# 005 Metrics for Recruitment Process

Metrics for Recruitment Process

According to ISO 9001 all activities within the QMS of any organization needs to be managed by applying the “Process Approach”. Simply put Process Approach means defining appropriate metrics for measuring the effectiveness of activities and improving it on a continuous basis by analyzing the data thus making it more and more efficient.

The recruitment department of an organisation is tasked with recruiting the primary asset of the company – its workforce. It follows that for the recruitment department to be efficient and effective, it should put in place proper performance metrics. Having a cost- and time-effective recruitment and selection process in place can benefit an organisation in several ways – in terms of employee engagement, sustained job performance, employee retention and low turnover among others. 

While few firms would dispute the importance of recruitment metrics, not all companies have well defined metrics or measurement processes actually in place.

First step therefore is to clearly define the metrics for the recruitment process. The metrics determined should not only provide the current operations status, but also help the organisation in making future predictions. This becomes more imperative in human capital intensive businesses where the organisation revenue is dependent upon the fulfillment of the positions.

Further recruiting metrics should be aligned with business needs and objectives. The metrics then are optimized over time to increase efficiency.  Metrics enable fact-based decision making by collecting, collating and analysing data.

The common recruitment metrics are:

Position Fulfillment Capability: What this number indicates is the number of open positions for which candidates – both internal and external candidates - were hired against the open positions during a financial year. It includes also those who may have accepted the position in the current financial year, but would be joining in the following year.

This metric helps determine the organisation’s capability to fulfill the open positions.

Cost-per-Hire:  How much is being spent to get a new employee on board? Which types of positions cost more to fill? In which specific areas in the recruitment process can you cut costs? This metric can help answer these questions. Cost-per-hire represents the costs associated with recruiting new hires, and these can be categorised under four heads: Sourcing, Screening, Interviewing, and Hiring.

Sourcing: Costs incurred  on job advertising, online job posting boards, agency fees (if any outside recruitment agency is hired), and employee referral fee.

Screening:  Costs associated with  time spent by recruiters to screen through resumes received per job and the number of preliminary phone interviews conducted.

Interview: Time spent in scheduling interviews, the number of interviews conducted, the time spent in the actual interviews, the average cost of the interviewers’ time, etc.

Hiring: Time spent on follow-ups with selected candidates, cost of background checks, signing bonus paid, and so on. 

All of these expenses may not be incurred for every new hire. Therefore it’s important to determine which recruitment costs to track and then track them consistently for all hires. One very important point to note while calculating this metric is to include above cost even for reneged candidates. Even though the candidate did not join but all the recruitment effort was made in getting the candidate on board.

However, it would be unfair, even wrong, to evaluate recruiters’ performance from this metric alone because it does not account for quality of hire. And the quality of hire is one metric that matters a lot.

Time-to-Fill:  Time-to-fill metric is a fair indicator for hiring efficiency. It represents the number of days from when the job requisition was opened until the offer was accepted by the candidate. It is a popular metric because of the loss of revenue associated with positions that remain unfilled.

Again it would be totally off the mark to use Time-to-fill as the sole metric to evaluate the performance of recruiters. And that is because a variety of factors could come into play to delay the hiring of a new employee: hiring managers may well be taking their own sweet time to interview and make decisions thereby pushing up the time-to-fill metric, the pay and benefits package offered may not be competitive enough to attract candidates as readily as that of firms who offer “juicier” packages, there may be conditions in the employment market that the recruiter has no control over, and so on.

Also, the emphasis in this metric is on ‘speed’ of hiring and not quality of hiring. If time-to-fill is set as the only consideration to evaluate recruiters’ performance, recruiters may focus only on ‘easily gettable’ candidates – the low hanging fruits as it were – in order to fill positions faster without paying any consideration to the quality of hire. So, when it comes to evaluating recruiter performance it is advisable to track new-hire quality along with time-to-hire and cost-per-hire.

Recruitment Ratios: These ratios are the ones that help in determining the quality of hire. Some of the recruitment ratios that are to be tracked are Interview vs Submittals, Cleared vs Interviewed, Offered vs Cleared, and Offered vs Interviewed. Tracking these ratios per recruiter will help determine which recruiter is able to provide the quality hire.

Based on these ratio metrics, we can also build prediction models for fulfillment of future positions such as how many submittals are required per position or how many interviews are to be conducted to clear how many candidates, etc.

The quality of hires can further be evaluated by conducting fixed interval surveys with the hiring manager regarding the performance of the employee hired against the job description based on which the employee was hired.

