Metrics for Executives

One of the greatest lessons I learned in recruiting came years ago, when I was a director of recruiting at Cisco Systems. I was presenting quarterly metrics to a group of executives at one of their staff meetings. I reeled off some impressive statistics like time to fill, cost per hire, and average requisitions filled per recruiter. I smugly showed them a series of graphs and diagrams, an excellent sampling of our performance that quarter. After the meeting I was quietly approached by a project manager who worked for a senior executive. He asked me how I thought the presentation went. My smugness turned to uncertainty, as it was obvious he had not approached me to pat me on the back. After I told him I thought it went well, he proceeded to tell me I had wasted everyone’s time. I was stunned by his rudeness, but he continued. “Not one person was listening to you in there,” he said. “They were either doing email or thinking about something else. Next time talk about something relevant.” I have thought about that day for many years. It was a slap in the face, but it was also a lesson well learned. The executives I was working with looked upon recruiting as a tactical function that did not add value beyond filling positions. With this in mind, I focused on integrating recruiting business practices with leaders’ priorities. More focus was put on projects that gave the company a competitive advantage. Progress was measured and reported to executives. Of course we must get our requisitions filled in a timely manner; that’s a given. But what other kind of projects and reporting can we do to ensure executives will view us as strategic business partners? What will get their attention so we can get investment dollars too? To start, we must report numbers that executives can relate to. One example is cost of turnover (COT). This number is derived by taking the number of replacement positions filled in a quarter or a year, and multiplying it by the average cost per hire. For example, if you fill 100 replacement requisitions and the average cost per hire is $6,000, your cost of turnover equals $600,000. Now your executives are feeling the pain of poor hiring decisions! Business leaders are motivated by statistics that are relevant and can give them a competitive advantage. They measure and report what they do, and you should do the same. If you are working on an initiative that requires investment of funds and time, make sure you can effectively measure your progress. Your next step will be to report your findings in a professional presentation with facts and figures. Let me give you two examples. At T-Mobile, we measure quality of hire by measuring what happens after our new hires start. This metric is a combined measure of performance and retention. We determine how well one group of hires has done from a performance and retention standpoint versus other groups brought in during the same quarter. We measure this group versus their peers at three-, six-, and nine-month intervals. In one example, we measured quality of hire of a sample of new retail sales employees who took an online pre-employment assessment versus previous new hires who did not. In another example, we compared the quality of hire of new college graduates versus all other sources of hire that same quarter. In both cases, we compared performance and retention of the case study group and the other sources of hire at the three-, six-, and nine-month intervals. The measurements proved that both the new college graduates and the group who took an online assessment were performing significantly better than their peers. These findings were relayed to our executives. Because they could see that our work was affecting their success, they provided funding for more investment in these important initiatives. Many of you may be asking yourselves, “But how do I measure quality of hire for positions that are not metrics based, like sales or customer care?” It can be done. Let me give you an example. Let’s say we want to measure the performance and retention of hires from an online job board versus other hires for the first quarter of 2005. We give hiring managers a questionnaire with what they expect their new hire to achieve at the three-, six-, and nine-month marks. At each milestone, we check in with them to determine if their new hire is meeting or not meeting the expectations they set. We then calculate the quality of hire based on their responses, and use it to compare the job board new hires versus the other sources of hire. (For longer-term studies, you can compare performance review scores and retention against sources of hire.) Recruiting is absolutely critical to the success of a company. If we hire poor performers, the company is out of business. If we hire mediocre performers, the company stumbles along. If we hire awesome performers, the company is a leader. It is our job to be tactically superior. It is also our job to give our executives confidence in our strategic importance. We must work on initiatives that will make a difference. When it comes to reporting, we need to report the progress of our initiatives to executives and hiring managers. Reporting cost of turnover, showing quarterly trends on how we are improving average days to fill (because now this number means lost revenue to them), and demonstrating quality of hire by source puts us firmly in a seat as their business partner. These statistics are vitally important to them and will stop us from falling into the metrics trap I fell into those many years ago at Cisco Systems.

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Randall Birkwood is a former director of recruiting at T-Mobile USA, Cisco Systems, and Microsoft Corporation, and HR at Intermec Technologies. While at T-Mobile his organization was listed in an ERE article as a top 10 benchmark firm in recruiting and talent management. He has been an advisory speaker at General Electric and AT&T for VPs and directors of HR, and spoken at a number of conferences in the U.S. and UK. He was the subject of a cover story on the "War For Talent" in Internet World Magazine.

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1 Comment on “Metrics for Executives

  1. Randall’s article is a good reminder to us to use metrics that are relevant to our business leaders. I must comment, however, on the cost of turnover statistic. We have done fairly extensive research on this topic and have determined that the actual cost of turnover (factoring in recruiting costs, training costs and lost productivity costs) to average 150% of the base salary. This is far in excess of the $6,000 figure mentioned in this article.

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