by Greg Chartier, Ph.D, SPHR

   This article was originally published in The Productivity Institute (PI) Newsletter

I am often asked to look at HR Departments and functions to see how effective and efficient they are.  As a result, I’ve developed a series of measures to use to conduct this evaluation.  It includes organization-wide metrics which might not show up in “HR Reports” as well as those which can be used for specific HR programs. Since 2010 looks to be just as challenging a year as 2009, it seems like a good time to review your HR Department and make sure it’s doing its’ part to contribute to company success.

• Are the people we have the most productive in our industry?

• What is our productivity (Output) per dollar of people costs spent?

• Can HR show the trend (over several years and project future years) and compare it to our chief competitors.

• What is our “People Profit” (The number of dollars of “people” costs we must incur in order to generate a dollar of profit)? What is the trend and how does it compare to our chief competitors?  What is our “Revenue per employee”? Is it higher than our competitors?

• Do we have the right number of people in our organization?

• Does HR have a metric/ system for ensuring we are not OVER-STAFFED? Do we compare our Headcount per unit of production/ sales to that of our direct competitors to ensure we don’t have headcount “fat”?

• Are we UNDER STAFFED in areas, where if we added people in key areas, we would increase our profitability?

• Are we overpaying our employees for the output they produce?

• Can HR show the impact of pay increases? What is the % increase in employee performance as the result of every 1% increase in pay?

• Does paying top dollar matter? Do the employees paid in the top quartile of the salary range produce proportionally more output than those paid in the middle quartile?

• Who are we over / under paying? Demonstrate we have an effective system for identifying and forecasting whether we are under or over paying our employees.

• Is there evidence that our benefits programs really attract or keep people?

• Do we improve the people we have? (Make them more skilled and productive)

• Is Training a Critical Success Factor? Is there a correlation in our industry between the % of all people costs spent on training/ OD and firm profitability?

• Does Training make a difference in performance? What is the percent increase in performance as a result of every $1,000 spent on training?

• Does HR have evidence that having “the best” employees is a Critical Success Factor (CSF) in our industry because the most profitable firms have a high proportion of “quality” employees and the less successful firms have lower proportion of “quality” employees?

• Has HR identified the jobs/ functional areas where having great people is essential for corporate success (a CSF)?

• Does adding more or higher quality HR resources make a difference? Is the Return on Investment in Human Resources higher than the ROI on Capital or for plant and equipment?

• Do we attract and hire the very best people we can afford?

• Did we hire better people this year (more productive per dollar spent in salary) than last?

• Demonstrate that we are hiring people with competencies and skills that give us a competitive advantage over our competitors.

• Do we “fix” our “problem” employees rapidly or get rid of them if they are too expensive to “fix”?

• What percentage of “poor” performers become “very good” performers within a year, as a result of our employee relations efforts?

• Show we get rid of our poor performers that can’t be “fixed” at a rate faster than our competitors.

• Is there evidence HR identifies and effectively “fixes”" bad” managers?

• Is there evidence HR provides guidance and help to strengthen our managers and teams?

• Does HR give managers multi-options and do its programs allow managers to “adjust” corporate policies to fit “local” needs? We give managers input into policies before they are initiated.

• Do we forecast and prevent people problems better than the best in the industry?

• Is our HR department efficient and does it continually improve?

• Is there evidence that HR continually improves its programs? Drops it’s ineffective ones?

• Is there evidence that putting more HR resources in an area dramatically impacts that areas productivity and profitability?

• What percent of all corporate spending goes to HR? How does it compare to last year and our best competitors? Are our costs per unit of HR service below those of our best competitors given an equal quality of service?

• Do key departments and products get the most Human Resources help?

• Are our employees satisfied?

• Do employees report they are more satisfied this year with the way they are treated? (Compared to last year?).

• Does HR have evidence of the impact of employee satisfaction on our employee’s productivity and retention?

• Is there evidence that we get the most from our talent?