Annual Turnover Rate: Employee turnover refers to the rate at which employees leave jobs in a company and are replaced by new hires.

Simply put, it is the ratio of the number of employees that leave a company over a period of time compared with the average number of total employees over the same period. Obviously, the more loyal employees are the lower will be turnover rate.

Turnover can be on account of a variety of reasons but what is critical in today’s context is the rate of voluntary separations. One need to track that for sure. In fact many times the cost of hiring and training a new hire could be more than the cost of retaining the separating employee by offering them the salary desired by them.

To restate the point, something which is not measured cannot be controlled. Since quantitative metrics are easier to observe, track, calculate and analyse, companies would do well to make a beginning with them.

(Condensed from the article published in DH dated 30.5.2012 by Ruhi Sharma, VP–BPE, Arctern -- A Subsidiary of Volt Information Sciences, Inc)

# 003 Customer Focus

CUSTOMER FOCUS

A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider to our business. He is a part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so.

Who is not familiar with the above quote of Mahatma Gandhi? There can be no better quote on customer focus than the one given above. For any organization in today’s competitive environment, developing true customer focus is not an option but a necessity for survival.

Customers today are very well informed and keep themselves up to date and abreast of things that are going on. They are more discerning and demand products and services that are of very high quality. They can not be easily satisfied or taken for granted.

All these make it important to have a strong customer focus (Clause 5.2). The key to building customer focus is the ability not only to know the present but anticipate and meet or exceed the future needs and expectations of:

·         Existing loyal customers

·         Potential customers

·         Dissatisfied customers  and

·         Competitors’  loyal customers

Customers are people just like us and they are human too. Even if an organization, it is made up of people. One needs to learn to “Think like a customer” and question oneself on what he/she would have liked, if roles were reversed. Know them, cherish them and be fair to them.

Certain fundamental principles to be kept in mind while dealing with customers are:

• Never promise what you can not deliver.
• Keep whatever promises have been made.
• Try to give a little more than what you have promised and/or what they require or expect.
• Respect and honour basic rights which every customer is entitled to.

With this focus, determine the product requirements (Clause 7.2.1). It is easier said than done. Sometimes it is difficult to even know who our ultimate customers are. Most of the participants in the Lead Auditor Training courses I conduct give out identify ‘children’ as customers for a School. When I point out the maxim ‘children walk to School and run back home’ they realize how far off the mark they are. If knowing who our  customers are difficult, determining their requirements are much more difficult. The requirements, more often than not, are not stated. Customers take it for granted that their requirements are known to the organization. In the case of engineering industries it is easier to make all the specifications clear by way of drawing, specifications, reference to standards, providing samples etc. But in the case of consumer goods and services unstated needs assume greater importance. A very good example could be expectations regarding hygienic conditions while serving the food items.

Further if any laws of the land are applicable to the products it must be adhered to strictly. An organization that does not follow regulatory requirements cannot be expected to follow voluntary requirements like ISO 9001 in the true spirit.

There could be some industry specific requirements like for example Automobile, Aerospace, Chemical, Nuclear, Education, Health or Food sector. Finally some specific requirements coming out of organisations own Policy and Core values. All these requirements also needs to be taken into account and reviewed (Clause 7.2.2) for completeness and ability to meet them. ISO 9001 requires a mandatory record to be maintained of “the results of review and actions arising from the review”.

Then Plan how these needs can be met and produce and deliver as per the plan. The cycle is not yet complete! Find out whether the customer is satisfied, how much satisfied or is having complaints (Clause 8.2.1). Obtaining feedback is an important process in itself. Good guidance on feedback process is published by APG which is reproduced in a separate posting in this series. It is possible that even when one has delivered a reasonably good quality product it need not necessarily result in high level of satisfaction. Therefore putting in place an effective process for monitoring customer satisfaction is part of the customer focus, a vital part at that.

Quality, like beauty, is in the eyes of the beholder. Rather in the mind of the customer. It is therefore subjective. And human beings being what they are, satisfaction assumes complex proportions. Whether the conclusion is ‘acceptable or unacceptable’, ‘right or wrong’, ‘reasonable or unreasonable’, ‘just or unjust’, ‘logical or illogical’, ‘real or imaginary’ does not matter. Satisfaction, by definition, is that perceived by the customer. There is no scope to disagree with this perception. It is their opinion/perception and only that counts and is final. It is therefore very important that feedback mechanism and analysis of data (Clause 8.4) be very robust.

