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Prove the ROI of Your Hiring Process Using These Key Metrics

May 16, 2018

Hiring-Process-ROIDo you know if your hiring process is working? 

Most organizations recognize that talent acquisition goes far beyond finding enough qualified applicants to fill open spots. Even smaller companies should be thinking about how to improve efficiency and the ability to, more often, pick the right candidate. Asking for funding for technology, tools, and other resources to support your hiring efforts can often result in leadership asking, “Where’s the ROI?” So, how do you measure the success?

The first factor many organizations look at is turnover rates. While it’s not a hard-cost line item in the budget, even the CFO recognizes that a hiring-losing-hiring again cycle costs money.

How Much Does Turnover Cost? 

The cost of turnover for exempt professionals is routinely estimated as 1.5 times the base salary. With an average annual salary near $70,000, replacing even one nurse can cost at least $100,000. With first year turnover around 20%, this represents a serious financial drain on hospitals. Reducing turnover by even 20% can represent millions of dollars in savings.

Accordingly, if turnover is a problem, it’s a good thing to consider when looking at ways to improve your ROI. (A note on the cause of turnover: keep in mind that turnover is a complicated problem. The cause of high turnover may not be your talent acquisition processes and tools. In addition to individual drivers of turnover, there are multitudes of external and internal drivers that contribute to turnover. Before you commit to turnover as THE measure of your process's success, make sure you understand the causes of turnover in your organization.

Whitepaper Download: Turnover: The Costs, the Causes, and a Sustainable Solution

Consider other measures of success. Some link directly to your hiring processes and tools, while others are more difficult to measure. Regardless, take a holistic look, measuring everything that matters to paint a complete picture of the role of your hiring process.

How to Evaluate the Success:

You can determine the success of your process in a few different ways:

  • Job Performance is one of the most direct ways to evaluate your hiring process. This often includes a formal validation study evaluating whether hiring decisions are successful – do the candidates you select sell more, produce more, get better performance reviews, and get promoted?
  • Other measures may be more difficult to tie directly to your efforts, but can help you make the case that bringing in the right people is a major factor in helping a hospital achieve its goals. Implementing a hiring process and talent acquisition strategies:
    • Helps to communicate the desired culture to the workforce

    • Improves consistency and compliance, and reduces legal risk

    • Allows you to evaluate candidate attributes that contribute to a better patient experience (hospitals measure the success of their service delivery process by evaluating the patient experience and outcomes). 

How to Get Senior Leadership to Appreciate the Value:

  1. Encourage leadership to look at more than one measure of ROI.

  2. Identify and prioritize your goals: Reducing turnover? Reducing time to fill? Finding better performers? It may not be possible to maximize gains in all areas, so get clarity.

  3. Define how you’ll measure each of these areas. There’s nothing worse than attacking turnover, only to find out 12 months in that not everyone agrees on how to measure it!

  4. Proactively report these metrics to leadership and hiring managers. Don’t wait for a problem. Nothing is more powerful to overcome skepticism or concerns than proactively showing that your hiring process is more efficient and works for hiring managers.

  5. Similarly, proactively identify potential problems and the solutions.

  6. Be realistic. Rarely can you move these metrics quickly. Hospitals are notorious for getting impatient and giving up on strategies too early. If your people are your most important asset, take the time, make the investment, and be patient.

Want to learn more? Download our whitepaper on Evidence-Based Hiring Strategies. Much like the evolution of evidenced-based medicine, HR professionals in the healthcare industry are now using research and data to drive decision making for selecting and developing talent, defining the behavioral skills employees need to be successful, and implementing a consistent process to evaluate and develop these skills.

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Bryan Warren Bryan Warren is the President of J3 Personica, a consulting, assessment, training, and coaching firm, and a guest blogger for PSI. Bryan is an expert in progressive talent strategies, with a particular focus on leader and physician selection and development.