The quality of hire (QoH) is a measure of the value new hires bring to a company, typically gauged by their contribution to the companys long-term success. Its a complex metric, often measured months after hiring, using various indicators like new hire performance metrics, turnover and retention rates.
Nikoletta holds an MSc in HR management and has written extensively about all things HR and recruiting.
Unsurprisingly, quality of hire is at the top of the list of useful performance KPIs. According to LinkedIn’s 2016 global trends report, it’s a priority for 40% of big companies worldwide (and 45% of small businesses). Efficiency recruiting metrics, like time to fill and time to hire, are trending up, but there are obvious reasons for why quality of hire is still so important.
Quality of hire is what makes the recruiting process worthwhile. Many companies focus on building a fast and cost-effective recruiting process. But, hiring for efficiency doesn’t necessarily translate into good hires and business success.
In this context, ‘value’ usually means how much a new hire contributes to their company’s long term success by completing tasks, improving their work and helping others.
QoH is a difficult metric. It has a long term horizon and you can only measure it many months after you’ve made a hire. Also, reliable measurements need standardized formulas. Quality, in contrast, is often vague and subjective. In fact, most companies that LinkedIn surveyed for its recent global trends report, don’t really feel confident about the way they measure QoH:
The best way to measure QoH is by proxy. There are quantifiable recruitment metrics that indicate quality. Let’s call those metrics ‘indicators.’
Finding and hiring top talent is critical for organizational success. But how do you know if your recruiting efforts are actually delivering quality hires? Smart companies go beyond gut feel to actively measure quality of hire
Quality of hire metrics quantify the performance and impact of new hires from different dimensions Tracking these metrics provides data-driven insights to refine your hiring practices and funnel. In this article, we’ll explore what quality of hire is, best practices for measuring it, and sample metrics you can use
What is Quality of Hire?
Quality of hire simply refers to how well new employees perform in a role after being hired. It shows whether your hiring process results in candidates who:
- Are a strong cultural fit
- Deliver outcomes tied to organizational goals
- Add value over the long-term
High quality means your recruiting efforts deliver hires with the optimal skills, experience, and attributes to drive success. Low quality means you end up with poor long-term fits despite your hiring process.
Why Measure Quality of Hire?
Many organizations rely on subjective impressions to evaluate recruiting success. But quality of hire metrics add much needed objectivity.
Tracking quality of hire provides data to:
- Benchmark performance of new hires against standards
- Identify strengths and pain points in your hiring process
- Compare quality across different positions or hiring sources
- Improve sourcing, screening, assessment, and selection practices
- Demonstrate recruiting’s impact and ROI
Without quality of hire data, you miss out on maximizing the value delivered from recruiting.
Best Practices for Quality of Hire Measurement
Follow these best practices when defining your quality of hire measurement approach:
Use Multiple Metrics – No single metric gives the full picture. Adopt a holistic set covering performance, cultural add, ramp up time, retention etc.
Standardize Criteria – Ensure consistent rating scales and criteria across all hires for fair comparisons. Align to company values and competencies.
Gather Inputs Broadly – Collect data from different people like hiring managers, team members, new hires etc. for well-rounded perspectives.
Track Over Time – Measure quality at multiple milestones – 30/60/90 days out, 6 months, 1 year etc. to see trends.
Segment by Role & Team – Compare quality of hire for different positions and teams to identify patterns.
Identify Root Causes – If quality is low, dig into reasons – source of hire, biases, gaps in assessment etc.
Revisit Weightings Regularly – Ensure metrics align to evolving needs. Adjust weightings given to each as strategies shift.
Pair with Employer Brand Metrics – Also track perceptions of your employer brand among candidates. It impacts who applies.
Use Technology – Deploy purpose-built HR tech to easily capture quality of hire data and provide reporting.
Educate Hiring Managers – Help managers understand the value of formally assessing each hire vs. relying on gut feel.
Act on Feedback – Most importantly, use quality of hire findings to continually refine sourcing and selection.
Quality of Hire Metrics and How to Measure Them
Now let’s explore some of the top metrics to gauge quality of hire and methods for measurement:
Retention Rate
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What it shows: Whether new hires are engaged and remain with your company long-term.
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How to measure: Calculate employee retention rate at 90 days, 6 months, 1 year milestones after hire.
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Benchmark: Compare to existing retention rates for tenured employees.
Ramp-Up Time
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What it shows: How quickly new hires are able to perform independently in their roles.
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How to measure: Have manager rate new hire’s time to fully ramp up using standardized criteria.
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Benchmark: Compare to expected ramp up times. Investigate longer times.
Culture Add
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What it shows: Whether new hire is a good cultural fit who adds positively to the team dynamic.
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How to measure: Peer and manager ratings of cultural fit collected via surveys or interviews.
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Benchmark: Percent rated as cultural adds vs. detractors.
Performance Ratings
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What it shows: Skills and abilities of new hires relative to role requirements.
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How to measure: Formal or social performance ratings at 30/60/90 days post-hire.
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Benchmark: Against ratings of satisfactory performers. Flag underperformers.
Productivity
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What it shows: Volume and quality of work output by a new hire.
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How to measure: Manager rates productivity metrics like tasks completed, quality standards met.
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Benchmark: Against existing team members at same tenure.
Multiplying Factor
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What it shows: Business impact beyond just role by training others, improving processes etc.
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How to measure: Manager rates on scale the broader impact new hire made.
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Benchmark: % rated as high multiplying factor vs. low.
New Hire Survey
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What it shows: Self-assessment of success and growth by recent hires.
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How to measure: Anonymous survey completed by new hires at 30/60/90 days tenures.