• Is our over-all HR strategy aligned with our business strategy?

• What is our over-all HR strategy?

• Is there evidence it adequately shifts, as our business needs change?

• Has HR done a competitive analysis (over-all and by function) to see where we need to shift our efforts in order to beat our competitors in every HR category?

• Does our HR strategy reinforce our corporate values and culture?

• Is there evidence that HR has significantly added to our shareholders value?

The answers to these measures will help answer the fundamental question of all:  Is HR contributing, the way it should be, to the success of the company?

Good luck in 2010 and Happy Holidays.

Greg Chartier is Principal of The Office of Gregory J Chartier, a Human Resources Consulting firm and is a well-known management consultant, educator and speaker.  His practice consists of two broad areas:  Human Resources management and outsourcing for firms of less than 100 employees and Management Training. His business experience includes management positions with Pfizer, The Chase Manhattan Bank, The Bank of New York and Johnson and Johnson.  He is also a Board Member of the Job Service Employers Council (JSEC) of the New York State Department of Labor.  Greg can be reached at greg.chartier@att.net and by phone at 914-548-1689.

by Greg Chartier, Ph.D, SPHR

   This article was originally published in The Productivity Institute (PI) Newsletter

One of the key challenges in enacting a health care reform plan is how to finance it among government, employers, and individuals.  Of particular concern to policymakers is what effect a health reform plan would have on government spending and the federal budget.  President Obama and Congressional leaders have said that any health reform plan should not add to the budget deficit over a 10 year period.  This means that the added federal budget spending that resulted from any reform efforts would be fully offset by new revenues or savings in existing government programs like Medicare and Medicaid.

For employers, however, the primary concern is; “Will there by new taxes?”  The answer is not clear.

By far, the largest component of the new health care plans is subsidies to the uninsured.  These could be provided through coverage expansion of Medicaid and Children’s Health Insurance programs.  While they would add to the federal budget, there would be some presumed savings in transferring costs to these individuals.

What should concern us, however, is the Congressional Budget Office predictions that any new health plan would cost “on the order of $100 billion” per year in current dollars.  Where will the money come to pay for these programs, especially in light of the administration’s claims that there must be no additional budget impact.

The plans approach these costs in three ways: 

1. Savings from existing programs.  This would mean reduced Medicare payments, almost certainly.
2. New revenues from business and the insurance industry.  For example, a “pay-for play”requirement on employers to either provide health coverage or pay a fee to help government pay for it.
3. New revenues from changes in the tax code. Two possibilities are a “lifestyle” tax on alcoholic beverages and an excise tax on incomes over $280,000 for single taxpayers and $350,000 for families.

There are two key issues that we should be concerned about:

1. How sustainable are these new sources of financing? And
2. What is the balance of financing among individuals, employers and the government?

The answers to these questions will only be answered as we get closer to some definitive plan.

The Kaiser Foundation provides a side-by-side comparison of the major health care proposals.  It is an interesting exercise, especially if you are concerned about the impact of these proposals on your own health care costs.

The interactive side-by-side compares the leading comprehensive reform proposals by the President and members of Congress across a number of key characteristics and plan components.  The Foundation also has prepared summaries comparing the Medicaid and Medicare provisions in the House Tri-Committee bill and the proposal before the Senate Finance Committee. Follow the link:   www.kff.org/healthreform/sidebyside.cfm .

Greg Chartier is Principal of The Office of Gregory J Chartier, a Human Resources Consulting firm and is a well-known management consultant, educator and speaker.  His practice consists of two broad areas:  Human Resources management and outsourcing for firms of less than 100 employees and Management Training. His business experience includes management positions with Pfizer, The Chase Manhattan Bank, The Bank of New York and Johnson and Johnson.  He is also a Board Member of the Job Service Employers Council (JSEC) of the New York State Department of Labor.  Greg can be reached at greg.chartier@att.net and by phone at 914-548-1689.

by Greg Chartier, PH.D., SPHR

   This article was originally published in The Productivity Institute (PI) Newsletter

If you are a federal contractor or subcontractor, you must begin using the new E-Verify program for new contracts, effective September 8, 2009.  In fact, contractors are also responsible for ensuring that their subcontractors comply with the regulation.

