What Is Your Hiring Batting Average?

I am an unabashed follower of the HR philosophy of Jack Welch, former CEO of GE. He is a proponent of a “business-like” approach to HR that emphasizes its critical role in impacting organizational results. Welch is certainly controversial in HR circles because he advocates many things that “softies” in HR regale against, including differentiation in treatment, honest and direct performance appraisals, stretch assignments, and yes, routine firing of individuals who don’t produce or fit the system.

His latest foray into HR deals with measuring your “hiring batting average.” By advocating the direct measurement of hiring quality, he adds even more credibility to counter the “silly” list of arguments that many in recruiting make against measuring quality of hire.

His support of using a quality of hire measurement is not unique among CEOs. In fact, Nick Burkholder, founder of Staffing.org, notes how “CEOs are interested in all performance metrics, but especially new hire quality!”

Lame Excuses for Not Measuring Quality of Hire

There is literally nothing more important in recruiting than measuring the “on-the-job performance” (quality of hire) of the individuals you bring into your organization. Many directors of recruiting try to avoid this measurement by shifting the focus to less political, simpler measures like cost, time to fill, or volume.

In this light, some argue that they “filled every position,” but then again, so did the Titanic. They argue that they hired people at a significant cost savings, a claim almost as insightful as “I got this Rolex for only $25.”

There are literally dozens of performance phrases that are uttered by recruiting leaders, but few sound like “We produced 112% of planned hires whose combined performance to date exceeds that of planned hires last year by 43%. Hires were accomplished leveraging an investment just 3% greater than last year’s, with no gains in recruiting headcount. Manager satisfaction with new hires this term is up 27% to a 4.1 on a 5.0 scale.”

When asked why quality of hire isn’t routinely measured, I hear dozens of excuses that typically fall into four basic categories:

  1. It can’t be done or it’s too hard. This argument is a direct reflection on the skills of the individual making that statement because a number of organizations already measure the quality of hire on a routine basis, proving that it is possible.
  2. It’s not necessary. Because many organizations measure the volume of hires, the cost per hire, and the time to fill, they argue fruitlessly that a quality measure is not necessary. Saying the performance of something you produce doesn’t matter would be ludicrous to a CFO, a CIO, the head of your supply chain, or anyone who goes through a long process for selecting equipment, services, and software.
  3. It’s too time-consuming and distracting. A bad new hire will negatively impact the organization, its customers, and the team that they work alongside long after the “cost” of their hiring is forgotten. Yes, measuring anything does take time and resources, but if you are going to skip on a measurement, skip on measuring the speed, the number of hires, or even the cost, but never the performance. If you were about to go in for brain surgery, would you argue that the quality of the surgeon and the success rate of the process wasn’t really very important compared to the cost or the speed of the operation?
  4. Manager’s own selection. This is an argument designed to throw accountability efforts off track. Yes, obviously the hiring and retaining of individual hires is directly impacted by individual managers, but that’s not the issue here. What we are measuring and improving is the recruiting and hiring process itself. Every other major business function that is involved in the selection of resources also “shares” some level of responsibility with managers in making selection decisions, but the accountability for making the overall selection process work across many managers always lies with the business unit that designs and maintains the selection process. Because the recruiting function designs and maintains the sourcing and selection process, it alone is responsible for ensuring the process routinely sources and selects individuals who meet or exceed “on-the-job” performance standards.

What is a Hiring Battering Average?

Jack and Suzy Welch, in their August 20 BusinessWeek column, argue that managers and individuals involved in the hiring process should be held accountable for their hiring recommendations. The process they recommend involves simply comparing an individual’s “hire” or “not hire” recommendations with the new hire’s actual on-the-job performance rating after six months.

The performance of the new hire is measured simply on whether the new hire’s “on the job performance” was rated as below expectations, meeting expectations, or exceeding expectations.

