Measuring recruiting Effectiveness

Even small employers may spend tens of thousands of dollars each year recruiting applicants, but few firms assess the effectiveness of their recruitment efforts. Employers are always wondering whether it is more cost-effective to advertise for applicants on the Web, or in Sunday’s paper or use this employment agency. One survey found that only about 44% of the 279 firms surveyed made formal attempts to evaluate the outcomes of their recruitment efforts. This in attention flies in the face of common sense. And, it ignores evidence that organizations that engage in specific staffing practices (such as studies to determine which recruitment sources are most effective) have higher annual profits and annual profit growth.

The question is what to measure and how to measure it. In terms of what to measure, the easy answer is, “How many applicants did we generate through each of our recruitment sources?” An internet ad may produce more applicants than one in the Sunday paper, so at a minimum we would assess the various sources based on how many applicants they produce. This makes sense. If more applicants are generated than there are positions to fill, the firm can be more selective.

The problem is that in practice more is not always better. The employer needs to attract qualified applicants, not just applicants. One Internet ad may produce thousands of applicants, many from that there is no chance they could be viable candidates. Even with computerized prescreening and tracking software, there are still costs involved in managing applicant pools. Larger applicant pools have more applicants to correspond with and screen, raising costs and potentially extending the time required to fill vacant positions. Furthermore, more applicants may not mean more selectivity. Realistically, the manager looking to hire five engineers probably won’t be twice as selective with 20,000 applicants as with 10,000 applicants. At some point, the costs of processing the extra applicants out-weight the benefits of being able to be more selective. The manager must assess not just the number of applicants produced by each source, but also the applicants’ quality.

One straightforward way to do this is to assess applicants from various sources, using prescreening selection devices. For example, general mental ability (“IQ”) tests, having applicants perform several job tasks (a “work sample” test), or testing the applicant’s job knowledge, are all relatively straightforward ways to show which applicants will succeed and which will not. A HR manager can use this information to gauge which recruiting source produces the best applicants for a desired situation. Having assessed the quality of each recruitment source, the employer may then want to redirect dollars from sources that produce more applicants but lower quality ones to sources that produce fewer but better candidates.

A high Performance Example: The methods used by one industry leader GE Medical illustrate how employers apply best practices measurement techniques to the job of recruiting high tech workers. GE Medical’s competitive strategy of staying on the cutting edge of equipment design makes hiring large numbers of top-flight tech workers essential. The company hires about 500 technical workers a year to invent and make sophisticated medical devices such as CT scanners and magnetic resonance imagers. Since GE Medical must compete for talent with the likes of Microsoft, it’s interesting that it has managed to cut its cost of hiring by 17%, reduced time to fill the positions by 20% to 30%. And cut in half the percentage of new hired who don’t work out.

GE Medical accomplished this by applying the sorts of best practices management techniques that made its parent, General Electric Corporation, a profit powerhouse. For example, GE Medical draws up a “multi-generational staffing plan” to go with each of its products’ multiyear product plan. That way, management can predict two or three years ahead the sorts of specific hiring needs (such as for “absolute algorithm” experts) for which it will have to hire and train.

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