About E-Verify

E-Verify is Department of Homeland Security’s electronic system that employers will use to verify employment eligibility of new hires against government databases. 

The new rule requires federal contractors to conduct immigration verification of all new hires and employees, whether or not they are assigned to the contract, and all existing employees assigned to the contract.

If you are not enrolled in E-Verify, you must:

a. Enroll in the E-Verify program within 30 days of a contract award;
b. Within 90 days of enrollment, verify newly hired employees within 3 business
days after their start date;
c. Within the later of 90 days after enrollment or 30 days after the assignment of existing employees to the contract, verify existing employees assigned to the contract; and
d. Continue using E-Verify for the duration of the contract.

You have the option of verifying employment eligibility of all of your existing employees. However, colleges, universities and state and local governments do not have this option and is limited to E-Verifying existing employees assigned to the contract and all new employees.

What Do I Do Now?

Before an employer enrolls in the E-Verify program, the employer must enter into a Memorandum of Understanding (MOU) with DHS and SSA, agreeing to continue hiring employees lawfully and to ensure that “no employee will be unfairly discriminated against” as a result of the employer’s participation in the E-Verify program. Violation of the MOU by an employer can lead to termination of its participation in the E-Verify program, and thus, participation in federal contracts.

Employers participating in the E-Verify program must continue to complete and retain I-9 Forms for each newly hired employee. However, employers must now require new employees to provide identity documents with photos for verification purposes.

Next Steps

There are significant fines for non-compliances and you should take a careful look at your hiring practices and, if possible, your clients.  My advice to my clients is to:

1. Determine if an existing or anticipated federal contract is subject to the Rule;
2. Determine which, if any, current employees will be subject to the Rule;
3. Determine if any exemptions apply or can be obtained;
4. Review or create companywide E-Verify and I-9 programs, policies and procedures; and
5. Institute corrective actions where needed, particularly with regard to employees with unconfirmed employment authorizations. 

Does it make sense to sign up for E-Verify even if you are not a federal contractor?  Not a simple answer but, my guess is that we will all have to use the E-Verify system in the not too distant future.  If you do a lot of hiring, I would suggest that you sign up and start using it, so, when you are told you have to use it, you will be used to the system and it will be easier.

Greg Chartier is Principal of The Office of Gregory J Chartier, a Human Resources Consulting firm and is a well-known management consultant, educator and speaker.  His practice consists of two broad areas:  Human Resources management and outsourcing for firms of less than 100 employees and Management Training. His business experience includes management positions with Pfizer, The Chase Manhattan Bank, The Bank of New York and Johnson and Johnson.  Greg is a Board Member of the Business Council of Westchester and the Chair of the Human Resources Council.  He is also a Board Member of the Job Service Employers Council (JSEC) of the New York State Department of Labor.  Greg can be reached at greg.chartier@att.net and by phone at 914-548-1689.

by Greg Chartier, PH.D., SPHR

   This article was originally published in The Productivity Institute (PI) Newsletter

A profit center is a unit of a company that generates revenue in excess of its expenses. It is expected that, through the sale of goods or services, the unit will turn a profit. This is in contrast to a cost center, which is a unit inside a company that generates expenses with no responsibility for creating revenue. The only expectation a cost center has is to lower expenses whenever possible while staying with a specific budget that is determined at the corporate level.

All companies, no matter what size, have both cost and profit centers (although, if it is a single-person company, that company would really have profit and cost activities, since all business “units” are the same person). For example, in most companies, units such as human resources and purchasing are strictly cost centers. The company has to spend money to operate those units, and neither has any means of producing a profit to offset those expenses. They exist solely to make it possible for other areas of the company to make money. However, without those two departments, the company could not survive. Examples of profit centers would be the manufacturing units that produce products for sale to consumers or other businesses. The sale of those products generates a profit that offsets the expense of creating the products.

