How To Measure Whether You’re Hiring Good People

Technology and changing business climate have change the ways people view talent.

Recruiters and talent acquisition managers are now becoming talent advisors while hiring managers have an increasing responsibility in hiring the right talent.

Reaching this position requires a real effort not only from hiring managers but also those in talent acquisition to demonstrate that the work they do and resources they require provide measurable benefits to the business.

 

Why is Quality of Hire (QoH) Important?

Quality of hire

Every CEO should know that people are their competitive advantage.

They are also keenly aware of the negative impact below average performers can have not only on the bottom line but also on product/service quality, reputation, and customer satisfaction – all of which could have lasting consequences for the future of a company.

In the new global benchmarking report “Hiring for Success: Improving Organizational Performance Through Better Quality Recruitment” by Hudson RPO and the HRO Today Institute shows that all hiring managers know that there are considerable differences in productivity between average performers and high performers, which means quality of hire is imperative for businesses.

Yet the study shows that 69% of respondents are not measuring quality of hire at all.

At the end of the quarter when you are measuring sales, revenues, and profits, you are likely forgetting the largest indicator of company success: Quality of hire.

Companies who invest in their people have a structured hiring process in place to ensure they acquire the best talent for the job.

Doing so results in maximized returns for your organization, because quality of hire has direct ties to your company’s revenues in two fundamental ways:

  1. Minimizing the cost of hiring the wrong people
  2. Maximizing the impact of hiring the right people (performance differential)

So if quality of hire is so important, then why are organizations not doing a better job of measuring it?

 

You can’t improve what you can’t measure

Measuring Improvement

Quality-of-hire metrics are critical to understanding the effectiveness of your company’s hiring process but, for many, figuring out how to define the measurement is a challenge.

But, why is the metric so elusive and hard to implement? Many times, it is because employers have a hard time defining “quality”.

Quality of hire can be calculated in different ways, and really depends on what a company is trying to measure and what they have defined as important.

  • What does “quality of hire” mean in our business? How do you define success? This definition varies for each company.
  • What data would indicate quality of hire? Cost of bad hire? Turnover rate? Performance data? Rate of promotions?
  • How do we measure each of these indicators? Can you profile “top performers” and find commonalities?
  • Are we currently bringing on quality hires?

Because of the more subjective nature of quality of hire data, it has led many in talent acquisition to skirt the issue, or avoid it entirely.

However, rather than fearing such an important metric due to its subjectivity, or in case it indicates poor performance among the talent acquisition team or hiring managers, HR leaders should embrace quality of hire.

 

Are you measuring QoH correctly?

Metrics most employed to measure QoH are time-to-fill, cost-per-hire, and interview-to-hire.

They have little to do with how well companies are hiring good people for the job.

Best-selling author Lou Adler contends that most companies hire for efficiency and to minimize cost, which does not directly correlate to new hires’ contributions to a company’s success.

These measures focus on the speed of the process of recruiting and not the impact they have on an organization’s ability to meet its business objectives.

Furthermore, it can easily lead to an environment where recruiters are evaluated and rewarded based only on speed and cost and not on quality and value.

“Hiring for quality is fundamentally different than just filling positions. To do it right, you have to track performance metrics like quality of hire and return on investment,” said Adler, the CEO and founder of The Adler Group, a talent acquisition training, consulting and search firm based in Orange County, Calif.

[Tweet Hiring for quality is fundamentally different than just filling positions. – Lou Adler]

Instead, measuring the quality of hires should focus assessing the value these new employees contribute to the company’s long-term success.

While every organization (and each department and manager within an organization) perceives quality differently, they would all agree that employee productivity, impact, and tenure have a positive effect on it.

 

Metrics for measuring QOH

There is no shortage of metrics for measuring Quality of Hire, which should be a good thing.

Though there is no one-size-fits-all approach, there are metrics today paving the path for Quality of Hire and it is important that there are distinct metrics for measuring pre-hire quality and post-hire quality.

Here are some sample metrics used:

  • Pre-Hire Quality metrics such as Candidates per hire, Passive candidate conversion rate, Email conversion rates, Passive candidate call back rate, Job posting effectiveness.
  • Post-Hire Quality metrics such as 360 Degree Feedback, Culture-fit surveys, Hiring manager surveys on new hire performance, Revenue per employee.

Not one of these alone, however, can measure quality of hire.

So, where do we stop measuring quality of hire and realize that we are measuring employee engagement?

If your new employees (less than 12 months) are highly engaged, does that mean it is because of the quality of the hire, or because they really like their manager (for example)?

The debate on Quality of Hire is hot, join us at New-Gen Recruiting Congress to hear from Ben Roberts, Chief Talent Officer Worldwide, Saatchi & Saatchi and Rakesh Rana, Senior HRBP & Talent Acquisition Leader- APAC, Murex to discuss on “Quality of Hire: Does it Exists?” from 9 – 10 March 2016, Singapore

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