decoding hiring roicontent.timesjobs.com/docs/tjinsiteapril2016.pdfhuman resources as short-term...

VOLUME-VI I ISSUE 4 I APRIL 2016 www.content.timesjobs.com

Find TimesJobs.com’s career articles, expert advice and tips @www.timesofindia.indiatimes.com, Jobs & Career section

n Event: PAGE 5 Industry-Academia Connect 2016

n Interview: PAGE 8 Director, i-exceed

From time to hire to quality of hire, organisations are using a variety of metrics to assess recruitment’s return on investment

DECODING HIRING ROI

Apeksha Kaushik, TimesJobs.com

BUSINESSES are often worried about the expenses they make on hiring and losing a candidate even as 62 per cent also confess to

picking wrong candidates! They do know

they are making mistakes but are unsure about the practices that can put a watch on the hiring mechanism.

Focusing on hiring ROI (return on investment) is a useful way to identify these loopholes, check and modify recruitment practices basis calculations and analysis of the ROI report.

However, most organisations see human resources as short-term investments instead of long-term which increases turnover and decreases recruitment ROI.

Although it is difficult to determine the average cost of an employee, says 90 per cent of the surveyed organisations, the 10 per cent, who think it can be measured, say it requires a lot of money and resources. Thus, it is wise to take a note of all of the internal and external expenses organisations have to provide for time and cost of each hiring process for a better recruiting experience.

The problemThe problem lies in the resumes

recruiters receive every day and the pressure to fill a position within a deadline. This pressure makes most recruiters(78%) spend less than five minutes on reviewing a resume, finds the TimesJobs study.

In the process, recruiters/hiring managers make many blunders such as unclear job descriptions (55%) and ignoring cultural fitment (40%).

VOLUME-VI I ISSUE 4 I APRIL 2016www.content.timesjobs.com

TimesJobs.com study

2

62 per cent employers confess to hiring wrong candidates while 53 per cent blame it on the lack of a proper tracking mechanism, according to our new study

Hiring ROI: Metrics HR needs to recruit better and faster

Have you ever hired a candidate who wasn’t the best fit for the job?

62%

38%

Yes

No

Unclear job descriptions

55%

Ignoring cultural fitment

Ignoring the salary-skill mismatch

Not being quick and responsive

40%

36%

Using traditional hiring methods

46%

What is the biggest hiring blunder a recruiter can make?

25%

Less than 5 min

78%

More than 10 minutes

0%

5-10 minutes

22%

How much time do you spend on reviewing a resume?

3


The solutionOver the years, recruitment ROI

has become a benchmark to assess hiring success rate. However, it is still a vague figure for many because many organisations have not yet been able to decode the metrics critical to hiring ROI.

To begin, one must be clear about the internal and external expenses/investments on hiring. According to the study, the key internal investments in hiring include interviews, background and reference checks and onboarding.

External investments are cost of job posting, paying for consultancy services (if opted for), employee referral payouts and cost of relocation (in specific cases).

Once the investments are identified, it is time to recognise and decode the key metrics to measure hiring ROI. Some of the top metrics, according to the study, are time to hire, sourcing/recruitment channel, cost and quality of hire and retention rate.

Decoding ROI metricsTime to hire

Time to hire is calculated from the time a business advertises a vacancy till the candidate joins in. According to the TimesJobs study, 39 per cent organisations take more than a month to hire a candidate.

In the study, 36 per cent large and 43 per cent small organisations said they are able to fill a position in over a month’s time.

The ROI calculation for this metric includes comparing the time to hire across different roles month-over-month and then lowering the average time with each passing month and new hires.

Sourcing channelThis is an important metric. To know

where your candidates came from helps in recognising the best hiring channel, one which is cost-effective and user-friendly.

Generally, organisations use multiple recruitment channels to source candidates – job portals, internal job boards, social media and referrals.

Of these, job portals are said to be the most effective by 40 per cent employers, according to the study.

These channel metrics need to be cross-referenced over a period of time to keep pace with tech upgradation, innovations and global workplace changes. Keeping tabs of this metric helps save money, resources and recruitment time in the long run.

Cost of hireMeasuring the cost of every hire is

crucial. It encompasses external and internal expenses discussed above. Some of these key components include job ad placements, social media set-up and maintenance, time spend interviewing potential employees, recruiter/consultant’s fees, other administrative costs such as onboarding, training and orientation of a new employee.

It also includes the interview cost – time and resource. On an average, 10-15 minutes are spent interviewing a shortlisted candidate, said 46 per cent recruiters in the survey.

These interviews takes place through various channels -- telephone, video and/or face-to-face and requires investment in technology, physical infrastructure and recruiters/interviewers.

