Measuring hiring managers: businesses can reap rewards by measuring hiring managers' success rates

HR Magazine, June, 2006 by Robert J. Grossman

Nearly half the store managers at the Wallis Cos.'40 convenience stores/gas stations in Missouri started as entry-level workers who were hired by the preceding store manager. That's a healthy success rate for store managers who identified and groomed their successors. Does Wallis Cos. have great hiring managers? Or, is it just lucky?

Unfortunately, it's hard to tell because Wallis, like many companies, doesn't evaluate the hiring performance of its managers. Who were those managers who picked the applicants who went on to succeed? How did they make their hiring decisions? Could the criteria they applied be adopted by other hiring managers throughout the company?

These are good questions that most HR professionals don't ask. Because of that, experts say, they are missing out on a golden opportunity to tap and duplicate a valuable resource in their organizations--best practices of successful hiring managers.

The managers who made the good hires would be relatively easy to identify: At Wallis--a major Midwest gasoline distributor based in Cuba, Mo.--convenience store managers do their own hiring.

"Sometimes you fail to see opportunities that should be obvious," admits Rachel Andreasson, SPHR, vice president of organizational services. "This would appear to be a measure that would help us with our business strategy. If we can identify six managers who have developed good-quality employees and retain them longer than average, we may be able to harness their strengths and apply them throughout the organization."

Expand the Focus?

Until recently, HR's metrics in recruitment and talent selection have been concentrated on efficiency--measuring cost-per-hire and time-to-fill data. Now, experts maintain that efficiency is only part of a winning formula; quality must be the other part.

"When you make [an unsuccessful hire], especially in managerial, sales or other jobs with customer contact, the downside risks are high; you can lose millions in revenues," says Scott Erker, senior vice president of selection solutions at Development Dimensions International, a global HR consulting firm in Pittsburgh.

"Assume you've hired 100 new sales representatives and periodically group their performance in three categories," he explains. "Ten A performers quickly and then consistently exceed their goals, 20 B performers regularly reach theirs, and 70 C performers are close but not quite there. If just 10 of the C's had been an A or B, the impact on revenue would be substantial."

Sure, you can upgrade most employees to some degree with training and coaching, but even the best trainers are not miracle workers. "If you need a 7-footer to play center on your basketball team and you recruit a promising player who is 6-feet-2, the finest training available won't get you where you want to be," says Jim Del Rosario, vice president of talent acquisition at Veritude, a staffing services company in Boston.

Fortunately--or unfortunately--most of the performer's fate is sealed at the hiring stage. Studies show that 65 percent of the time, the hiring process will be the deciding factor in determining whether you will end up with a good performer, Erker says.

A Commitment Gap

Virtually all top executives say it's important to hire the best people. But Del Rosario says they admit that tracking the outcomes of hiring decisions is a lower priority than other aspects of their business. When executive teams monitor the cost-effectiveness of HR's hiring practices, they don't ask HR for metrics or other formal feedback about hiring managers and their skills in talent selection. And while company leaders hold line managers strictly accountable for achieving marketing and sales targets, they give managers a free pass on their talent selection and development track record.

Pete Ramstad, executive vice president of strategy and finance at Personnel Decisions International, a global consulting firm in Minneapolis that specializes in talent management, says managers' hiring choices should be subject to the same level of scrutiny as their performance in generating revenue or managing money. "You need to deploy the same rigor you apply to accounting and marketing to hiring decisions," he says. "That means using outcome-based metrics that really matter."

Without measuring managers' hiring performance, Ramstad says, "you don't have a reliable way to know whether it's going well or not."

Moreover, he points out, if things aren't going well, you won't know why--or how to fix the problem, which could be caused by heated competition for labor, a poor employment brand, uncompetitive salary and benefits, or a poor hiring decision.

"You hire someone who turns out to be a poor performer. Why did it happen?" Ramstad asks. "Did you have a weak applicant group to choose from? Or did you have a strong group and make a poor selection? If you want to fix a problem, it's important to be able to segment why it happened. You could need either a selection or recruitment intervention."

Ben Dattner of Dattner Consulting in New York says: "Not following the trail back to the hiring manager doesn't make sense. It's like running a mutual fund and not being able to learn who picked the best stocks."