A numerical batting average score of between .001 and .999 is assigned to each person involved in making hiring recommendations and a .800 average means that 80% of those recommended met or exceeded expectations. Consider weighting hires who exceed expectations. This hiring batting average is simple, quantifiable, and it ensures some level of accountability.

A More Sophisticated Measure

If you are taking a broader perspective and are looking at the entire hiring process throughout your organization, consider adding other “pre-hire” factors like identifying which source, which assessment process, which selling points, and which individuals had the most impact on hiring individuals who became top producers on the job.

Add other measures of post-hire success beyond a manager’s subjective assessment of the new hire’s on-the-job performance. If an individual must be terminated or if they voluntarily quit within the first year, they cannot be considered a “quality” hire.

On the positive side, consider an increase in diversity hiring into your professional and managerial positions as an important indication that you have a high-quality hiring process.

At the end of each recruiting period, recruiting management needs to determine whether their organization’s hiring process has produced better results than last period’s or the efforts of a previous year. Before you can make an accurate comparison, you must first make a list of all of the possible new hire outcomes.

Actual Output Measures:

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  • New hire output has increased. Output measures might include productivity, output volume, sales volume, efficiency, etc.
  • Time to productivity is quicker. New hires require a shorter number of days to reach the (pre-set) minimal acceptable level of on-the-job performance.

Assessments by Managers and Employees:

  • New hire performance appraisal scores are higher (for similar jobs).
  • New hire scores on manager determined “forced ranking” processes are higher.
  • New hire performance management or disciplinary action needs decrease.
  • Involuntary turnover of new hires decrease.
  • New hire 360-degree feedback scores are higher (from coworkers and/or their manager).

Pay, Rewards, and Recognition:

  • New hires receive a greater average bonus compared to a previous period.
  • New hires receive a higher percentage of salary increases, as a percentage of salary (when salary is related to performance).
  • New hires receive a higher percentage of stock options or stock grants.
  • The number of months until new hires are promoted decreases.
  • The number of internal company performance awards, recognitions, or nominations increases.

Qualitative Measures of Performance:

  • Customer service scores or ratings are higher.
  • Error rates, complaint rates, or reject rates are lower.

Indications of Innovation:

  • A higher number of patent applications and approvals.
  • They produce significant innovations or innovative ideas.
  • There is evidence that they have added a diverse perspective to discussions and projects.

Indications of Leadership and Team Players:

  • They are selected as a team lead.
  • They are added to the succession plan.
  • They are designated as a “backfill” for a team lead or mission-critical position.
  • They are rated as having management or leadership potential.
  • They help to successfully refer and recruit other top performers.

Softer Indications of Performance:

  • They have a higher level of performance in certification courses, training programs, or post-hire assessment tests.
  • They require less maintenance, coaching, and management time than the average hire.

Final Thoughts

The creator or owner of any business process is responsible for measuring the quality and the performance of that process. Just as CIOs measure the performance of software and hardware they select, and directors of marketing measure the performance of PR and marketing plans, directors of recruiting must quantify and measure the performance of their selection process.

Whether you choose a relatively simple approach like Jack Welch’s “hiring batting average” or choose to institute a more sophisticated approach, the key is to do something right away and then refine the approach over time.

Even though “efficiency metrics” like volume, speed, and cost have some value, process “effectiveness metrics” (i.e., measuring the impact of the hiring process on business results) is the one and only measure that sends a clear message to senior management that recruiting is strategic and businesslike.

Now, if you want to do something that is hard to do, sit with your CFO and convert the results of superior recruiting into its dollar impact on corporate revenue. But that’s another article.

Dr. John Sullivan, professor, author, corporate speaker, and advisor, is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high-business-impact talent management solutions.