Like most businesses, the current priority in your organization is probably contingency planning. Fortunately there are simple, overlooked solutions when it comes to adding immediate and lasting value to your organization — “low hanging fruit” comes from streamlined HR, training and leadership practices. Human Resources and related departments are traditional cost centers, yet forward-thinking leaders understand that strategic initiatives can develop and transform these departments into strategy and profit centers.

Tip #1: “Do” diligence, not due diligence.

A bad hiring decision can be immensely expensive: the cost of the recruitment, training costs, severance pay, and loss of productivity, impact on morale and the cost of re-hiring. Studies have shown that even for low-level positions a failed hire costs a company double the person’s salary. At higher levels, the cost can be six times the salary.

Tip #2: Harness internal talent to streamline human capital management and organizational development.

There are two aspects to this principle. First, use an employee referral system to help identify and attract top talent. Your employees can be a highly effective means of sourcing candidates using either a monetary or non-monetary incentive program. Second, organizations can leverage their existing talent in new ways.

Tip #3: Telecommuting.

Companies can save time and money by expanding their notion of the traditional workplace to a “workspace.” This is where telecommuting comes into play. For example, a given employee may be a “morning person” yet that energy and enthusiasm may be wasted on a commute into the office.

Tip #4: Employees have market intelligence.

Employees are strategically placed to notice business issues and customer issues that managers with a higher level focus can miss. Organizations should tap into the knowledge gleaned by its teams. Two effective practices are a quarterly or bi-annual Employee Opinion Survey (one that focuses on both employee engagement and business practices) and a structured method of knowledge transfer for exiting employees.

Tip #5: Employee retention equals money retention.

Employee training and professional development doesn’t cost, it pays. Customer satisfaction actually follows from employee satisfaction and engagement. Now more than ever, employee loyalty and performance hinge on perceived job security and future employability.

Tip #6: Promote and reinforce a culture of “doing the right thing.”

Noted management expert Peter Drucker says that “doing the right thing is more important than doing things right.” Doing the right thing is effectiveness; doing things right is efficiency. Focus first on effectiveness (identifying what is the right thing to do), then concentrate on efficiency (doing it right). All other things being equal:
Focus on opportunity
Focus on the future, not the past
Focus on priorities that support your values
Focus on problem preventing rather than problem solving
Focus on feeding your elephants (big important stuff) and starving the ants (trivia)

Tip #7: Learn and live the 80/20 rule.

19th-century Italian economist Vilfredo Pareto’s rules states that 80% of all that happens at work is really the result of 20% effort.

For example, 80% of the dollar value of an inventory is often found in 20% of the items. 80% of all telephone calls come from 20% of the callers, or 80% percent of meals ordered in a restaurant come from 20% of the items on the menu. With your goals, you can be 80% effective by achieving 20% of your goals. If you have a daily to-do list of ten items, you generally can expect to be 80% effective by successfully completing only the two most important items on your list.

Tip #8: Multi-tasking kills productivity.

Though developed as a means of combating the ever increasing complexity of life, multi-tasking often results in perpetual oscillations between starting and stopping without ever completing a single task. Time-blocking on the other hand, allows employees to start, focus and finish.

Tip #9: Reconsider and restructure internal touch points.

Following from the above, consider reducing the number of face-to-face meetings. Ask yourself if a meeting is absolutely necessary or will a phone call do just as well? VOIP technologies like Skype and Voipbuster (”google” these names to find out more) allow conference calls to be conducted at little to no cost – even among team members in worldwide offices or who are telecommuting.

Tip #10: Feed the elephants and starve the ants.

