MAXIMIZE QUALITY OF HIRE THROUGH YOUR RECRUITING PROCESS

February 2012

Introduction
Human resource executives have a clear and growing interest in how pre-employment assessments can be helpful to their business. A recent study from Aberdeen Group included a survey of HR executives in which 61% rate talent acquisition as their top priority in 2012. Since assessments play a critical role in determining the talent available in talent acquisition, this means that assessments are an important part of the talent acquisition priority. The growing use of assessments is also being driven by several factors ranging from technological innovation to the ability to standardize a process that is often ad hoc and open to variance. The growth of cloud-based applications is one technology factor driving the adoption of assessments. The technology benefits from cloud deployments allows assessment content providers to easily deploy assessment content, connect platforms to create interoperability, and customize client solutions while maintaining scalable economics which reinforces a strong value proposition. Big data, business intelligence, and analytics are also driving the use of assessments within talent acquisition solutions. The same factors being realized elsewhere in the enterprise apply equally well within talent management and acquisition. Historically Human Resource departments have not been able to quantify the investment return like operations or information technology has historically been able to show. Now, though, recruiting leaders can demonstrate a clear linkage between assessment content and business outcomes through analytics that link the hiring process to new hire performance over the employee lifecycle. In a January 25th article on ERE.NET by John Zappe, Aberdeen Group Analysts, Madeline Laurano and Mollie Lombardo discussed findings from their research report, Organizations that integrate talent data with business data are three-and-a-half times as likely to achieve Best-in-Class as those that do not integrate data. Finally, the process to implement assessments, when done correctly, enables the organization to drive objectivity and alignment. This process allows for: A job analysis which enables the hiring team to determine the competencies that drive job success, gain alignment on these competencies, and use them in future discussion on training, coaching, and ongoing development. Standard evaluation of candidates using objective tools that measure these key competencies. A validated process that has been calibrated to job performance. When communicated to the hiring managers, this enables everyone to understand how the hiring process is related to business outcomes. A closed loop analysis process. As discussed earlier, the economics, availability, and integration of data enable recruiting leaders to deeply understand their


hiring funnel, if a candidate meets quality of hire baselines, and ongoing performance improvement opportunities.

How does this relate to recruiting?

With the growing interest and application of assessments as part of a data-driven talent acquisition process, understanding factors that may limit your organizations use of assessments is important. Your recruiting process is potentially one of those factors. The recruiting and sourcing process potentially creates a bottleneck that reduces the effectiveness of your assessment tools and ultimately your talent acquisition process. In a well-designed hiring process, you start by creating key foundations. A job analysis defines the competencies that are important to job performance. Understanding the competencies also enables you to select the right assessment content. For example, to measure multi-tasking, you are better to use a simulation than a structured interview. To measure integrity, you are better to use a personality assessment than a problem solving test. Once you have selected the assessments, you must demonstrate how a candidate assessment score links to job performance. This validation process provides you the foundation to identify an appropriate pre-hire assessment profile. The strength and breadth of your labor pool is an important consideration in determining how stringent you can be in designing that profile. If you design the pre-hire assessment profile to be very stringent or selective, fewer candidates will pass the assessment process, potentially making it more difficult to fill job openings, but those candidates should be better qualified to perform well on the job. To illustrate this, consider the following example taken from a contact center organization. In this example, two assessment hiring profiles were created based on validity evidence and analysis of the candidate population. In Profile 1, a 75% pass rate was modeled. This means that out of every 100 candidates, 75 will pass the assessments and be eligible for hire. In Profile 2, a 50% pass is modeled. This means that only 50 out of every 100 candidates will pass the assessments and be eligible for hire. The premise is that the more selective the hiring team can be, the greater the probability that they will be able to hire an individual who will perform better. For simplicity purposes, we will assume that all candidates who pass the assessment process are hired. We will also examine $$ collected per hour as the performance metric used to determine quality of hire.

Being selective enough to hire the top 50% of candidates rather than the top 75% results in average new hire performance of $25.85 more dollars collected per hour, or a 30% performance improvement.
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Under Profile 1 more candidates pass the assessment process. This means that more candidates who are potentially low performers are allowed into the talent pool for consideration; however, the trade-off is that recruiting can recruit fewer candidates per job opening because more will pass the process (making openings easier to fill). However, under Profile 2, the average performance increases because those lower performers are eliminated by the assessment process. The trade-off is that the recruiting team needs to source 66 more candidates to reach 100 hires. Profile 1 Assessment Process Pass Rate Number of Candidates Needed to Reach 100 Hires Performance Results Increase in $ Collected / Hour compared to baseline* % Improvement Profile 2 over Profile 1 75% 134 $84.85 Profile 2 50% 200 $110.70

N/A

30%

* Baseline = $ Collected/Hour by employees hired without the use of pre-hire assessments.

In this example, the hiring team has two options to consider. Both options provide them with a substantial improvement over the baseline performance of employees hired without the use of assessments. However, if recruiting can maintain enough candidates at a 50% rate to meet their fill rates, then they have positioned the business to benefit from a potential 30% performance improvement in $ collected per hour.

