chairsTalent has been called a company’s “most important competitive asset.” It accounts for a significant amount of company spending, too — for many business, labor costs are “second only to the cost of real estate.”

And yet, HR still struggles to make its business case to the C-suite.

“If you go back in the recruiting and HR world even ten years ago, there was always a lot of discussion about HR executives not being part of the C-level,” says Jeff Furst, CEO of FurstPerson. “[A CHRO might have that 'C'] in their title, but they’re not on the same level as the CTOs, CIOs, CFOs, and so on.”

HR’s lack of boardroom clout, Furst and many others believe, is a direct result of the department’s difficulty in quantifying the value it brings to the company.

“Everybody knows employees are important, but what exactly is the contribution?” Furst says. “Are they actually moving the business forward?”

To help HR really quantify its impact on business outcomes and finally gain its deserved seat among the executives, Furst has developed what he calls a “quality of hire report card.” What that report card looks like depends on the specific needs of each business and each role in the business, but the overarching concept behind the report card always remains the same: to help companies, large and small, quantify and improve their sourcing methods and the performance of each hire.

Measuring Employee Performance

“When you think about HR practices and hiring in general, the question is: how do we know our processes are actually working?” Furst says. “How do we know that we are actually sourcing candidates who are performing well?”

According to Furst, instituting a quality of hire report card is a way of linking sourcing and hiring practices to business outcomes, a way to help HR make its business case.

BirdsThe report card works as such: each new hire’s performance is tracked over a period of time, according to a set of predetermined metrics. At the end of this period of time, each new hire should meet or exceed their goals — thereby proving that HR is sourcing and hiring the right people and directly impacting the business.

The criteria by which each new hire is judged will depend, as mentioned above, on the business itself, the industry the business operates in, and the employees’ individual roles. Examples of some common metrics include:

  • Length of time the employee stays
  • Customer satisfaction ratings
  • Sales quotas
  • How often the employee is absent

“The report card is company and role dependent,” Furst explains. “Company A might have a different set of performance metrics from Company B. Ultimately, the goal is: if you hire this person, what does business success look like for them? How will you measure and determine if they performed how the business needs them to perform?”

Reevaluating Your Sourcing and Hiring Process

Of course, new hires don’t always meet their goals. This is why the quality of hire report card also tracks sourcing methods and aims to ensure that recruiters and HR professionals are always looking for the right talent in the right places.

“There are a lot of different ways to source candidates,” Furst says. “Traditional job fairs and newspaper ads, job boards, direct sourcing, social media, and so on — but what are you getting for your investments in these different recruiting sources?”

By tracking the quality of each new hire made, the quality of hire report card also tracks the quality of each sourcing method the company uses. That way, HR can identify the ones that work and double down on those, while discarding the ones that don’t.

Party“For example, if I source from Job Board A, Job Board B, and Job Board C, I might learn that Job Board A provides the most high quality hires for me,” Furst explains. “It might be worth shifting dollars from B and C back to A so I can source even more people through that method.”

Essentially, the report card is a way for companies to analyze the costs of different hiring methods and use their hiring dollars in the most efficient ways possible.

The quality of hire report card, then, is a dual-purpose tool: HR departments can use it to quantify the value they add to the business, and they can also use it to guide their sourcing and hiring methods so that they can recruit higher-quality talent more efficiently.

Furst also stresses that these quality of hire report cards, once implemented, cannot be “a one and done thing.”

“You can’t look at it once, set it up, and walk away from it,” Furst says. “It’s designed to be proactive and ongoing. Every time you hire someone, you should be looking at this data and making incremental improvements in your sourcing and hiring methods.”

And that’s how HR can really prove it works: by gathering the hard data and developing effective strategies.

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