What is your preferred hiring source?

Job portals

40%

Referrals

Consultants20%

12%

Social media28%

More than a month

39%

A week’s time

23%

More than two weeks26%

How much time do you usually take to hire a candidate?

More than a week

12%

What are the key internal expenses in hiring?

50% 30% 20%

n Interviews n Background & reference checksn Onboarding training

n Cost of job postings n Paying for consultancy services n Employee referral payments n Cost of relocation

35% 32%

What are the key external expenses in hiring?

17% 16%

Job ad placements

32%

Time spend interviewing

Recruiter/consultant’s fees

Other administrative costs

22%

14%

Social media set-up and maintenance methods24%

What are the key elements to determine cost of hiring?

8%

n Time to hire – 42%n Sourcing channel – 40%n Cost of hire – 36%n Quality of hire – 30%n Retention – 32%n Open vacancies v/s positions filled – 25%n Offer to acceptance ratio – 21%n Application completion rates – 18%n Internal v/s external hires – 13%

Key metrics to measure hiring ROI


4

However, less than 5 per cent candidates (interviewed monthly) are selected for the job, said 60 per cent recruiters.

The Society for Human Resource Management (SHRM) and the American National Standards Institute, Inc. (ANSI) provide a simple equation to find the average cost of hiring (CPH) a new employee).

CPH = ∑ (External Costs) + ∑ (Internal Costs) / Total Number of Hires in a Time Period

Quality of hireOver 30 per cent employers said the

quality of hire is an important metric to balance cost with quality.

To evaluate quality, organisations should assess aspects such as the hire’s output and performance, subjective assessment by managers and others, percentage of qualifications met, compensation and promotional rewards given to the hire and retention rate of top performers.

RetentionThis is a worrisome element for most

organisations. Thousands of rupees per year can vanish from a company’s budget with low staff retention rates.

According to the TimesJobs survey, 38 per cent organisations have witnessed an average attrition rate of 5-10 per cent while 30 per cent have witnessed 0-5 per cent attrition in 2015.

However, most organisations are unaware of the real reasons behind this. Retention rate can be best looked at from a cross-sectioned perspective. Here are the key components to calculate retention rates.n Turnover rate for a specific rolen Turnover rate across specific departmentsn Turnover rate across specific experience categoriesn Turnover rate by pay package across roles and departments

Open vacancies vs positions filled

This metrics goes hand-in-hand with time-to-hire. Assessing the number of open vacancies compared to recently-filled vacancies gives a fair idea of recruitment process’ efficiency.

It is mostly applicable in larger organisations where the volume of hires is huge. A company managing its talent acquisition will have a low amount of open vacancies when compared to positions filled.

Offer-to-acceptance ratio

It’s great to be in a position to make an offer to a worthy candidate. But unfortunately, at times they turn it down for some or the other reason and the organisation is back to square one. The process not only costs you money but time and morale too. Thus, this measure goes along with the cost of hiring. It includes:• Interview-to-offerratio• Offer-to-acceptanceratio

Application completion rates

Knowing the number of applications started versus applications completed is also crucial. Application abandonment rate helps identify weaknesses in the application process.

In another TimesJobs survey, 51 per cent candidates said the process has become easier while 33 per cent said it has become difficult. Out of these, 38 per cent claimed that the process has become lengthy while for 32 per cent, there is too much automation.

So, if the drop-offs in application filling process are high, it is time to upgrade to a new application filling and tracking system or modify the recent process.

Internal vs external hires

It is important to evaluate your workforce to determine if internal or external hires are more successful, so you know where to find talent.

According to the TimeJobs study, over 40 per cent organisations prefer hiring talent internally, while the rest find it good to bring in outside talent.

However, it is advisable to have a right balance in internal and external hiring. Moreover, the results should be assessed on a periodic basis to see what works for your organisations and what doesn’t.

What has been the attrition rate in your company in FY150-5%

30%

10-15%

More than 15%24%

8%

5-10%38%

How much time do you spend on interviewing a candidate?

22% 46% 32%

n 5-10 minutes n 10-15 minutesn More than 15 minutes

How has the application process changed?

51% 33% 16%

n Easier n Difficultn No change

What approach you use while hiring?

42% 35% 23%

n Sourcing talent internally n Sourcing talent externally (within industry) n Sourcing talent externally (outside industry)

What are the key aspects of quality of hire?

33% 29% 25%

n Output and performance of the hire n Subjective assessment by managern Percentage of qualification met n Compensation and promotional rewards n Retention rates of top performers

20% 16%


5

TimesJobs.com Bureau

While skill requirements are changing at lightening speed, it has become crucial for industry and academia

to stay connected keeping a 360-degree view. Their effective collaboration and integration is the key to this unsolved talent conundrum.