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Benchmark: Satisfaction and engagement levels, feedback themes.
Pre-Hire Metrics
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What it shows: Quality of talent pipeline flowing into the hiring process.
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How to measure: Education, experience levels of applicants/candidates.
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Benchmark: Against open position needs and previous talent pipelines.
Cost Per Hire
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What it shows: Efficiency of hiring process and source costs.
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How to measure: Track costs (time, job boards, agency fees etc.) to fill each role.
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Benchmark: Against industry cost data. Lower cost can mean lower quality hires.
Candidate Rejection Rate
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What it shows: Rigor and selectivity of your hiring standards.
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How to measure: Percentage of applicants rejected at each hiring stage – resume review, interviews etc.
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Benchmark: Against previous rejection rates. Lower rates could indicate loosening standards.
Using Quality of Hire Data to Improve Recruiting
The ultimate goal is to use quality of hire findings to refine your recruiting practices. Analyze the data to:
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Identify best sources of hire – Which channels deliver highest performers? Double down on their use.
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Remove poor sources – Stop investing in channels providing low quality talent.
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Improve candidate evaluation – Revise interview processes and assessments if they miss predicting quality.
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Coach hiring managers – Provide feedback on unconscious biases or interview skills impacting quality.
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Refine job specs – Update them to emphasize must-have attributes and skills tied to quality.
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Develop sourcing pipelines – Cultivate channels to consistently feed in applicants with desired qualities.
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Guide training plans– Use ramp-up data to build more effective onboarding programs.
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Revise compensation – Adjust pay bands if offers are not attracting or retaining high quality hires.
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Highlight recruiting value – Quantify quality of hire impact on performance to showcase recruiting’s role.
Getting Started with Quality of Hire Measurement
Follow these tips when launching a quality of hire measurement program:
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Start small – pick 2-3 key metrics you can easily begin tracking rather than trying to measure everything.
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Use simple data collection methods like pulse surveys to begin gathering insights cost-effectively.
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Socialize the process with managers so they understand the value of formally assessing hires vs. relying on intuition.
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Offer anonymity or aggregate reporting if employees are uncomfortable formally rating peers.
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Report quality of hire data regularly to drive continuous improvements vs. just one-off analysis.
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Automate data collection and reporting where possible so it’s sustainable long-term.
Measuring quality of hire delivers tremendous benefits. But it requires cross-functional participation and buy-in. Take it step-by-step and soon you’ll have the data-driven insights to refine recruiting practices. What measures have you found most useful for gauging quality of hire? Please share your experiences and advice in the comments!
How to collect data
Collecting data on turnover and retention rates is relatively easy. So is quantifying concrete performance goals, like “this new hire generated X sales leads in a year.”
But, other calculations can be less transparent. For example, hiring manager satisfaction surveys aren’t normally recorded as part of everyday operations. And calculating time to full productivity (which companies can use in quality of hire calculations) can be tough. It requires companies to clearly define what ‘time to full productivity’ means and consistently keep track of new hires’ work from the beginning.
Surveys can be a good solution to gather necessary data. They come in various forms:
- Hiring manager satisfaction surveys (focusing on the recruitment process)
- Surveys asking managers to rate a new hire’s performance (e.g. 6- and 9-month performance surveys)
- Employee engagement surveys for new hires
- 360 surveys asking managers, peers and team members about a new hire’s culture fit and performance
- Surveys asking hired or rejected candidates to give feedback on the hiring process
As expected, there’s a great deal of subjectivity in all of these surveys. But, quality is often subjective.
Use QoH to make comparisons
QoH can be useful on its own. For example, if your QoH was 65% last year and it jumped up to 90% this year, you have grounds for celebration.
But, QoH can be used to make even more useful comparisons. For example, connecting QoH with other metrics like source of hire can be good for adjusting recruiting strategies to get more return on investment (ROI) from different sources. If the hires with the highest QoH come from X job board or Y recruiting agency, you’ll be able to make a sound business case for investing more in those recruiting channels. Conversely, you could also justify a decision to stop collaborating with an agency that consistently sends you lower quality hires.
You can also use QoH to determine the strategic impact of the recruiting process. For example, you can determine whether QoH translates into increased revenue or higher overall productivity. And HR metrics like revenue per employee can help you get more granular.
Industry comparisons aren’t likely to work for this metric, though. There’s too much inconsistency in how each company measures QoH. It also wouldn’t really matter if your company had the highest QoH in your sector, if the overall quality level in the sector was low.
How to Measure Quality of Hire
How do you calculate quality of hire?
Job Fit = ( (Employee Score + Manager Score) ÷ 2) × 100% In this case, you can also apply the simple formula for calculating quality of hire we described above: Quality of Hire = (Time to Productivity Score + End of Probation Review + Job Fit) ÷ 3 You may want to take a broader view that considers all the contributors to the hiring process:
What is quality of hire?
Quality of hire is a metric you can use to determine how effective your recruiting process is. The recruiting process includes assessing and locating talent, as well as determining which compensation and benefits to offer. Quality of hire considers the candidate’s performance, productivity, relationships within the company and contributions.
What is the best metric for quality of hire?
“Generally, there is no one-size-fits-all metric for quality of hire because it depends on what your priority is,” Min said. “Common quality-of-hire metrics include turnover rates, job performance, employee engagement and cultural fit measured by 360 ratings.”
How do companies measure quality of hire?
Companies use various indicators in measuring quality of hire, performance appraisal score being the most popular. This is often used as an indicator to measure the quality of hire. Simply put, the longer an employee works for an organization, the more value they contribute to the business.
