How to Measure and Meaningfully Improve Quality of Hire
How effective is your hiring process? You might assume it’s fine if you’re able to fill your open positions in a reasonable amount of time. Hiring effectiveness is about more than just the quantity of people you’re able to hire though. You also need to measure the quality of your hires to be sure you’re getting the best people on board to grow your business.
Quality of hire has always been challenging to measure — you can’t use a single simple metric to track it — but with the amount of data and tools companies have access to today, it’s easier. With a consistently tight labor market with high competition for top talent, it’s more critical, too. Here’s what you need to know about quality of hire, from why it matters to how to measure it and how to improve it.
What is Quality of Hire?
Quality of hire measures the value a new hire brings to your company. What long-term contributions to your organization’s success will they be able to make? You can see why this isn’t the easiest metric to measure, as it requires a longer timeframe and determining the value of an employee and their expected contributions to see how they measure up.
However, quality of hire is a vital metric to track. After all, if you hire a whole department’s worth of people and half of them are poor performers, and the other half quit after three months, you’re actually worse off than when those roles were open. Something is clearly going wrong in your recruiting and hiring practices, which you need to fix if you don’t want history to repeat itself.
Tracking how well your hiring process is matching open roles to well-suited candidates who add immediate value to your organization is what measuring quality of hire is all about.
Why Does Quality of Hire Matter?
Employee turnover is expensive (costing from .5-2x an employee’s annual salary), and much of it is driven by hiring processes that fail to identify people who are a great fit for your organization. Having a poor quality of hire rate indicates that something is broken in your recruiting process, whether it’s how you source candidates, how you evaluate them, how you extend offers, or simply how long the process takes.
Hiring employees who are a poor fit is expensive as well. Research estimates that one bad hire costs an organization between $15,000-$17,000 on average. Just one poor hire can do real damage to your hiring budget and also the morale of your existing employees.
Having a high quality of hire rate ensures that your organization is hiring wisely, effectively, and cost-consciously.
How Can You Measure Quality of Hire?
Want to know how to measure quality of hire? Well, there’s no one-size-fits-all answer here, as it depends on what value you expect new employees to add (expected contributions for an accountant will look very different from a warehouse worker, for example, or for a senior leader versus an individual contributor). But here are some metrics you can use to begin to measure your company’s quality of hire.
Hiring Manager Satisfaction Surveys
After a new hire has been on the job for three, six, or nine months, many companies send a survey to the hiring manager to see how the new person is living up to expectations. You can also ask hiring managers about their satisfaction with the hiring process overall to see how they view the experience and if there are potential areas of improvement.
New Hire Engagement Survey
Measuring the engagement levels of new hires is also a good way to gauge how effective your hiring process is at hiring people who are a great fit. The first few months on the job are exciting ones, after all, and new employees should ideally be brimming with fresh ideas, energy, and enthusiasm.
If your new hires are mostly engaged, that’s a great indicator that you’re bringing on the right people who love the work and the company. If not, you’ve got work to do.
New Hire Retention Rate
New hire retention rate is also a helpful metric, though it won’t tell you the whole story about your hiring process. After all, new employees might leave for many unrelated reasons, including a toxic culture, a poor manager, or poor practices in a department. But if you have a very high new hire turnover rate, that indicates that one or many issues need to be urgently addressed.
New Hire Performance Metrics
Performance metrics specific to the role can also be a useful way to measure how well your hires are performing against expectations. This will vary widely by role and industry, but it’s helpful to measure new hire performance regularly and benchmark them against experienced people in the same role to see how your hiring process is doing at identifying top performers.
Performance Reviews
While performance reviews can be subjective, they’re also a good look at how a new hire has done in their first year or two on the job. These reviews might point to hiring issues, but they can also indicate that your onboarding and training processes need help as well if new hires aren’t given the support they need to succeed.
Employee Lifetime Value (ELV)
This metric is a promising new way to measure how your quality of hire is paying off, by calculating the value that an employee contributes to your organization over their entire lifecycle at your company.
Calculating Overall Quality of Hire
These metrics independently calculated will give you an idea of how your recruiting and hiring process is delivering on its promises, but for maximum value, you can also combine them to calculate an overall Quality of Hire rate as follows:
Quality of hire (%) = indicator % + indicator % / number of indicators
Let’s say you’re currently measuring ELV, hiring manager satisfaction, and new employee turnover. You would add all three metrics together, and then divide them by three to get your overall quality of hire rate. This metric is particularly useful when you’re looking at your overall organizational quality of hire rate instead of by individual hire.