To explore this, TimesJobs recently hosted an ‘Industry-Academia Connect 2016: Building the Workforce of Future’ in association with Sri Manakula Vinayagar Engineering College in Chennai.

The panel of speakers included Chidambaram Meenakshi Sundaram, group head-HR, Tech Mahindra; Rekha Nair, head-HR process automation India, Schneider Electric; Ramesh Kumar, head-HR, Verizon Data Services; Hema Parikh, director-HR, Ajuba Solutions; Dr Ravi Thilagan, head-HR, FSS; Baishali Sen, HR-business partner, KLA Tencor; Jude Xavier, senior director & head-HR, Technosoft Global Services and M. Dhanasekaran, chairman & managing director, SMVEC.

Initiating the discussion, Kumar of Verizon Data Services said the kind of skills companies are looking for are different from what colleges syllabus offers. How do they keep pace with changing technology? What elements of technology/languages will be useful for organisations? Stability is a factor as students mostly run away from an organisation in two years.

Where does the industry-academia relationship stand? Highlighting the gap, Sen of KLA Tencor said that what industry is really looking at is people with practical knowledge. “And practical knowledge comes from projects and internships that students built during college. But large numbers of colleges are still focusing only on classroom-based learning which is not scalable when students come on-board.”

Sharing the best practices from his company, Xavier of Technosoft Global said, “In our partner institutes, we set the expectations in institutes in terms of the team, niche skill sets required, and training required. So students get a year’s training and when they come on board, our requirements are met.”

While there are collaborations happening between industry and academia, is it happening on a large scale across sectors? Answering this question, Chidambaram of Tech Mahindra said, “Industry-academia collaborations are happening in non-IT sectors too. In IT, time to market is a critical factor. More than skills, we look for right attitude in our associates (entry-level talent). The candidate should have the attitude to learn, upgrade themselves and pick up tech advancements.”

On hiring for healthcare BPOs, Parikh of Ajuba Solutions said they preferred to recruit from colleges but the hiring pivot is culture. “If they are able to fit in, they stay longer.”

“Our priority is CAP in candidates, which stands for communication, attitude for learning and passion for work. To be able to hire quality student, we have to invest in training,” she said.

Transitioning a new hire in the corporate world has been a challenge for HR. On this, Nair of Schneider Electric said that to hire right, they have moved a step back and created a connection with institutes. “We have a strategic alliance team to see which institutes we should partner with for various roles. We consciously support these institutes in faculty management to understand skills requirement of the organisation.”

Sharing his view, Kumar of FSS said, “While hiring from campus, we look for fundamentals aptitude, attitude and good understanding of subjects. Communication is not too critical for us as employees learn it easily on the job. But to bridge the gap between industry and academia, colleges have to relook at the kind of faculty they hire.”

Adding the academia perspective on training faculty and designing industry-ready curriculum, M. Dhanasekaran of SMVEC said that to make their students industry ready, they provide specialised trainings relevant to industry requirements. They have also framed curriculum to train students based on the requirements they receive from recruiters visiting the college. “If industry leaders can teach students once a month, we will get closer to filling the gap.”

Companies want trained talent, academia seeks industry resources

Industry-Academia Connect 2016, Chennai


6

Chaitrali Singh

THE best way to gauge a candidate’s long-term potential besides assessing his/her current

skill sets during the initial interview stage is to determine whether the candidate is someone who routinely jumps between companies every few years without making a meaningful contribution.

That doesn’t mean someone having a long tenure at a firm assures a return on investment (ROI) either, especially if the candidate has nothing to show for it.

Habitual short-timers who don’t contribute will not rake in any ROI and will only cost the firm in terms of time, cost and productivity.

To avoid this, the talent acquisition team must ensure it understands the candidate’s career goals and recheck whether they match with the profile requirement. The candidate may be looking for stability, money, growth, excitement or even a purpose. A firm must assess whether what candidates say in person is in sync with the achievements and career goals listed in their resumes. Above all, every new hire needs to be a perfect fit for the firm’s culture.

Using analytics as a competitive advantage

People analytics has emerged as key to empower recruitment teams to make good decisions and execute them quickly. With the right data at hand, the

total cost of recruiting can be cut down by concentrating on the most productive candidate pools and sourcing channels.

Also, adapting talent sourcing methods -- online assessments and applicant tracking systems -- to cater to a diverse talent pool can also improve hiring effectiveness.