He’s a prolific author with over 900 articles and 10 books covering all areas of talent management. He has written over a dozen white papers, conducted over 50 webinars, dozens of workshops, and he has been featured in over 35 videos. He is an engaging corporate speaker who has excited audiences at over 300 corporations/ organizations in 30 countries on all six continents. His ideas have appeared in every major business source including the Wall Street Journal, Fortune, BusinessWeek, Fast Company, CFO, Inc., NY Times, SmartMoney, USA Today, HBR, and the Financial Times. In addition, he writes for the WSJ Experts column. He has been interviewed on CNN and the CBS and ABC nightly news, NPR, as well many local TV and radio outlets. Fast Company called him the "Michael Jordan of Hiring," Staffing.org called him “the father of HR metrics,” and SHRM called him “One of the industry's most respected strategists." He was selected among HR’s “Top 10 Leading Thinkers” and he was ranked No. 8 among the top 25 online influencers in talent management. He served as the Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees, and he was the CEO of the Business Development Center, a minority business consulting firm in Bakersfield, California. He is currently a Professor of Management at San Francisco State (1982 – present). His articles can be found all over the Internet and on his popular website www.drjohnsullivan.com and on staging.ere.net. He lives in Pacifica, California.

 

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7 Comments on “What Is Your Hiring Batting Average?

  1. I have been a fan of Jack Welch’s HR philosophy since the 80’s.

    As competition further escalates, his principles are going to very much come into vogue…again..and at a higher level of acceptance.

    People will see that some of his principles were not as extreme as they once thought, they were simply correct.

  2. This article, like many others, is attempting to generate a simple, easy to understand ‘wrong answer’ for a very complex issue – if HR votes against a hire and the employee doesn’t perform, do we get an ‘I told you so’ award? How in the world does this provide improvement in the quality of hire for the corporation. This is not a binary function – you can’t measure it – hit or strike out. When HR gets the final decision-making authority for hiring, then you may feel free to measure me on this over-simplified scale. I’ve hired thousands of people over the past 30 years and I have not seen a measurement system that can be displayed on an Excel spreadsheet that was even close to telling the whole story…

  3. This is spot on! The true value of Recruiting isn’t all about how fast, how cheap, or how many roles we fill. It is about improving the quality of the organization’s talent! That encompasses diversity too, by the way, lest anyone drop that lens.

    If a company has a performance management system (ratings, etc.) then it is not really so problematic to measure and report the data. Take that info and demonstrate some causality between talent and improved operating efficiencies, stronger revenue production, etc. and the picture snaps right into HD, 1080p resolution.

    If my counterparts within the various LOB’s are rated on their impact to the business, why shouldn’t I, as a Recruiter, be evaluated on a similar measure? (think rhetorical question here folks).

  4. There is a business process called staffing. The nature and rigor of the measurement approach to the staffing process is a direct reflection on the expectations of the C Suite and the skills of the HR practitioners the company has hired. Each CEO has exactly the HR team they paid for.

    Why is it that so many C Suite executives have such low expectations for value based metrics from HR? Why is it that so few staffing professionals have deployed the measurement disciplines to document the yield of their business process called staffing?

    One of the biggest obstacles is lack of infrastructure. Every other core business process has made an investment in the infrastructure of data capture, storage, retrieval, analysis and reporting. There are tremendous resources for accounting, raw goods, order flow, very few well developed resources for the staffing process. ATS and CRM platforms fall short of the mark. The leading edge practitioners are building systems to meet their needs. It can be done and skillful people are doing it.

    Kudos to John for keeping a range of value/contribution variables for consideration in front of the profession. Those staffing professional who document how their process contributes to a maintaining a competitive differentiation in the market will be the winners.

  5. Great article. I agree completely. The only bit I question is this, ‘if they voluntarily quit within the first year, they cannot be considered a ‘quality’ hire.’

    I think that has to be evaluated on a case by case basis…if the individuals performance meets or exceeds expectations, you need to look at why they are leaving and put some accountability on the organization to create an environment where people don’t want to leave in the first year. This is not recruiting’s fault, yet we often bear the blame when things don’t work out in the first year.