Revisit and streamline your internal practices to reduce obvious and innocuous time wasters that hinder productivity and profitability. Look out for these common roadblocks:

Excessive paperwork
Lack of policies and procedures
Lack of competent personnel
Red tape
Unclear objectives
Crisis management
Poor scheduling
Lack of self-discipline
Attempting to do too much at once

Moving Ahead

These tips go beyond best practice tactics for enhancing short-term productivity; it is about establishing and reinforcing a culture of thinking and working smarter and strategically. In The War for Talent, McKinsey and Company noted that “talent is the most under-managed corporate asset of the past two decades.”

It is astonishing this shortcoming persists since these authors found that “talent driven companies experienced nearly 82% greater profit than their competitor.” Down markets remind us that talent management is not a business luxury, it is a business lifeline.

Greg Chartier is Principal of The Office of Gregory J Chartier, a Human Resources Consulting firm and is a well-known management consultant, educator and speaker.  His practice consists of two broad areas:  Human Resources management and outsourcing for firms of less than 100 employees and Management Training. His business experience includes management positions with Pfizer, The Chase Manhattan Bank, The Bank of New York and Johnson and Johnson.  Greg is a Board Member of the Business Council of Westchester and the Chair of the Human Resources Council.  He is also a Board Member of the Job Service Employers Council (JSEC) of the New York State Department of Labor.  Greg can be reached at greg.chartier@att.net and by phone at 914-548-1689.

by Greg Chartier, PH.D., SPHR

   This article was originally published in The Productivity Institute (PI) Newsletter

I’ve been enjoying my crocuses for the last week or so and my daffodils are just on the cusp of blooming.  Spring is here, the signs that foretell the approach of nice weather are clear. You know the expression, “spring turns a young mans’ fancy to romance.”

While it’s not as clear, there are signs that the economy is recovering as well.  There seems to be more confidence, the stock market was up, recently and the times are not good, I can see some hopeful signs of improvement.  While I don’t think that these economic signs will turn our heads to romance, I do think it’s not too soon to think about what I should be doing to be ready for the good economic times to come.

Engaged Employees

An engaged employee is on that is truly connected to the workplace, one that is truly interested in their company and concerned about its success.  They are employees who regularly and consistently do the “right” thing, for the company, for the customer and for themselves.

Over the past ten years, there has been a great deal of discussion about engaged employees and there is ample evidence that they are more customer oriented, less likely to quit, have less workplace accidents and are more productive.  This is especially important in this economic environment.  I believe that:

• There is a skill shortage.  It’s hard to find the people you want to hire.
• The shortage is not going to get better anytime soon.
• Workforce productivity is more important than ever.
• Replacing employees is very expensive.
• Retention is the key value for engagement.

If, as I believe, these workplace dynamics will drive successful firms in the coming decades, then:

• Your strength will be the competitive advantage your engaged employees give you.
• Your customers will stick with you because of your employees.
• Replacing valuable employees will be more difficult and expensive than ever.

We replace capital equipment after a certain time period.  We calculate replacement cost, maintenance cost and pay back.  We calculate ROI and break even.  Human capital maintenance includes systems, services and initiatives that make you more attractive to current and prospective employees.

As a result, there are some things we have to do to get ready:

• Employees have to contribute more to the company.
• Managers need to do a better job engaging their employees.
• Our Human Resources has to add value to the bottom line.

In order to engage our employees we need to focus on four things:

• Engaged employees respond to a meaningful challenge.  Connect them to our mission, our customers, and our value to the community.
• Engaged employees are looking for us to set high expectations, to raise the bar.
• Engaged employees are looking for clarification. How can we adjust their roles to better fit their talents?
• Engaged employees are looking for us to measure their achievements.  Measurement aligns expectations and outcomes; it builds a sense of achievement.

Now is the time to begin to get ready for the coming economic recovery.  Take advantage of these times to prepare your workforce, your managers and yourself to be engaged.