Faster training and onboardingThe quicker a firm gets the new hires

up to speed, the faster they can start contributing productively -- and the faster they can begin delivering ROI. The amount of time taken to train and onboard new employees must be substantial, but firms have to speed up the process without compromising on

the quality of onboarding. Proactively facilitating the learning curve will reap returns much sooner.

Knowing employees’ mindset After employees have undergone

training and have adjusted to the firm culture and their role, they should be hitting their stride.

In an ideal scenario, for the next few years, the firm will witness growth, returned value and productivity. Over time, employees may begin to get restless. Regular feedback sessions post projects will ensure employers are on top of what their people are thinking, whether they are satisfied, aiming for a larger role, or getting fidgety and most importantly, whether they are they feeling valued.

It’s important to keep a note of the employees who have consistently given stellar performance so the firm can start investing more time and effort in their growth. Once a firm knows they are open to staying, they should focus on making it worthwhile for them.

Think long term and stay in touchWhen people leave, it’s usually

because they are looking to grow their careers and build experience. Hence, smooth and friendly exit interviews are the key to making sure they leave on a good note. Organisations should build a database to maintain strong relationships and communicate with the alums regularly. They become a source

of positive references and it’s likely that they will return the favour by referring connections and perhaps even return themselves with skills, stronger than before.

It’s far-fetched to keep the best employees at the firm forever, especially in today’s competitive job market. However, with the right planning, firms can definitely retain them for a long tenure and can get the best value from those employees, even after they have left.

The author is director of human resources atZSIndia

Making new hires deliver ROIGuest column: Rules of recruitment


7

TimesJobs.com Bureau

EVERY year, India produces the maximum number of engineering graduates in the world. But there

is a serious issue of qualitative imbalance concerning technical and interpersonal skills of these graduates. Practical solutions are dependent on effective collaboration of industry and academia.

In its effort to be a change agent in the skilling space, TimesJobs.com in association with Academy of Technology recently hosted a TimesJobs.com Conversation on ‘The Evolution of Engineering Talent: Gearing Up for the Next Level’ at The Leela in Gurgaon.

The panelists included Yuvraj Srivastava, chief human resource officer, MakeMyTrip.com; Dr. Maninder Singh, VP-HR, Viom Networks; Deepak Bharara, CHRO, Lanco Infratech; Devarshi Deb, CHRO, Asahi India Glass; Anadi Sinha, president-group HRM, UNO Minda; Sabih Kidwai, director-HR, Schneider Electric, and Poulomi Deb Roychowdhury, HOD-corporate relation, Academy of Technology.

Are engineering graduates readily employable? Speaking on this, Kidwai of Schneider Electric said, “For last five years, we are discussing what needs to be done to make engineering graduates employable. But the progress is not good enough.”

What does being ‘job-ready’ really mean? On this, Bharara of Lanco

Infratech said the problem lies in getting the right person in terms of organisational fit. “There is 80 per cent mismatch in view of industry demand. ”

On the challenges of transitioning new hires in the corporate world, Singh of Viom Newtorks said there is a need to make a clear distinction in what kind of colleges one is hiring from. “Students from established colleges are better than the ones from newly-opened ones and are ready to work after some polishing. ”

Sinha of UNO Minda said that providing on-the-job training to engineering graduates is a necessity in order to meet overall skills requirement of an organisation.

Adding to this, Deb of Asahi India Glass said, “We deliberately go to tier II and tier III colleges as students’ aspirations of established colleges are different and they don’t stick around for long.”

Srivastava of MakeMyTrip said that in terms of hiring from institutes, people are at a nascent stage as far as education is concerned. “So we hire on the basis of their potential talent, and their ability to scale up over a period of time.”

Bringing an academia perspective, Roychowdhury of Academy of Technology said they have experimented with the curriculum to add training modules. “Our students are our brand ambassadors. To train them to industry expectations, we make them undergo rigorous 35 hours training in a week.”

TimesJobs Conversations, Gurgaon

TechGig.com Bureau

IHE Society for Human Resource Management (SHRM), the world’s largest association

devoted to human resource management, will organise its second ‘HR Technology Conference & Exposition’ in Mumbai from April 20-21. The meet will bring together more than 650 delegates from organisations across all sectors. TechGig is the event’s community partner.

