Over the past few weeks I’ve met with 50 or so recruiting leaders from major corporations around the country.  Interestingly, nobody is doing nothing.  A third are increasing their hiring forecasts, a third are hiring more recruiters, and a third are getting ready for a sign that hiring will increase.  It appears that the stars are finally in alignment.  So get ready to rumble.  We’re in for a triple witching hour hiring tsunami of epic proportions, and if you’re not ready now, it’s probably too late.

Every company wants to hire the top 15%.  A few actually do – typically those with the big brass brands and compelling employee value propositions.  Those with a small wind or rhythm section can do pretty well, too, under the right circumstances.  For just about everyone else, there’s a feeling that getting to average is about all that can be expected.  Well strike up the music, it doesn’t have to be that way.

 

The financial gain of hiring A-level talent is probably 10-100 times the person’s compensation.

The financial cost of hiring a walking lawsuit is probably 10-100 times their compensation.

Assuming the duds and the stars represent 10% of your total hires, it’s what you do with the other 90% that really matters.

As you know the best people typically don’t look for new opportunities the same way as everyone else does.  For one thing they’re looking for careers, not lateral transfers, and they find them largely through some type of networking effort.  This suggests a massive shift away from generic job boards to new tools for networking including the implementation of an aggressive employee referral program.  It also implies using a different approach for closing that gets candidates to consider the long- and short-term factors in balance before making any decision.

 

Over the past several months I’ve been advocating a strategic view of the recruiting function based on quality of hire as the metric of choice. In case you missed any of the missives, here’s a quick summary of what some would contend are blasphemous repudiations of the recruiting department of yesteryear.

As you know I suggest using the 10-factor talent scorecard to measure quality of hire on a pre-hire and post-hire basis. This form is available for members of the Recruiter’s Wall network to download. Using it is based the on the concept described in my book, Hire With Your Head (John Wiley and Sons, Inc., 2007), suggesting that in order to maximize assessment accuracy, candidates need to be assessed against real job needs. This way,10-factor talent scorecard rankings pre- and post-hire are directly comparable.

In all the brouhaha about great new sourcing initiatives and Web 2.0 tools, how much have your recruiters and hiring managers improved their ability to hire great people, not average people?

Over the past few months I’ve been describing a new approach for determining quality of hire, and using changes in this to justify any new expenditures on an ROI basis. While the methodology is pretty slick, the pushback is coming not from the process, but from the idea that HR/recruiting is responsible for quality of hire at all.

If not HR/recruiting, then who?

Every vendor in the recruiting space touts their latest recruiting and sourcing tool as the next killer app. If you were there, you saw many of them at the last ERE Expo in Florida in September. As the economy recovers, there will be many more at ERE’s Expo 2010 in San Diego next March. Some of them will be superb and worthy of serious consideration.

The Basics of Hiring ROI

Caution: you are about to enter the zone of the CFO. Tread carefully. Bring your green eyeshade and calculator. However, if you master this information, you’ll be able to calculate the ROI for your current hiring processes and any new hiring initiative imaginable. Beware though, if it turns out that the ROI of your current hiring process is less than 25%, you’re in big trouble. On the other hand, if any proposed new program is over 100% you’ll be able to get instant CFO approval and a high-five, along with the check. But don’t be seduced, any new hiring programs might not work as promised if the economy recovers anytime soon. Then you’ll just be scrambling to stay even.

To see the importance of calculating hiring ROI, just multiply the number of people you’re forecasting to hire in the next 12 months by their average compensation. This is probably a big number. For example, if you’re planning on hiring a group consisting of college grads, experienced techies, and a bunch of customer service reps, you’re probably looking at an average compensation of $65,000. If you’re hiring 1,000 of these folks, this means you’ll be spending $65 million on new hires in the next 12 months, and if you’re going to hire 100 you’ll be spending $6.5 million.