Should we change our thinking around measuring performance beyond KPIs?
Key Performance Indicators (KPIs) have been around in one form or another since the beginning of business. We ask four experts their thoughts on KPIs and you may be surprised by their answers.
KPIs have long been accepted as part of the job in recruitment, after all it’s critical to measure the cost of each placement, the number of qualified candidates per placement, days to offer, retention and of course billings.
Or is it? At the recent RCSA conference in Noosa there was a lot of talk about how useful and relevant these historical measures of success are today. Some in the sector believe they are as useful as ever citing the adage: what you don’t measure you can’t manage. Others argued that KPIs are still relevant, but it is imperative to change what is currently being quantified by KPIs. Others still believe they are antiquated and have no place in the workplace.
We spoke with four leading experts in the recruitment and HR space to get their take on KPIs and their answers may well surprise you.
Principal at The Savage Truth
It is pretty well accepted that most recruiters hate KPIs and I would argue they can, in fact, do more harm than good when expectations are unclear or KPIs are unrealistic.
That said, I still firmly believe KPIs are an essential dashboard to a well-functioning recruitment agency. KPIs are frequently used because old-school managers are bereft of new ideas to increase productivity so instead persist with the same destructive cycle of pain and futility that are KPIs.
If KPIs are to work, there needs to be clear buy-in from the consultant, they need to be managed and measured by management and they need to be measuring and quantifying different metrics to what is being measured now.
I do believe there is a place for KPIs and I am a firm believer that you can’t manage what you don’t measure, but if KPIs are not developed smartly, they can become a dysfunctional aspect of the business. You can’t motivate by insisting on draconian KPIs, which cannot realistically be achieved.
I believe focusing on the activities which have been proven to lead to success, where the energy is centred very much on the outcome, is a stronger motivator than setting unclear or unrealistic KPIs.
I also believe establishing a clear work plan is effective at establishing consultant buy-in and I strongly recommend a classic backwards plan where targets are clear and the pathway to achieve this has been established. Instead of broad KPIs, I suggest recruitment consultancies focus on measuring and quantifying three key areas:
• Catchment - reach into the client and candidate communities
• Conversation - monitoring how frequently potential client and candidates are contacted and starting meaningful conversations on social media
• Conversion - where catchment and conversation is converted into a client or candidate
I believe KPIs are needed to some extent within recruitment, but I also believe we need to re-think what we are measuring and why. Is it driving the outcomes we want or is it a legacy of days gone by?
CEO & Principal Consultant at Henry Reed
The concept of KPIs and having a yardstick by which to measure success is still relevant, but traditional KPIs or using KPIs in isolation are no longer effective for organisations who value innovation, agility and ethical work practices.
When KPIs are intertwined with the values and culture of an organisation they become a powerful way to drive improved performance.
Recently, I was working with a client who used KPIs to define every aspect of their employees’ work activities. The KPIs were prescriptive and didn’t allow employees to contribute their expertise or vary the pathway to success. As a result, there was poor engagement, high employee turnover, and KPIs were rarely achieved.
Often, KPIs are badly formulated, misused, and poorly explained. In these instances, they’re not clearly linked to strategic objectives, they focus on activity not outcomes, and they’re not embedded effectively with values in HR processes to improve performance.
The importance of having a balance between KPIs and values has been highlighted by the recent findings of the Royal Commission into the finance industry, which showed that having a focus only on results can lead to inappropriate behaviour and unethical work practices.
KPIs remain an essential element in communicating expectations for performance but they must be used together with values to provide the quantity/ quality balance that forms the basis of all HR practices from recruitment, reward and recognition, performance management, succession planning and development.
I don’t think KPIs are irrelevant, but they do need to be re-thought. Organisations that achieve the highest levels of success understand this balance of culture and strategy defined through values and KPIs. They are more likely to mitigate the risks of poor performance and inappropriate behaviour while also creating magic by engaging and enabling their employees.
Managing Director of Connemara UK
I am a determined advocate of KPIs, just so there is no confusion. So why is it that so many in our industry are staunchly against them?
I think the issue arises because people confuse activities with KPIs.
So, what is a KPI? It’s a measurable value that demonstrates how effectively you are achieving your objectives/goals and they are there to help you evaluate your potential of success at reaching these goals.
This being the case, making a set number of calls and booking a number of client meetings does not constitute KPIs, as they do not quantify the quality of the work... simply the quantity.
That said, simply having KPIs will also prove ineffective unless they are being measured and managed; staff will do “what you inspect, not what you expect.” This phrase has stuck with me for over 20 years.
It’s all well and good for the individual to be utilising their stats and incorporating them into their plans, but if their line manager isn’t monitoring the results and providing an opportunity to talk through what t all means, they may not useful. Indeed, it would be a very dedicated consultant that keeps it going consistently for themselves. More often than not, the KPIs will be resented and eventually ignored.
There are some further stats outside of the traditional ratios that recruitment consultants can measure themselves on, to determine their effectiveness:-
• The length of the recruitment process from job take to offer • Client meetings converted to business • Fill rate of roles • Average margin or fee • Percentage of clients returning year on year • Future bookings for temp/ contract • Percentage of next month/ quarter’s target reached.
Owner of The Turner Group
A few years ago we made the decision to strip out all KPIs at The Turner Group, a niche consulting group with a small team of consulting and support staff.
We now have two sets of deliverables, which we measure and manage.
The first are numbers around the business itself and are the usual important ones including:
• Financials • Business growth • Client satisfaction [if !supportLineBreakNewLine] [endif]
The second set of deliverables are focused on our consulting and supporting staff and we believe these are what really counts. There are three areas we look at for each individual team member:
• Quality of work • Level of collaboration • Financial success
There is nowhere to hide from these and at the end of the day if any of my staff don’t have an idea of what activity it takes to be successful, then they don’t deserve to be in my business.
I am not interested in micro managing my staff by tracking how many calls they have each made, how many interviews they have done, how many client visits they have conducted or how many resumes they may have sent.
I believe the quality of service to both clients and candidates suffers when staff are being micro-managed and expected to meet KPIs.
For us it’s not the volume of activity our staff undertake that we want to measure; instead it is all about the quality of the process and the end result.
I acknowledge that this may not be the right approach for all recruitment firms and I suspect these activities are measured in recruitment teams offering volume recruitment.
For us, however, it’s all about the team feeling as if they are very much a part of the company’s success.