Some of the speakers are Jason Averbook, thought leader & author; Anuranjita Kumar, managing director and chief human resources officer, Citi South Asia; Viresh Oberaoi, founder CEO and MD, Mjunction Services.; Dr Sumit D Chowdhury, founder CEO, Gaia Smart Cities; Yuvraj Baghwala, VP-HR, Genpact; Kevin Freitas, director-Global Recruiting & Rewards, InMobi, Nishchae Suri, partner & head-people & change advisory- KPMG, India; Pradeep Mukerjee, former CEO & country head, Mercer Consulting; Unmesh Pawar, global MD-talent acquisition, Accenture; Jaspreet Bakshi, senior VP-HR & regional head-HR, People Services India; George Oommen, director-HR, Technology & Process Consulting; Sameer Khanna, VP and head of HR, Region India, Ericsson; Manu Narang, VP-HR, American Express; Vikas Joshi, senior director-HR Transformation, PepsiCo Asia, Middle East & North Africa; Sunder Ramachandran, head- training function, Pfizer India and Abhijit Bhaduri, chief learning officer, Wipro Ltd.

Besides more than 15 knowledge sessions and panel discussions, there will be live product demos as well at the event.

SHRM Tech’16 to focus on evolving workplaces

Making engineering talent employable

Disclaimer: Information provided in this newsletter shall not be reproduced, published, re-sold or otherwise distributed inany medium without the prior written permission of TimesJobs.com and a clear acknowledgement to TimesJobs.com.Contact: TJinsite, TimesJobs.com, Plot No 6, Sector 16A, Film City, Noida, 201301. Write in to [email protected]

Copyright ©2016 Times Business Solutions (A division of Times Internet Ltd). All rights reserved.

How do you measure the ROI of hiring?n Determine the incremental profit contribution for a typical new hire. Multiply the revenue per employee by the variable profit margin and you will get the average profit contribution expected for each new employee. This can be adjusted for salary by dividing average profit per employee by the average compensation. n Estimate the increased profit contributionforhiringatop-thirdemployee. Assuming the performance of a company’s workforce is reasonably evenly distributed, the performance of those in the top-third is about 15 per cent above the average.nFigureouttheinvestmentrequiredtohirethetop-third. While there is positive profit contribution for hiring the top-third there are some upfront costs associated with it. You have to factor in paying additional recruiters, performance-based hiring training, and a possible salary premium. In our model we initially assume a 5 per cent salary premium with the expectation that a top recruiter can fill at least 25 positions per year with a top-third person.

What are the hiring metrics you calculate?HR metrics are sometimes overlooked by businesses who assume they’re too complicated to deal with. But HR metrics can help uncover strengths and weaknesses within a company and allow you to understand which areas you need to focus on improving and which ones you need to capitalise on. Here are 10 of the most helpful HR metrics and what they can tell you about your company.n Cost Per Hire – One of the most commonly used HR metrics, this can tell you just how much it really costs your company when you hire a new worker.n Revenue Per Employee – Similar to the above HR metrics, these HR metrics help

you uncover just how much each one of your employees is actually earning for your company.n Absence Rate – One of the simplest HR metrics, this one gives you a look at just how many days your workers are missing and could indicate employee satisfaction rates.n Benefit Cost – These HR metrics will give you an overview of just what your benefits package costs you per employee.n Satisfaction – One of the more difficult to gauge HR metrics. Satisfaction is more abstract, and surveys are the only real

way to gather the needed info for these HR metrics.n Turnover – These HR metrics are straightforward and give you a look at how many employees leave your company in a given year.n Tenure – Conversely, these HR metrics help show the average amount of time that your employees have been with the company.n Turnover Costs – These HR metrics help show how much it costs when you lose an employee based on separation costs, vacancy costs, new hiring costs, and new training costs.n Workers Comp – These can either focus upon the number of workers comp incidences within a set time period or tell you the exact costs of workers comp per employee.n Time to Fill – These HR metrics help highlight the efficiency of your HR department and measure the time it takes them to fill a vacant position in your company.

What are the challenges you face while measuring hiring metrics?While measuring recruitment activity is very important, measuring and reviewing every single possible metric will leave you very little time to actually recruit. So, assuming you already have a star-studded recruiting team that is ready to build an outstanding workforce, it’s time for you to take a step back and consider the following six key metrics to measure the success of your recruiting process.n Time to Present/Number of Candidate Slates n Hiring Manager Feedback Timelines n Aging of Requisitions n Present-to-Interview Ratio n Interview-to-Offer Ratio n Offer Acceptance Rate

(As told to Neha Singh Verma)

‘HR METRICS REVEAL A COMPANY’S STRENGTHS AND WEAKNESS’

INTERVIEW: S Sundararajan, director, i-exceed

HR metrics are overlooked by businesses who assume they’re too complicated to deal with. But they allow you to understand which areas you need to focus on and which ones you need to capitalise on

decoding hiring roicontent.timesjobs.com/docs/tjinsiteapril2016.pdfhuman resources as short-term...

Documents