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Recruitment Four Meter Model

Measuring Recruitment Program Effectiveness

Delivering Results Since 1975


CV-C:\DATA\PPT\MAURO\RECRUITMENT METRICS V7

Vancouver Calgary Edmonton Toronto

Western Management Consultants


Human Resource Management:

Leadership development Job evaluation and classification Compensation, employee benefits and salary administration Performance planning and review systems Personnel planning and management systems Performance evaluation Training and development programs Employee attitude / satisfaction surveys

Executive Search:

Candidate sourcing, interviewing and screening Candidate testing and evaluation Comprehensive reference verification Candidate negotiation
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The Alberta Advantage


Led Canadian Growth at 6.8% 3.5% unemployment lowest in Canada (avg. 6.1%) 90,000 new FT jobs in 2005 400,000 new jobs expected by 2014, but .. only 300,000 new workers

42,000 moved to Calgary last year


Source: Alberta Venture + Calgary Economic Development

Projected Demand is Massive

The Alberta Advantage??


The Result?

Labour widely seen as the key pressure point Fewer workers Employee-driven work ethic Perks escalation Poor service / attitudes Growing emphasis on efficient and effective recruitment, and on-boarding

Source: Alberta Venture + Calgary Economic Development

Three Trends
Race for the Basin:

Capital budgets have grown by

factors of 2 and 3 times Keen and growing focus on cycletimes, speed of execution

Energy Sector Maturing:

Increased emphasis on process Growing interest in measurement


and accountability

Outsourcing of all or part of recruitment


Trends in Calgary point to an increased focus on NUMERICAL METRICS, creating an industrialized process aimed at reducing costs, cycle time and increasing productivity and ROI measures *September 2006 Business in Calgary magazine

To continue to be heard at executive table, the Human Resources Team must establish effective processes, set performance targets and track results.
Mauro Meneghetti Western Management Consultants

Measuring Recruitment

Key Considerations

Size of the Organization Degree of Centralization Role of HR in recruitment Systems Maturity

Criteria for HR Measures


Strategic importance Financial significance Widespread impact Operational relevance Targets must reflect organizational and role differences

Focus on items that are controllable and variable

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Recruitment Metrics How to Choose


Excellence in recruiting and retention can increase your organizations market value by 8 percent
*Yeung and Berman, Pfeffer, Ostroff, and more

Talent no longer refers to innate ability, but is a new management buzzword used to refer to brainpower (either natural or trained), and is used by some to refer to their entire workforce and others to refer to the management of specific competencies. The bottom line is, however it is defined there is a TALENT SHORTAGE looming *The Economist, Oct 7, 2006

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What Firms are Measuring Today:


2001 Cost of Employee Behaviors (absenteeism, smoking, etc.) Turnover costs Employee Replacement Costs Economic Benefit of additional recruiting Economic Benefit of various training levels Economic Benefits of high, medium and low performance on a particular job 2006 Time to Fill Offer Acceptance Rate Training Investment (ROI) Cost of Hire Employee Replacement Costs % of employees trained % employee utilization Voluntary & Involuntary separation rates

*The HR Scorecard, Becker, Huselid & Ulrich

* The Wynford Group, Human Capital Benchmarking Survey

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Common Issues
Too hard to measure Lack of process focus; results in inability to repeat, build on accurate data Incomplete picture Not actionable Still a feeling of lots of people available

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The 4-Meter Model for Recruitment


STRATEGIC ALIGNMENT

RECRUITS PROSPECTS

HR OPERATIONS

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Strategic Alignment
Question How many Candidates do you need? Are you meeting Executive expectations? Are we getting our moneys worth? Metric Number of Candidates you need to find by level, role, and skill set. Satisfaction survey and interviews with key business leaders. ROI of recruitment activity in relation to avoided cost of turnover.

