Ultimate Performance: Measuring Human Resources at Work

Measures of Meaning

Individual productivity is a measure of Quality of Hire. In his book The Deming Route to Quality and Productivity (1988), William Scherkenbach, Ford’s former Director of Statistical Methods, states: “If you believe in the Law of Averages, there will always be above-average and below-average.” He goes on to explain that the quest is to raise the average.

Do you know what the “average” is of the talent you obtain with each hiring decision? The wrong hire can actually take your average down a notch. Spencer and Spencer (2001) document the output advantage of people who are one standard deviation above average in their book, Competence at Work. In non-sales positions, the impact is 19 percent to 48 percent more output. In sales positions, the range goes from 48 percent to 120 percent more sales volume. As such, high levels of performance have a much greater impact on the bottom line than was traditionally recognized.

In Watson Wyatt’s 1999 research on the Human Capital Index^®, it was found that “by showing a significant improvement in recruiting new talent, companies can achieve a 10.1 percent increase in market value—the largest found among the five areas linking . . . effective human capital practices and shareholder value creation.” In staffing, New Hire Quality is raised by increasing the validity of methods used to make hiring decisions. Research into the validity of various methods used in hiring decisions was conducted at the University of Michigan.

The ...