Monitoring and measuring this customer satisfaction is no doubt important but it is basically an activity of post mortem. Therefore it is very important to have a programme of customer care and support which alone will ensure right customer focus and relationships.

Customer care requires instilling a feeling of confidence in customers that the organization really likes and values them. Confidence building involves two principles:

1.      Keep your customers coming back not your products.

2.      Customer complaints are opportunities to convert dissatisfied customers into satisfied or even delighted customers.

Often dissatisfaction happens not due to the quality issues with the product themselves but due to unavoidable extraneous factors which are situations beyond the control of an organization such as

• the competitors raising their level of product quality thereby lowering the organization’s quality level relatively

• the competitors  raising their level of ‘Customer Care and Support’

• the competitors play foul to take away the organization’s regular customers.

It is therefore important to pay attention to the way in which the products are delivered. How the interfaces are managed and how customer as a human is dealt with. Our culture while emphasizing the need to speak the Truth (Satyam) stresses the importance of delivering it with care (Priyam).Not only that, it extols delivering only those that are Good (Hitam). Replace ‘truth’ with ‘quality product’, core essence of customer focus is thus fully addressed in these three simple words – Satyam, Priyam and Hitam.

                    

According to ISO 9000 a customer is one who receives the “Product”. That is to say anyone on whom our product has an effect, to include intermediate stages through whom the product passes through or the end user if our immediate customer happens to be not the end user. Thus the word customer includes at one end of the spectrum, even the people working within the organization to the entire society in which the Organisation operates which is the other end of the spectrum. Thus concept of internal customer/supplier relationship needs to be built for a successful implementation of QMS. Service to the customer is incomplete without an orientation of service to society and this must also be essentially fulfilled and form part of the customer focus. This is the ultimate Corporate Social Responsibility which makes an organization a Responsible Corporate Citizen.

It is of interest here to note that the definition of quality given by CQI includes ‘innovation and care’ as depicted in the diagram below:

  

I have carried out review of QMS documents of more than 400 organisations for ISO 9001 certification. Barring a few, they are all alike and just a copy of clause 5.2 of ISO 9001. It is actually a violation of copy right act!! Addressing Customer Focus should reveal application of fundamental principles discussed above. In fact organization will be better off not documenting anything against clause 5.2 rather than repeat parrot like the clause of the ISO standard word for word. There is no need for documenting anything on Customer Focus. What really required is for the organization to demonstrate that it has customer focus.

# 004 Quality Objectives

SMART METRICS

A metric is a standard measure to assess performance in a particular area. Metrics are at the heart of a good QMS and any program directed at continual improvement

Measure the right things

Clearly, one needs to measure ones financial performance. However one needs to assess other aspects of business too. Measurement system should cover the following areas as a minimum:

CUSTOMER     a. Performance against customer requirements

  b. Customer Satisfaction

PROCESSES    a. Cycle times

  b. Product and service quality

  c. Cost performance (could be productivity measures, inventory, etc.)

SUPPLIER        a. Performance of suppliers against oner requirements

FINANCIAL     a. Profitability (could be at the company, product line, or individual level)

  b. Market share growth and other standard financial measures

EMPLOYEE     a. Employee satisfaction

Give a complete, or at least an adequate set of current measures - remember; only the organization can judge the completeness of the measures.

Type of metrics

Metrics fall into two general categories: performance metric and diagnostic metrics

Performance Metrics are high-level measures on what is being done; that is, they assess ones overall performance in the areas one is measuring. They are external in nature and are most closely tied to outputs, customer requirements, and business needs of the process.

Diagnostic Metrics are measures that ascertain why a process is not performing up to expectations. They tend to be internally focused and are usually associated with internal process steps and inputs received from suppliers.

A common mistake is to start first with diagnostic measures - measuring internally, rather than beginning with an external focus, namely the customer.

Metrics should be simple. If they require a lot of explanation and definition, then collecting data and translating that data into actions becomes difficult.

Common pitfalls that are to be avoided are:

1. Developing metrics for which one cannot collect accurate or complete data.
2. Developing metrics that measure the right thing, but cause people to act in a way contrary to the best interest of the business to simply "make their numbers."
3. Developing so many metrics that they create excessive overhead and red tape.
4. Developing metrics that are complex and difficult to explain to others.

Create metrics that are SMART

Metrics needs to be Specific, Measurable, Actionable, Relevant, and Timely or SMART objectives.

