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.

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.