more to take a retrospective look at how well they have performed, and then define this as the “quality of hire.” What if the quality of hire turned out to be poor? keep reading…
I’ve been espousing the need for predictive metrics in HR for over 20 years, so I am pleased that more talent leaders are now beginning to realize their value. Unfortunately, most of what is written on the subject tends to be very general and instead what is really needed are some how-tos and some implementation tips.
In my first article on the subject, I covered the benefits of predictive metrics and the need to add actionable components, so that predictive metrics drive action and actually improve people-management decisions. In this article I will outline those actionable components and highlight the specific areas where you might need predictive metrics. keep reading…