"Specific" in that the metrics are specific and targeted to the area one is measuring. For example, if one is measuring customer satisfaction, a good metric would be direct feedback from customers on how they feel about the service or product. Metrics like number of returned products or number of customer complaints indirect measures of customer satisfaction and, as such, can be misleading and therefore poor metrics and are not very specific.

"Measurable" in that one can collect data that is accurate and complete.

"Actionable" in that the metrics are easy-to-understand, and it is clear when one charts the performance over time which direction is "good" and which direction is "bad", so that one know when to take action.

"Relevant" simply means don't measure things that are not important. A common downfall of process professionals or standards groups is to measure everything, which produces many meaningless measures.

"Timely" metrics are those for which one can get the data when one need it.

The metric areas of time, quality, cost, and customer satisfaction are generic across organisations  & industries. Examples are:

Quality

1.      Reduce internal rework to 100 ppm from the present 1000 ppm in 12 months for a manufacturing unit.

2.      Answer the incoming calls in not more than 2 rings 98 % of the time for a Call centre.

3.      No rework on Facials for a Beauty Parlour.

4.      Achieve an average waiting time of not more than 10 minutes to attend to the outpatient for a Hospital.

5.      Produce at least one national level player in Tennis in this year for a Sports Club providing coaching.

Cost    

1.      Reduce purchasing cost of meats by 5 % for a Hotel

2.      Cost of training a fresher to be reduced by 3 % in next 6 months for a Call Centre.

3.      Reduce cost of supervision of Guards by 10 % for a Security services provider.

4.      Increase the earnings per KM from the present Rs.8 to Rs.8.50 for a Transportation service provider.

5.      Achieve a reduction in final price of the product

Time

1.  Reduce the cycle time to produce Radar to 30 months.
2.  Reduce the time taken to complete the security check per passenger for Airport Security.
3.  Increase the average speed of all Trains being run to 70 KMPH.
4.  Improve the average time taken to issue the Certificate to 15 days.
5.   Demand Draft to be issued in less than 15 min for a Bank

Customer satisfaction

1. Achieve a satisfaction index of 98 %
2. Achieve a minimum of 95 % monthly performance rating from the customer
3. Apply for national quality award this year.
4.  Get a letter of appreciation/recommendation from each customer.
5.  Achieve zero complaints from customer.

Further Objectives are to be established for different functions. Though clause 5.4 of ISO 9001 do NOT require objectives to be established for ALL functions but only “relevant functions” in the organization it is always better to define for ALL functions. However ISO requires that objectives be laid down for “relevant levels” within a given function.

How Good Are the Metrics?

Once metrics are defined one should step back for a sanity check by asking "Whether these metrics will help improve the processes?”

When the evaluation of the metrics is over, put them in place, gather data and track progress - typically a run chart - a graph with time along the "x" axis and the performance measure on the "y" axis. As data is gathered over time and charts are updated, one will get a trend over time. The trend lines or charts are simple and very powerful indicators of performance and for identifying areas of and opportunities for Continual Improvement. Trend line will also help in benchmarking oneself with others in the industry.

# 006 Difference between a "Procedure" and "Work Instruction"

There was a discussion recently in the LinkedIn on the difference between a "Procedure" and "Work Instruction." I thought it is worth reproducing my response as a separate blog too.

There need be, really speaking,  no difference !!

As per ISO 9000 a "Procedure is defined as "a specified way of carrying out an activity". Applying this definition, WI also is a "procedure" since it describes the way in which a particular task is to be carried out - just as a "record"  is also  a "document", looking at it from the pure definition of a document.

However it has become a practice to call the functional level document as a "procedure" which details the what, how of a function say Procedure for Purchasing function (or more correctly Process). And the document giving details of sub processes or activities within a given function a WI. For ex."Raising of a Purchase Order" which is just a part of or a sub process of overall "Purchasing" function. That is to say a Procedure describes a higher level activities and WI, a lower level activity within a given function.

Basically there are normally 3 levels in an organisation viz Strategic or top management level, Functional and operational. Top level documents like Vision, Mission, Core Values, Policies, Objectives etc are called Apex level documents more popularly known as Manual. Next level is different functions such, Design, Marketing, Production, Purchase, HR, Maintenance etc. which are clubbed under Procedures or Procedure Manual. Last level is at specific task/operations like welding, soldering, teaching, code writing etc. The documents used to describe these activities are called WI. It is to be noted that WI is extensively used in manufacturing sector and not in service sectors.

It may be of interest to note that there is no mention of WI in ISO 9001 Standard and there is no hard and fast rule that one should be called a Procedure and the other WI. There is no water tight compartment between the two.