    But, the rest of the article I think is fantastic. I love the idea of evaluating the hires made…not just looking at how fast they are filled, but how well they are filled, and looking at the opinions of every individual involved in the hiring process….so that it can be seen who voted for that individual who turned out to be a star…and who didn’t see their potential.

    🙂 Pam

  6. IMHO, measuring ‘quality of hire’ is related to- but not the same as- recruiting. As a recruiter, I see it as beyond the scope of what I am able to accomplish. Measure it by all means, but don’t ask me or my colleagues to take time out to gather or process the information- that’s what clerks/admins should do. Recruiters should help get qualified candidates hired as quickly, easily, and affordably as possible for their clients.

    Cheers,

  7. Its very nice to say that we have to take the time to measure and qualify the great employees we hire but you have not discussed the real relevant issues of the corporate world; Limited time, shortage of talent, short term thinking, executive turnovers and unrealistic upper management corporate expectations.

    In a perfect world we know this would be important in order to make improvements. The reality is that most companies do not have the time or the people resources to measure quality of hire. Certainly the use of job boards have made it easy to hire non strategic staff in an employer market where jobs are in short supply. There are BI – business intelligence software that can easily determine the profile of the most succcessful employees hired. This is already being done in Banking industry to determine the profiles of the most profitable customers.

    Most companies strive to hire strategic talent however they do not have the time or the resources to develop quality talent with little support allowed to hire a new employee to be successful in a 90 probationary period. Even the most successful employee with the ideal profile will fail if not given the proper environment to succeed. Most companies want to hire someone who can be up and running with no training and no corporate support. Most companies try to operate with a very lean people head count that ignores the fact that great employees have approached the company and make it virtually impossible to hire talent because hiring is not in the budget.

    It is stated that major companies in the Western World including Canada and the United States have low unemployment rates due to low birth rates in the last 20 years. This interesting event as taken place are consequences due to higher individual and small business taxes and high cost of living with generally 2 people working in a household. Meanwhile U.S multinational corporations are paying the lowest corporate taxes since World War 2. Countries such as Canada are encouraging immigration policies to address this serious low birth rate.

    With the emphasis now on a employee market….more and more companies will have difficulty hiring people.Unfortunately more and more time will be spent finding and hiring people if the companies fail to recognize that the market has changed. Most companies in the last 20 years have failed to develop great employees because it takes to much time and money to develop great employees in the short term. Not every company has the talent or the resources of a GE. Not every company has Jack Welch as the CEO.

    Limited Time and Budget contraints….will be determining factors in attracting the best and the brightest. No one here is to suggest that measuring is not important. The answers are there but unfortunately HR budgets and HR People are not and in some cases limited by budget constraints. There is no one there to do a proper job of measuring except the hiring managers are not trained to interview….let alone hire….yet more and more of these individuals are being forced to accept the hire function in addition to their own jobs. By being overworked and underpaid, no one can expect a senior manager to be working at top performance. These people will quit and seek employment elsewhere. The question is why should someone work over 60 to 80 hours a week for an average salary at the expense of one’s personal life?

    There is not right or wrong answer to hiring. Unfortunately we have a fast food mentality that hiring great people is EASY. We also are seeing more and more Executives being hired to perform and fulfill unrealistic expectations that require long term thinking that are being curtailed by short term profit results. Most corporations have failed to develop talent and will have no choice but to hire and pay more to lure away top talent from the competition. There are also issue of 4 generations of workers with the oldest workers being discriminated against for younger workers.Talent should be the deciding factor and not age and certainly not ethnic origin.

    Measure all you want….the reality is that the real killer to corporate productivity are longterm vacancies, high turner, shortterm corporate planning, lack of infracture and indifferent overpaid management teams, adversion to diversity hiring. The consequences are enormous and adversely affect retention of customers, and retention of key employees.
    The reality is that most people in these companies know what the answers. The majority of these corporations prefer the status quo rather than change. They also prefer denial rather than problem solving to address these real problems that make measuring irrelevant.

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