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Prospects
Question Which methods for finding new talent are most effective? Metric Response rates for all recruiting tactics: web site, advertising in media and direct mail, job fairs or other events, referrals etc. Rate of talent acquisition by level, role and skill set (time to hire). Referral rate. Turnaround time for candidate inquiries received via Web site, email, phone, regular mail, referrals and events.

How long does it take to find the types of talent you need? Are we a preferred employer? How quickly do you respond to qualified talent?

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HR Operations
Question Metric

How do you decline candidates who are not appropriate while ensuring that they send you referrals? How can you decline them graciously?
Are your internal clients satisfied with your ability to support their recruitment needs? How quickly are we filling positions?

Time to decision and time to followthrough communication and appropriate closure.


Internal Client Satisfaction Surveys and interviews. Cycle time from when the need is identified to start date. Aged request or vacancy reporting.

How much does it cost to support the recruiting process?

Time and money associated with recruiting.

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Recruits
Question Is our process recruit friendly and effective? Metric Candidate satisfaction with the recruitment process (via surveys and interviews with new hires).

How quickly do new recruits become functional in their role?


Can you manage/handle their referrals? Are the new recruits staying?

On-boarding time. Job progression rate.


Conversion rate. Number of repeat referrals. Early days (3-6 months) turnover ratio.

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The 4-Meter Model for Recruitment:


STRATEGIC ALIGNMENT

Hiring rate Executive satisfaction R.O.I. by employee category

RECRUITS PROSPECTS

On-boarding time Conversion rate on Internal referrals Candidate satisfaction (with recruitment process) Early days turnover ratio Job progression rate

Response rate (attraction power) Query response time Referral rate Acceptance rate

HR OPERATIONS

Internal client satisfaction Gap-to-Hire cycle Time % Appropriate closure Cost per recruit

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Criteria for HR Measures


Strategic importance Financial significance Widespread impact Operational relevance Targets must reflect organizational and role differences

Focus on items that are controllable and variable

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Implementing with Success


Stakeholder buy-in Communication throughout the organization Consistent application Support for change must come from HR

DATA is key
accurate, timely and repeatable

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Questions ??

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How to Calculate Common Metrics:


Formulas necessarily differ from organization to organization and MUST consider both hard and soft costs that impact the organization most profoundly. These are just the formulas creating the numbers that fill the formulas is the trick! Metric Accession Rate Description New Hires + Replacement Hires Total Headcount __ Hiring Costs__ _ New + Replacement Hires Days to Fill (from requisition) New + Replacement Hires Offers Accepted Offers Extended
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Cost Per Hire

Cycle Time (time to fill)

Offer Acceptance Rate

The Cost of Turnover


Direct Costs Separation Costs:
Exit Interviews interviewers / interviewees time Administrative Costs destroying files, removing individual from electronic records etc. Unused Vacation Time (payouts) Lost Client Revenues - service fewer clients during vacancy and training periods Overtime Pay paying other employees to assume leavers work Case consultation (transferring clients from leaver to others)

Replacement Costs:
Advertisements, Recruitment Tactics (job fairs, referrals etc.) Application Processing (administrative and professional time) Entrance Interview (Interviewers/Panelists time) Selection Process (Interviewers/Committees time) Miscellaneous Costs (tests, travel, relocation, reimbursements etc.) Formal Orientation (Instructors and Trainees time) Formal Job Training (Instructors and Trainees time) Off-Site Training (Course costs and Trainees time) On-the-Job Training (Trainees time to develop proficiency)

Training Costs:

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The Cost of Turnover (continued)


Opportunity Costs / Soft Costs

Lost time Morale Intellectual capital losses (ideas, plans, conceptsfuture streams of
revenue).

Total costs estimated to be between 1.5 2.5 X the employees salary (FOR EACH LOST EMPLOYEE!!)

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Our Clients experience


Cycle time (actual time to fill positions from ad to bum in seat) Controllable turnover Acceptance rate (offer acceptance/decline rate) # of recruits/month - # of vacancies New hire determination ratios Aged requisitions Early days turnover

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