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Taking the Long View of New Hires

Don't be too quick to measure the impact of new hires, experts say. Even though many companies are "concerned" about the way they appraise new professional and managerial-level hires, it's important to allow them to develop and grow before determining their worth to the organization. It's also important to establish meaningful metrics.

Tuesday, May 22, 2012
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Professional football franchises are big businesses that depend on frequent injections of new talent to remain successful.

Look at the recent NFL draft, where each of the league's 32 clubs carefully selected a handful of college athletes they hope will lead their organizations to success for the next decade or so. These pro prospects are poked, prodded and closely scrutinized for months leading up to draft day, and teams have become increasingly thorough in testing the physical and mental capabilities of these young men before making sizable investments in them.  

Still, predicting a just-drafted player's career trajectory is an inexact science. Highly touted players with big-name college pedigrees don't always pan out at the pro level, while unheralded, under-the-radar picks from smaller schools sometimes blossom into superstars.

And NFL teams and their highly paid talent evaluators are left to contemplate their methods for measuring the potential impact of these skilled, but unproven, new employees.  

Sound familiar? There's an almost 50/50 chance it does, if findings from the Futurestep Global Talent Impact Study 2012 are any indication.

The survey of more than 1,500 HR professionals in five continents finds that 40 percent of respondents report they "are concerned" about the metrics and measurements they have in place to assess the impact of new professionals and managerial-level recruits on their organizations.

There is no one-size-fits-all approach to measuring a new hire's potential impact, says Byrne Mulrooney, CEO of Futurestep, a global recruitment company with U.S. headquarters in Los Angeles.

More than half (52 percent) of survey respondents say they rely on two to five metrics to assess a new hire's potential value within the organization, he says.

Measurement tools will vary based on the industry and type of position, but there are broader measurements that an organization can use to assess the possible worth of a new hire, according to Dave Ulrich, professor of business at the Ross School of Business at the University of Michigan and a partner at the RBL Group, a Provo, Utah-based consulting firm.

For example, he says, "there are some generic metrics such as perceived performance (perceptions of those that work with the person), behavior (the extent to which the new hire's time is spent on the appropriate business issues) and 'time to productivity,' which is the time before the new manager or hire is fully productive in the new job."

Ideally, these essential processes should be in place before hiring a candidate for a managerial-level position, adds Ulrich, "then those expectations can be the standards to determine if someone is doing the right job."

A new hire's impact will evolve over time, and companies and their HR leaders should rely on a combination of metrics to assess value in the short-, medium- and long-term, says Mulrooney.

"There are three distinct dimensions to a new hire's impact," he says. "First is the immediate impact, when a candidate with the right skills arrives to get the job done. The consequential impact is when an individual's contributions transition from the actions within their own role to influencing others. The third dimension is when additional value is brought to the organization over time, and an employee shows potential to be promoted and grow within the company."

A key reason many companies wind up questioning their assessment tools is that they place too much weight on short-term results as a predictor of future, rather than more long-term success, says Mulrooney.

He notes that about two-thirds (67 percent) of respondents identify the immediate performance of a new professional and managerial-level employee as a critical indicator of a successful recruitment process.

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"Our study unearthed an alarmingly short-term approach, with one-in-three respondents (35 percent) measuring impact within a new hire's first six months. Although it's encouraging that measurement is taking place, it's essential that a meaningful process is engaged to maximize impact in the long-term and retain staff," he says.  

Indeed, HR leaders should take the long view when evaluating new managerial-level employees, says Keith Strodtman, research fellow of HR strategies at HfS Research, a research-analyst organization with U.S. headquarters in Boston.

"Most would acknowledge that it's more important to hire a quality employee than it is to hire a poor employee quickly," says Strodtman. "Yet, when it comes to hiring metrics, speed-of-hire or cost-of-hire are much more commonly measured than quality-of-hire. Speed and cost are important, but don't forget the big picture."   

In the grander scheme, HR must be instrumental in defining the processes and measurements of the recruiting process that are meaningful to their organization and industry, and can often find reliable predictors of new hires' performance within their own organizations, says Strodtman.

"Profiling existing successful employees will provide the key indicators required to assess the potential value of a new hire," he says.

"HR leaders must also work with line-of-business hiring managers to define the metrics and processes that provide insight into the success of a new hire. The metric will vary depending on the goals of the business and the type of role being filled," he says.

"Companies may want to consider a global metric to measure overall quality-of-hires and specific metrics for key roles in the organization. A key is to focus on business outcomes and how successful employees deliver against the desired outcomes," he says.

Ultimately, HR professionals are "like architects who design the processes that capture the desired meaning within the company," says Ulrich. "And, like architects, HR professionals need to listen carefully to the desires of their clients -- in this case, line managers -- so that they can design the right systems."

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