The word 'quality of hire' evokes something nebulous, subjective - to attempt to measure your hires in quantifiable terms is foolhardy, right? Wrong!
Now more than ever, recruiters are turning towards the selection and use of clear metrics to assess the effectiveness of their hiring drives and optimize their talent acquisition process.
In fact, 39% of leaders agree that quality of hire is among the most important metrics to track when it comes to recruitment. What many companies struggle with is where and how to start tracking the quality of hires. That is why we have put this handy guide together for you:
What is quality of hire?
Quality of hire measures the value that new recruits bring to the company. Value, in this context, refers to the recruit's contribution in terms of learning things, completing tasks, helping their team, and otherwise positively adding to the company's success.
Using quality of hire to make comparisons
Tracking the quality of hire is useful in its own right. However, you can also apply it to make essential comparisons with other recruiting metrics. Let us, for instance, consider the source of hire.
If you look at the data and see that the hires with the highest QoH score come from specific job portals or a recruiting agency, it makes sense to hire more people via that board or agency. You can also measure QoH against metrics like revenue or productivity to check whether higher QoH is an indicator of higher revenue or productivity.
The best ways to measure the quality of hire
Did you know that up to 50% of new hires end up causing problems of some sort within the first 18 months? That is a scarily large number, which shows you why leaders emphasize much on the quality of hire. QoH, however, can be a difficult metric to measure.
This is largely because the term 'quality' is highly subjective, and it can only be assessed several months after the hire's joining date. What most companies do is use quantifiable indicators that measure QoH by proxy. Some of these indicators include:
1. Performance reviews
This is what 69% of companies rely on when assessing QoH. It makes sense, too, as the better the hire's performance, the more likely it is that hiring them was the right decision.
Some ways to measure performance are by ranking all new hires from top to bottom or checking the error rate of each hire. However, performance reviews can be subjective, as some managers are harder to please than others.
This is used by 49% of organizations, the basis being that the longer a hire stays with the company, the more value they can add. Some metrics to track include the general turnover rate among new hires and the turnover rate among the top performers.
3. Hiring manager satisfaction
Research shows that 43% of companies use this to measure QoH. It involves the manager completing a separate survey for each new employee rating their satisfaction with the competency and performance of each hire. Again, such satisfaction ratings can be subjective, so it is important not to use these numbers in isolation.
4. Employee lifetime value
This represents the total net value that a new hire brings to the company over time. While it might take some time to establish the average ELV for your company, this is a great metric that combines variables like productivity and performance to assess QoH without relying on subjective reviews.
5. Pre-hire metrics
These can be useful to gain a complete picture of hire quality. They help identify the best candidates off the bat and allow problems in the hiring process to be identified and addressed so that future recruitment sessions are not compromised.
Quantitative attributes to consider include referral rates from the recruiter, time to hire, and scores on aptitude tests.
Qualitative attributes to consider include the hire's background, whether they have won any awards, how hard they were to convince during the recruiting process, whether they have competing offers from other companies, and so on.
Types of quality of hire metrics we can measure
Despite the obvious importance of measuring the quality of hire, there is no standardized way or a one-size-fits-all approach to calculating it. However, what you can keep in mind is the many different types of quality of hire:
1. Quality of hire of an individual
If using more than one metric to assess your candidates, you can measure QoH for each one using an average or weighted average of these indicators. You should ensure that all measurements use the same scale (such as scores out of 100 or ratings between 1 and 5).
2. Average quality of hire of all recruited people
You can find this by taking the average sum of all their individual QoH scores.
3. Overall quality of hire of the recruitment process
This can be assessed by adding the average QoH to the retention rate and dividing it by two. The new hire retention rate can be calculated as:
(Number of new hires who remained employed for the measurement period) / (Number of new hires at start of measurement period) x 100
4. Quality of hire of a specific recruiting practice
This can be measured by comparing the relative QoH of one practice against another. For instance, if you want to calculate how well AI can spot talented candidates, you can compare the QoH of candidates selected by AI against the QoH of candidates selected by other means.
Quality of hire survey
One of the critical components of measuring the quality of hire is conducting surveys to collect the best data. These should capture various aspects of how the new recruit is doing since they joined to get a clear overall picture. Some types of QoH surveys include:
- Surveys with managers or team members where they rate the hire's performance across various parameters
- Surveys with peers asking about engagement levels since the hire joined
- Surveys directly asking the new recruit how they feel about their new job and the experience of working with the company
Three hidden problems to fix before you can improve your quality of hire
Once you have gotten all your data and measured your QoH, you might find it lower than you expected. Fret not; it is a solvable problem. The first step is to identify any significant gaps in your current recruiting process. Here are three of the most common ones that crop up:
1. Not rating your candidates
This might seem surprising, but many recruiters still hesitate to track candidate data during the recruitment process. While it is understandable that you would not want to put a number on subjective qualities, data can streamline your process immensely.
