How can HR determine the ROI of a hire?

by Stephanie Zillman30 Apr 2012

Some two-thirds of HR professionals see a new professional and managerial level employee’s immediate performance as a critical indicator of a successful recruitment process – yet many are concerned about the methodology in place to assess the impact of new recruits.

New data has been released after collating the opinions of more than 1,500 HR professionals who assessed the ways in which they measure the impact of new recruits. According to the results of the Global Talent Impact Study 2012 by consultancy firm Futurestep, new employees’ performance is the top indicator when measuring the success of the recruitment process. Employers are too focused on measuring short-term performance rather than retaining staff in the longer term, and many HR professionals are concerned about the value of the metrics and measurements they are using to make their ROI assessments.

Key statistics from the report revealed:


  • HR believes there is too much focus on the individual’s short-term financial performance – this factor was a major criterion behind evaluating the success of the recruitment process ahead of factors such as the cost of hire and the time it took to secure them.
  • 76% of respondents measured the impact of a hire in the first 12 months, viewing this immediate impact as three times more valuable than retention – highlighting the pressure on organisations to focus on short-delivery as a result of the economic uncertainty.
  • On average, HR professionals consider two criteria of success – the most popular measures were performance data (64%) and financial performance (46%)

“It’s clear that there isn’t a one size fits all approach to measuring impact but many organisations favour performance and financial data over longer term measurements such as retention and the potential for promotion,” Byrne Mulrooney from Futurestep said. By highlighting the benefits that individuals can bring to a business in the medium to long term, HR will be better placed to gain greater recognition for the strategic role that HR plays within businesses, Mulrooney commented.


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  • by Max Underhill 30/04/2012 4:25:00 PM

    Modern human capital management approaches utilising outcome-based competency systems provide quantifiable size and contribution ($’s). This enables an organisation to place the HR asset value on the balance sheet.
    These days Strategic planning is incorporated with human capital management and involves the development of performance and capability frameworks. By definition a performance management system is a system where the expectations are properly defined and the individual manager or employee can manage their own performance and utilise it as a regular reporting tool (empowerment). Under good governance principles the development of performance management systems that are also reporting systems is essential. The technology and tools are available that enable the HR assets to be placed on the balance sheet with a number of new measures including RoHRAssets.

  • by Richard Van Oirschot 1/05/2012 2:44:13 PM

    An interesting article.

    We're finding organisations are increasingly looking for insights into their workforce, rather than just having tonnes of metrics which are meaningless and or difficult to interpret...

    Check out this video regarding workforce planning



    Disclaimer - I am a Successfactors employee.

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