HR Management

How to Measure Quality of Hire

Getting the right person in the right job is obviously a crucial component of successful talent management. But is there a measurable way to know how often the organization meets this goal?

Some would argue the answer is no. Determining whether a new hire is a good “fit” for the organization is much more subjective than objective in many cases. But there are actions we can take to at least measure the quality of our hiring decisions on a consistent basis—even if we can never fully banish the subjectivity of such a measurement.

This entire premise—measuring how effective we are at hiring the right talent—is the basis for the “quality of hire” metric.

Today, there are probably as many ways to measure quality of hire as there are companies trying to measure it. But we can learn to be more effective by reviewing some of the most common measures and determining which of those make sense to replicate in our own organizations.

How are Organizations Measuring Quality of Hire?

At the end of the day, there is no single measurement that assesses overall quality of hire. Most organizations use a set of metrics together as a group. These organizations take several truly objective measures, such as turnover rates, and look at those measures in coordination with more subjective measures like performance reviews. Here are some of the many metrics organizations are using concurrently to get an overall “quality of hire” measurement:

  • Turnover/retention rates
  • Prehire testing results
  • Cultural fit (as measured by survey data)
  • Successful completion of full onboarding process
  • Time to productivity
  • Total productivity level of the new hire (such as revenue or percentage of goals completed)
  • Error rates
  • Employee engagement levels
  • Performance reviews and/or 360-degree feedback results
  • Survey results from:
    • Surveys completed by new employee’s manager asking about fit and performance and whether they would rehire;
    • Surveys completed by new employee; and
    • Surveys completed by entire team, asking about how well the company culture is being upheld.

While some of these measures are clearly subjective, they can be useful as a benchmark and point of comparison over time. Employee engagement level is a good example: It’s purely subjective, but it can definitely be influenced and improved over time. The results of surveys are also subjective but are still useful for comparison, assuming the questions remain fairly consistent and are relevant for the organization to measure and improve upon.

How to Create a Quality of Hire Metric

Some organizations find it useful to take some of the items in the list above and create a calculation for new hire quality. For example, such a formula might include:

(Performance + Productivity + Retention) / N

Performance is the average of all new hire performance ratings.

Productivity is measured as the percentage of new hires achieving full productivity in the desired time frame.

Retention is the percentage of new hires still onboard after a year.

N is the number of indicators used in the formula. In our example here, it’s three, but you could add other metrics into the formula, and then “N” would be the total number of metrics used.

Doing a measurement in this way yields a percentage figure, which can be used to compare quality of hire measures over time.

What about your organization? Do you measure quality of hire? How do you go about it? What data do you include?

Formula to Create a Quality of Hire Metric

*This article does not constitute legal advice. Always consult legal counsel with specific questions.

 


About Bridget Miller:

Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.