Greg Chartier is Principal of The Office of Gregory J Chartier, a Human Resources Consulting firm and is a well-known management consultant, educator and speaker.  His practice consists of two broad areas:  Human Resources management and outsourcing for firms of less than 100 employees and Management Training. His business experience includes management positions with Pfizer, The Chase Manhattan Bank, The Bank of New York and Johnson and Johnson.  He is also a Board Member of the Job Service Employers Council (JSEC) of the New York State Department of Labor.  Greg can be reached at greg.chartier@att.net and by phone at 914-548-1689.

by Greg Chartier, Ph.D., SPHR

    This article was published in The Productivity Institute (PI) Newsletter

It seems like it was only yesterday, when most workplace gossip was confined to watercooler breaks and clandestine meetings in the break room. Once uttered, gossip vanished like the last donut. Unfortunately, that is no longer true today. Technology has now created the ability for these workplace rants and raves to be captured forever.  Welcome to the world of blogging.

Blogging is simply an on-line diary, written by anyone and, in may cases, contributed to by readers.  New postings are at the top of the page and visitors can read what’s new and can comment, add a link, email the writer, or just do nothing.  For larger firms, employee blogs have become all too common, especially after major changes in pension benefits, health care costs or as the result of large layoffs.

The best way to deal with any problem is to avoid it entirely. Establishing a blogging policy allows you to discourage your employees from using a blog to say untrue or derogatory things about you.  If it’s too late, the second best course of action may be to ignore the blog. As an alternative, you might ask the employee to remove the offending material but there are, sadly, some legalities that we have to discuss first.

If the content of the blog is discriminatory or harassing, treat the blog as if the employee was discriminating or harassing someone in the office.  Disciplinary action is certainly appropriate. Discrimination and harassment require employers to take action and ignoring the issues will not protect you from problems with third party agencies.

If the content of the blog is not obviously discriminatory or it is only derogatory toward you, the employer, we have to approach it in an entirely different way.  While every state is different, generally employees are allowed to engage in “legal recreational activities outside of work hours.”  What that means is that your employees can use their blogs to say unflattering and rude things about you but if you cannot show that their words create a conflict of interest or that they are saying things that are false, there may not be much you can do about it.

Employee blogging could also be protected speech under the National Labor Relations Act or whistleblower laws. The NLRA allows employees to discuss the terms and conditions of employment with the purpose of engaging in collective action to change them. Whistleblower laws in some states protect employees from retaliation if they report illegal or unethical behavior to government officials or agency management.

New York State specifically has laws prohibiting an employer from disciplining an employee for participating in legal recreational activities unless that activity creates “a material conflict of interest related to the employer’s business interest.”

I tell my clients to put things in perspective and that communicating with your employees and letting them know what’s going on will preclude anyone’s blog from becoming embarrassing or, in the worst case, from creating a legal problem.

Greg Chartier is Principal of The Office of Gregory J Chartier, a Human Resources Consulting firm and is a well-known management consultant, educator and speaker.  His practice consists of two broad areas:  Human Resources management and outsourcing for firms of less than 100 employees and Management Training. His business experience includes management positions with Pfizer, The Chase Manhattan Bank, The Bank of New York and Johnson and Johnson.  Greg is a Board Member of the Business Council of Westchester and the Chair of the Human Resources Council.  He is also a Board Member of the Job Service Employers Council (JSEC) of the New York State Department of Labor.  Greg can be reached at greg.chartier@att.net and by phone at 914-548-1689.

   by Greg Chartier, Ph.D., SPHR

This article was published in The Productivity Institute newsletter

Management cares about results.  Historically, however, human resources has not understood nor attempted to understand what results were important.   Two measures are most common, effectiveness and efficiency.  I think we begin with efficiency. 

Efficiency is a ratio of inputs and outputs; you put resources in and get results out.  If you can decrease the inputs and increase the outputs, you are more efficient.  Efficiency also allows you to spend more resources, assuming that the outputs will increase in a greater ratio than those inputs.

One of the difficulties in using the term “efficiency” is that we have multiple definitions for it.  I will use efficiency to mean, “How much does a given expenditure on human resources produce in programs or practices?”

