Tim Jubb |

HR and Recruitment professionals the world over agree that metrics add value to recruitment campaigns. Metrics provide quantifiable criteria, or KPI’s, that HR and C-suite executives can use to measure the success of a given campaign. The actual work of measuring these KPIs, however, is fraught with issues.

One of the main problems is that it is notoriously difficult to create a standard that all organisations adhere to. For some, value of hire is as simple as working out the cost per job posting. But these simplistic value of hire calculations don’t tell the full picture. They don’t, for example, consider the impact of a bad hire. Bad hires can affect the productivity of colleagues and, in worst case scenarios, the entire organisation.

At the other end of the scale are top performing employees. How much additional revenue could a top performing sales person generate in comparison to an average, or below average sales person?

The key question here is: if organisations were better at measuring value of hire based on employee productivity, and therefore knew the effect of a bad hire/good hire, would more organisations invest in making every hire a top candidate?

Dr John Sullivan believes there is an argument to do so. An internationally renowned HR thought leader, he has worked on trying to create a standard for calculating cost of hire.
His insights on ‘Calculating the Dollar Costs Of A Bad Or Weak-performing Employee’ and ‘How to Measure the Dollar Value Of A High Performing Employee’ create the academic basis for a new cost of hire tool.

In a bid to help standardise calculating the cost of hire, here at Eploy, we have created the Value Of Hire Calculator. This free tool is unique from other value of hire calculators because it uses a rating system to assess the quality of a hire, and assigns a cost multiplier accordingly. This enables HR and Recruitment professionals to measure the indicative cost of a bad hire, and the potential increase in revenue from taking on top talent.  


The negative impact of a bad hire

Sullivan notes that the cost of a bad hire could be in the region of three times less than the average revenue generated per employee. Based on these findings, the new Value of Hire Calculator helps HR and Recruitment professionals to understand the average revenue generated per employee, and then provides a negative sliding scale. Based on subjective estimates, users can submit a rating of 1-4 stars, depending on just how bad they judge the hire to have been. The tool then works out an estimate for how much it has cost the organisation to have hired this employee.


The positive impact of a good hire

The tool works in much the same way to work out the positive impact of a good hire. While Sullivan admits that working out the exact cost of a top hire is often subjective to an organisation, he notes that the potential revenue generated from a top hire could be enormous. Based on Sullivan’s estimates, the tool works under the notion that a top hire can add more than ten times the value of an average employee.

The Value of Hire tool is designed to give an indicative cost- a benchmark- for organisations to use as part of their candidate attraction strategy. It is designed for recruitment teams to get an indicative cost of hire, not only as an expense or outlay, but also as a form adding value to an organisation. 

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