Quality of hire

Quality of hire is a metric used to evaluate how much value a new employee brings to an organization. It looks at their contribution to long-term success through performance and tenure. Beyond just measuring individual success, it also provides insights into how effective a company’s recruitment efforts are overall. Essentially, it’s about understanding the real impact new hires have after joining the team.

How companies measure quality of hire

There isn’t a single way to calculate quality of hire, as it depends on various factors unique to each company. However, the most commonly used indicators include:

• Job performance: Many companies use performance reviews to gauge a new hire’s success. While subjective, this remains a vital indicator of their contribution to the organization.
• Retention: Retention tracks how long new hires stay with the company. A longer tenure typically signals a higher-quality hire, as they contribute more over time.
• Ramp-up time: This measures how long it takes for a new hire to become fully productive in their role. A quick ramp-up is often a sign of a strong hire.
• Productivity: It’s measured by how quickly new hires meet performance targets or reach full productivity goals.
• Employee Lifetime Value (ELV): This metric gauges the total value an employee brings throughout their time with the company, from day one to the end of their tenure.

The impact of hiring the wrong person

Hiring the wrong person can be costly. In a CareerBuilder survey, 54% of employers said the wrong hire failed to produce quality work, 51% didn’t fit in with the team, and 49% had mismatched skills. The average cost of a poor hire can be as high as $17,000. Mistakes often stem from rushing the hiring process or focusing on an excessive list of skills and requirements that ultimately aren't relevant to the role.

How to improve quality of hire

1. Audit your hiring process
   • Review past hires, gather feedback from managers and employees, and identify areas for improvement.
2. Optimize job descriptions
   • Make sure your job descriptions are clear, specific, and aligned with your company’s goals to attract top talent.
3. Enhance talent acquisition strategies
   • Use targeted sourcing, build a strong employer brand, and prioritize a positive candidate experience.
4. Implement structured interviews
   • Develop standardized interview guides, use behavioral questions, and involve multiple interviewers for a fair evaluation.
5. Utilize pre-employment assessments
   • Use skill, personality, and cognitive assessments to evaluate candidates more effectively.
6. Train hiring managers
   • Provide training on effective interview techniques, unconscious bias, and decision-making.
7. Leverage data and analytics
   • Track key performance indicators like time-to-fill and cost-per-hire, and use the insights to refine your recruitment strategies.
8. Continuously review and improve
   • Regularly assess your hiring process and adapt to changing business needs and market conditions.