Measuring the Holy Grail of Recruitment: Quality of Hire

By Neelie Verlinden

With the end of summer and its lazy days inevitably comes the arrival of autumn. Besides Halloween and pumpkin galore that also means the official end of Q3. A good time to reflect on the past nine months from a recruitment perspective. How’s your workforce, what are the turnover rates and what about the new hires you’ve done this year? How are they holding up? Are they everything you’d hoped for?

If you don’t know the answer to these questions - or only approximately - it may be time to start measuring the holy grail of recruitment: quality of hire. Today’s post will get you fully up to speed about this key HR metric.
Definition

Let’s get the basics out of the way first. Starting with the definition of Quality of Hire (QoH). Although you probably have an idea - what’s in a name, right? - it’s good to avoid misunderstandings: “Quality of hire is the value new hires bring to the company.”

Measuring Quality of Hire

But what does ‘value’ actually mean in this context you ask? Very good question. This is where we get to the less straightforward part of the QoH metric. The tricky thing is, there’s not a single element that instantly measures an employee’s quality of hire. In fact, there are many different indicators organizations use. Some of the most common ones are: retention, time to fill (the position) and hiring satisfaction (of the hiring manager).

What happens in practice is that companies apply a combination of objective and subjective elements to get an overall quality of hire. Think of preselection assessment results and turnover rates as examples of objective elements. A good example of a subjective element are employee engagement levels.

How to Do the Math

To figure out your employees’ QoH you need to sort out a few things first. Starting with what variables you want to use to measure the quality of hire. Let’s say you pick culture fit, the preselection assessment results we mentioned before and new hire performance. Of course, you’ll have to establish a way to measure each of these variables. For culture fit, you could use the employee’s situational judgment and personality scores - both taken from the pre-employment test they went through. The same thing goes for the preselection assessment results of course. As far as the employee’s on the job performance is concerned, you could measure this based on the number of productive hours and the employee’s actual output. There are plenty of options when it comes to measuring the different indicators you choose to work with. What’s important is that everyone knows what measuring tools you use and that they're being used consistently.

Back to the 3 variables from our example: culture fit, preselection assessment results and new hire performance. Employee A scores respectively 75%, 69% and 72%. You simply add these percentages together and divide them by the total number of indicators you use to measure quality of hire - which in this case is 3. The only thing left to do now is to check whether or not the employee’s score is in line with the QoH level you’ve decided is acceptable within your organization.

If you like to put things into a formula, this is what it would look like:

QoH = (Indicator 1% + … + Indicator N%)
N

QoH = (Culture fit + preselection assessment results + new hire performance)/3

QoH = (75% + 69% + 72%)/3

QoH = 72%

Why it Matters

Now why is measuring quality of hire such a big deal? According to LinkedIn, QoH is the number one recruiting metric for hiring managers in terms of importance. For one, because it’s something that has a long-lasting impact on the business. After all, how well (or not) your employees perform is directly linked to the success of your organization as a whole. Another benefit of measuring quality of hire is that it improves the overall quality of staff - and eventually that will increase retention rates. Not to mention the higher engagement levels and the rise of employee referrals over time…

Predicting Quality of Hire

The beauty of living in the 21st century is that we’ve got innovative technology at our disposal. Tech tools that make everyday life just that little bit easier for recruiters and hiring managers. Since we look at QoH today, preselection software is a good example of HR technology that can come in handy.

Digital pre-employment testing is meant to predict a candidate’s likelihood to succeed in the role he or she applies for. Factors such as personality, intelligence and job related skills are assessed. But that’s not all. Applicants get to see exactly what it’s like to work inside an organization - the office, the actual job and of course the people - via an online video tour. Based on their actions and answers, data is gathered which makes it possible to predict whether or not a candidate fits in the company culture.

An extensive pre-hire assessment, both on objective and subjective quality of hire indicators, is the foundation for long-term QoH improvement.

The Full Cycle

To get the best results though, QoH should be connected with other HR metrics such as source of hire. Linked together, they can give you valuable insights. If for example it turns out that employees who came in via job board A generally have a higher QoH than those who came via agency B, you can adjust your sourcing strategy accordingly.

The same thing goes for measuring your employees’ performance on the job. We spoke about the importance of performance tracking before - go here if you missed it. Another example: 9 months after they’ve joined your organization, it turns out that those employees who scored very high on problem solving during the pre-employment test, perform 89% better than those who didn’t. You can use this information to optimize your selection process (i.e. let problem solving skills weigh heavier). As a result, both the individual and overall quality of hire of your staff will gradually increase.

In other words: measuring QoH should start before you hire a new employee, continue during your preselection process, and even carry on after they begin working for your organization. This full quality of hire cycle can (should) repeat itself every couple of months.

Before Winter Comes

Recruiters and hiring managers really only want to know one thing: is our recruitment process selecting the right people or not? Thanks to 21st century technology and software, HR professionals can now use data to assess an employee’s quality of hire.

If you want to start measuring QoH (and you should) think of the following: 1) pick the indicators you’ll use to measure 2) make sure every part of your quality of hire cycle is properly prepared and ready to be measured 3) as obvious as it may seem, don’t forget to make improvements based on the results you get. If you get the ball rolling now, you may be all set before autumn turns into winter.

 

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Quality of Hire can be assessed during your preselection process. Data combined with Predictive Analytics can be a powerfull combination in measuring a candidate's potential QoH. Did you know we wrote an e-book about predictive analytics in HR? In it we go way down the rabbit hole regarding this topic. And the best thing about it? It's free! Spread the knowledge!

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