For HR people that means, what level of human resource programs (training, compensation, staffing, communications ,etc.) is generated for a given investment of

resources (such as time and money)?

Every business uses some sort of metrics or management index to determine “how we are doing.”  When business people talk about a company or the health of the economy or an industry, they almost always use some sort of measures to refer to.  What is valuable about indexes is they serve as a barometer for the overall health of the system we are measuring.

If the other departments have indexes, then Human Resources should have them, as well.  I have always felt that the principal measure of the HR department has been staffing.  It is the most obvious of our functions and the one that affects every manager.  So , a staffing index is a good place to start.  A staffing index will tell us how the staffing function is doing and, more importantly, give us some conversation points for our Senior Management.

Most of us already use some measures, particularly in the staffing area.  We talk about “time to fill” or recruiting costs per placement or turnover ratio.  These are good but they create a mindset that focuses only on lowest cost or fastest delivery.  This is not efficiency.

I have several different types of measures that I would like to introduce, all of which can add value to your organization.  Let’s start with Revenue per Employee.  Rather than focus on headcount, we should look at how much revenue each employee brings into the firm.  Headcount doesn’t mean much if they are contributing to the success of the organization by either bringing in money or reducing outlay of money.

Now, we need to look at the staffing function, just to collect some data we will need later.

Cost Per Hire.  This is not only the direct cost of advertising and agency fees.  I would include several other items:

Source Costs = Advertising and agency fees as well as referral bonuses.  There are four

costs:  advertisements, agency fees, employee referrals and no cost walk

 ins.

Staff Time = salary, benefits and overhead for the recruiting staff. 

Manager Time = Salary, benefits and overhead for the hiring manager

Processing Cost = Employee references, physicals, drug tests, payroll set up, other

      employment costs

Miscellaneous = New Employee Orientation, and any unplanned expenses.

            CPH =  SC + ST + MT + 10%

                                    N

            SC = Source Cost (Advertising expense + Agency fees + Employee Referrals)

            ST =  Recruiting staff time

           MT =  Manager time

          10% = Miscellaneous

New Hire Performance.  While it’s great to fill our positions, the true measure of our effectiveness as recruiters is the quality of the people we hire.  In this case, the new employee is the product of our recruitment efforts and we must be held accountable for at least a portion of the success of the new employee.

Quality is a difficult concept to apply to human resources but I think we can admit two things: 

The new employee must perform, on the job, over a period of time, in order to be considered “successful.”  I would suggest a six month review of new hire performance, compared to the performance averages for the company as a whole.  There must be some return on the investment we made on the new employee.  This means, to me, that they need to stay with the organization (voluntarily) in order to demonstrate success.

With these two items in mind, we can measure New Hire Performance:

            NHP = PR + HP + HS

                                    N

            NHP = New Hire Performance

             PR   = Average job performance rating of the new employee

             HP   = Percentage of new hires promoted within one year

             HS   = Percentage of new hires retained after one year

              N    = Number of new employees hired during the evaluation period

                                    NHP = 60 + 20+ 90       = 1.7%

                                                        100

This is a relative value and it means what you want it to mean.  The evaluation only becomes valuable over time as you compare period to period.  It can be valuable to compare different departments, over time, as well.

            Greg Chartier is Principal of The Office of Gregory J Chartier, a Human Resources Consulting firm and is a well-known management consultant, educator and speaker.  His practice consists of two broad areas:  Human Resources management and outsourcing for firms of less than 100 employees and Management Training. His business experience includes management positions with Pfizer, The Chase Manhattan Bank, The Bank of New York and Johnson and Johnson.  Greg is a Board Member of the Business Council of Westchester and the Chair of the Human Resources Council.  He is also a Board Member of the Job Service Employers Council (JSEC) of the New York State Department of Labor.  Greg can be reached at greg.chartier@att.net and by phone at 914-548-1689.