More importantly, with team data, you get a broader picture of the candidate and thus safeguard candidate quality. You can start by asking your colleagues to rank each candidate on various attributes during the interview process.
Taking a collective score will help smooth out biases (as may occur if it is just one person rating everyone) and ensure that you filter out the best recruits every time.
2. Not including prospective teammates in the selection process
While skill tests and interviews with leaders can go a long way in assessing a candidate's abilities, prospective teammates are perhaps the best positioned to determine how well someone manages day-to-day tasks on the job.
By including them in the selection process, you can get valuable insights into the candidate's abilities and a perspective on how well the current team members got along with the recruit. Given that they will be working together daily, they must share a rapport.
3. Not prioritizing cultural fit enough
Quite often, recruiters focus mainly on the candidate's skills and experiences when hiring them while regarding cultural fit as a 'nice to have.' However, no matter how smart a candidate is, factors like whether their values align with company values or how well they get along with their teammates matter just as much to their long-term company contribution.
To avoid work quality being compromised because of poor cultural fit, include specific tests or interview questions to check for this before choosing your final candidate.
How to improve your quality of hire
If you have not been measuring your quality of hire so far, do not worry - only about 1/3rd of companies currently do so. By now, though, you have hopefully seen the benefits of including it as a metric. Here are a few quick ways you can ensure that your QoH results are accurate and that the numbers are constantly improving:
1. Collect the right data
Ensure that your recruitment team has ample access to pre-hire and post-hire data. Pre-hire data includes scores on tests, interview performance, or resume grades as given by a screening software, and post-hire data includes productivity, number of promotions/bonuses earned, manager satisfaction ratings, and so on.
The idea is to show a strong relationship between pre-hire and post-hire data, indicating that the candidates selected were the right fit.
2. Streamline recruiter workflow
Lengthy workflows with multiple layers of approval and time-consuming assessments can significantly impact the quality of hire. You can reduce the burden on your recruiters by studying conversion rates to identify priority areas, using intelligent automation to speed up processes, and optimizing resources by creating standard templates (such as candidate notification emails).
3. Align hiring managers
The recruiting process often gets slowed down because multiple managers keep examining the same resume. This can be fixed by getting hiring managers aligned on what to look for.
You can have a meeting before the recruitment process commences and reach a consensus on an ideal candidate's attributes. You can also lay down certain best practices to follow during assessment and interviewing.
How technology is impacting the quality of hire
The use of AI in recruitment has been popular for a while now. For one, it can greatly speed up processes by taking over routine tasks. For another, it can quickly analyze and determine patterns in recruitment data that can be used to make predictive decisions.
Artificial Intelligence (AI) has a lot of potential for QoH, as it can standardize the matching between the candidate's abilities and the job requirements and thus select more productive and committed hires. There are four main areas where AI can impact QoH:
1. AI in screening
AI-powered screening software speeds up the resume scanning process by quickly identifying what skills and talents your current employees possess and then applying those to rank the resumes of new applicants.
2. AI in assessments
AI can be trained to recognize behavioral patterns in personality and psychometric tests, thus identifying candidates who would be the best fit. Adaface can also help you evaluate candidates based on their on-the-job skills and knowledge.
3. AI in interviews
Some AI software can pick up on candidate word choice, body language, and facial expressions during video interviews, thus assessing their personality fit.
4. AI in talent intelligence
AI can improve the recruitment process by combining data from different sources like resumes and assessment scores to provide an overall candidate grade. It can also find links between pre-hire and post-hire data to determine further whether the candidates chosen actually proved to be the best contributors.
Over to you
In conclusion, you can only optimize your recruitment process if you know exactly what is going on during the process and how well your hires are doing afterward.
By focusing on the quality of hire as a top-priority metric, you can get a clear picture of what you are doing right, identify gaps, develop solutions, and ensure that you always have the right person for the right job.
Frequently Asked Questions (FAQs)
1. How do you measure the quality of hire?
If using more than one metric to assess your candidates, you can measure QoH for each one using an average or weighted average of these indicators. You should ensure that all measurements use the same scale (such as scores out of 100 or ratings between 1 and 5). Common indicators include performance reviews, retention rate, hiring manager satisfaction levels, employee lifetime value, and pre-hire metrics.
2. Why is quality hiring important?
Quality of hire directly influences your business outcomes. Hiring the right people for the job can dramatically lead to better performance in the short-term and long-term. The resources you invest in hiring and training such individuals result in an immediate return on investment.