Measuring the Business Impact of Employee Selection Systems to Improve Performance
Ishita Bandyopadhyay
Senior Consultant,
Aon Hewitt
Productivity within industries has historically been perceived as a function of efficient working of machines and the capacity of people working on them. Industrial employees were merely viewed as human capital, used for the sole purpose of profitability. However, we have now come a long way, progressing from Hawthorne Studies to viewing employees in terms of their capabilities and fit with companies. Today, the leadership of growing businesses views organizational performance from multiple lenses, with key focus on employees' capability and quality of talent.
It is well-known that the capability of human resources within an organization has a direct impact on the overall organization at performance as the basic unit of an organization, employees can be the reason for its success or failure. Most leaders believe that high quality talent has the ability to impact business performance significantly. Identifying and quantifying the key elements of business performance will not only allow for performance to be analyzed effectively, but these elements can also serve as crucial data points for predicting future performance. Once quantified, they can also be used to identify appropriate or high quality candidates in the selection process who would be aligned closer to the organizational strategy.
A deep analysis of the wide pool of projects conducted by Aon Hewitt was leveraged to describe different ways to demonstrate the impact of employee selection system on business. This enabled us to elaborate on the relevant elements or metrics that impact business performance. Furthermore, Aon Hewitt has also attempted to provide suitable indications on how to select employees and how to measure the effectiveness of the selection process.Drawing from our studies and extensive data, the business impact of employee performance has been categorized into 3 metrics:
1. Financial Metrics - Profitability is a measurable and tangible outcome of business performance in terms of financial units. This is typically a lag indicator.
2. Non-Financial Quantitative Metrics - Engagement score is an example of a measurable and tangible predictor or outcome of business performance in terms of non-financial units. This is typically a lead or lag indicator.
3. Qualitative Metrics - Rehirability is an example of intangible predictor or outcome of business performance in terms of non-financial units. This is typically a lead or lag indicator.
The process of selection of competitive and high quality talent remains largely intuitive till date. However, given the gravity of its impact, we cannot leave this process to intuition. This makes recruitment one of the most critical business processes of an organization. For a better and more accurate understanding of this, Aon Hewitt has endeavored to substantiate the impact of recruitment through an exhaustive analysis of key financial and non-financial data. This study examines each metric to trace its relevance to the larger organizational picture.
The key focus is to improve business results of an organization rather than diminishing the stand-alone selection cost. However, if high quality candidates are recruited successfully, this results in significant cost saving in the long run.
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