Ways to improve recruiting

In the previous section, we demonstrated the impact of being more selective in the recruiting process. With a lower pass rate, more low performing candidates are eliminated from consideration. In order to be able to be more selective, though, we need to be able to recruit as many candidates into the top of the funnel as possible. In this section, we will highlight strategies and tactics that have enabled organizations to improve their ability to recruit more candidates into their hiring funnel.


Strategy / Tactic
Right Sized Recruiting Team

Description
Many recruiting teams have headcount reduced and administrative tasks added to their workload making them ineffective at sourcing candidates. Consider using number of hires per recruiter as a metric to maintain the right sized recruiting team. FurstPerson data indicates that between 150 hires and 200 hires per recruiter is a target zone. Tie recruiter compensation to performance. Metrics to consider include attrition and fill rate. Examples include credits for employees that stay for 90 days and deductions for those that term within 90 days. Another example is to establish a bonus amount. For each new hire that terms, a debit is applied against the bonus. Make sure to have individual and team components. The goal is to create a performance based compensation model that is similar to third party recruiting firms. Carefully determine each role on the recruiting team and hire specifically to that role. Each recruiting team should have roles for individuals that are masters in sourcing candidates. Making sure the recruiting team is staffed for each role is critical for success. Assuming you conduct hiring in multiple locations, determine what processes can be centralized to reduce costs and allow for local resources to be more flexible. Web-based tools make online hiring accessible and cost effective. FurstPerson data shows that organizations can increase applicant flow 1.5 to 2.5 times in-office applicant volume by moving the process online. Be prepared for window shoppers that start the process but do not finish. Make sure to provide adequate notice to the recruiting team so they have the appropriate time to fill each class. This is critical to enabling recruiting teams to meet the sourcing requirements of hiring profiles like profile 2 in the example above. Internet based recruiting has proven to drive both candidate volume and quality. Consider shifting efforts away from job fairs and newspaper ads towards internet based sourcing. Rethink your employee referral program to run it more like a sales process (Leads / Qualified / Opportunity / Close). Ditch the generic referral program where you offer the referral reward at the end of the year if a referral stays. Instead, break-down the program into milestones at point of referral, date of hire, first day on job, 30 days, 60 days, and 90 days. Use each referral to reinforce the program to the organization.

Create an incentive plan for the recruiting team

Hire the right recruiting team talent

Centralize Common Recruiting Processes for Better Utilization Move the Recruiting Process Online

Allow for adequate time to fill

Focus on internet based recruiting and employee referral programs


Strategy / Tactic
Recruitment Sourcing Analysis

Description
Hiring teams that maximize their quality of hire relentlessly focus on linking recruiting sources to new hire performance data so that they can optimize their recruitment spend. Consider analyzing each recruiting source on the basis of number of candidates generated, retention results at 30, 60, 90, and 180 days and overall performance based on scorecard, rating, and review. Each source can then be assigned a ranking which can be used to shift investment away from poor recruitment strategies to better performing ones.

Summary
Talent acquisition is a key priority for human resource executives. Pre-employment assessment tools enable hiring leaders to evaluate job candidates to determine how they potentially fit a hiring profile for specific jobs. Being able to hire individuals that meet or exceed these profiles enables the organization to improve quality of hire. The ability to be selective based on job performance during the recruiting process allows the organization to hire new employees that are potentially more capable. When we compared profile 1 and profile 2, we saw that hiring at a 50% pass rate enabled the organization to drive 30% higher performance compared to hiring at a 70% pass rate. However, recruiting and sourcing can impact the ability of organizations to hire at a profile 2 level compared to a profile 1 level. Organizations must rethink how their recruiting teams are hired, structured, and compensated. In addition, using different tactics to drive sourcing and analyzing the effectiveness and efficiency of the sourcing tactics will remove the guesswork out of the recruiting process so that your recruiting team is driving performance improvement.

Notes
1. Infusing a Talent First Culture Through Integrated Talent Management by Madeline Laurano, Aberdeen
Group, January 1, 2012; http://www.aberdeen.com/Aberdeen-Library/7474/RA-integrated-talentmanagement.aspx .

2. HR Still Struggling to be Strategic, by John Zappe, ERE.Net, January 25, 2012;

http://www.ere.net/2012/01/25/hr-still-struggling-to-be-strategic/

About FurstPerson.
FurstPerson, based in Chicago, has been helping organizations solve hiring problems through a consultative, technology enabled approach since 1997. FurstPerson focuses on customer contact organizations that hire for contact center jobs, retail jobs, field service jobs, and other customer facing jobs. FurstPersons solutions incorporate pre-employment assessment tools with professional services and expertise that help organizations discover hiring challenges, solve these challenges, and advance the solution forward resulting in sustainable return on investment. FurstPerson has been an innovator for customer contact hiring including the use of simulation technology (CC Audition call center simulator), contact center home agent hiring models, and configurable technology to match your hiring workflows. You can learn more at furstperson.com or call us at 888-626-3412.