Also, it can be helpful to break down your quality of hire data once you have it across several segments to see if there are interesting patterns. Perhaps your quality of hire is high for individual contributor positions, but lower for managers or leaders, and that’s where you need to focus your efforts. Or maybe there’s a certain channel for sourcing candidates that leads to a lower quality of hire, or a specific team where you’re struggling to place good candidates, and you can direct more attention there.
How to Improve Your Quality of Hire
If you’ve measured your quality of hire and found it lacking, how can you improve it effectively? It depends on what is driving that poor hire quality, which is why measuring multiple metrics is useful and comparing that data across teams, managers, and roles to identify those patterns. Simply plugging in a one-size-fits-all solution isn’t going to be as effective as a thoughtful, strategic approach that takes your organization’s unique culture and needs into consideration.
But no matter what is driving your quality of hire rate, here are some effective potential steps to take to improve it.
Collaborate with Hiring Managers
If your recruiters aren’t aligning closely with the hiring manager for each and every open position, that’s a mistake. They know the role and the team best, so their input and buy-in can make a big difference in performance and retention.
There could be a mismatch in what your recruiters are looking for and what your hiring managers need, or how recruiters are describing the role and the team and the reality of it on the ground, so getting everyone aligned can clear up any confusion.
Write Clearer Job Descriptions
Job descriptions are often vague and filled with buzzwords and jargon that make it hard to determine what, exactly, the new hire will be doing on the job. Or they contain words and phrases that turn off many candidates who would actually be a great fit. If you haven’t updated yours in a while, they might be inaccurate or outdated.
Put more care and specificity into your job descriptions and make them as inclusive as possible, and you’ll attract people who are a better match for the role and the organization. Job descriptions might be the first place a candidate encounters your company, so they need to make a good first impression. Try Cangrade’s free Job Description Decoder to upgrade your descriptions with more accuracy and enticing language.
Use Better Candidate Evaluations
How are you evaluating candidates during the hiring process? If you’re not using updated techniques like pre-hire assessments and standardized interviews, you’re not going to be as effective as possible in hiring for the long term.
That’s because these methods are more effective at identifying the people who are the best fit overall — their experiences, their hard and soft skills, and their aptitudes and preferences. Note that quality of hire isn’t just about finding the most qualified person. It’s about finding the person who is the best fit holistically for the role, the team, and the organization. These tools will help you identify those people faster and more effectively.
Use Your Hiring Data Wisely
When you’ve started tracking quality of hire, you can use that information to dig into which channels are delivering the best results. Perhaps referrals and lateral moves are your top performers — how can you source more candidates from these channels that you know are successful? Or maybe one of your recruiters has a much higher quality of hire rate — you can see what the rest of your recruiters can learn from her to improve everyone’s skills.
You can also use tools that let you collect and understand more about your quality of hire rate, like Cangrade’s Retention Forecast feature, so you can constantly improve your recruiting and hiring processes.
Bring in the Team
A new hire won’t just be working with the hiring manager — they’ll be part of a broader team, where they’ll hopefully be a valued colleague and contributor. That’s why involving the whole team in hiring decisions can help you make better choices. Ask their potential team members to join interviews and see how the dynamic feels, how they interact, and what they think about adding this new person to the team.
Of course, they won’t have the final say in the hiring decision, but adding in team interactions can help you narrow down the final choices to the best person for the role and the team, together.
Consider Cultural Fit
Hiring is about more than just finding the person with the right hard skills. The best hires are people who also mesh with your organization’s unique culture, and help support it and drive it forward. Cultural fit can get a bad reputation as a hiring metric, as it can be a cover for hiring only people who are just like the hiring manager or recruiter.
But if you know the right way to have conversations about culture fit (hint: they need to be structured and intentional), you can use this essential element to help hire the people who will thrive at your company and stay for the long haul.
Remove Bias From the Hiring Process
Unconscious and unintentional bias can easily creep into the hiring process, and that can cause you to miss out on candidates who would be a great addition to your company. Improving diversity in recruitment isn’t just the right thing to do: it also increases your odds of finding the perfect candidate.
AI recruiting is a helpful add-on here — you can use AI tools that are designed to eliminate bias while increasing recruiting effectiveness and efficiency, like Cangrade.
Our certified bias-free technology helps you identify, assess, and hire the perfect people for your open roles, and even manage their development as they grow with your company. Pre-Hire Assessments will help you narrow the candidate pool to fit top talent, Video Interviews are standardized to reduce bias and increase effectiveness, and Retention Forecast helps you identify who will stay and grow at your company for the long term.
There is a lot to consider when evaluating and measuring the quality of a hire. Tackling one area of improvement at a time is a reasonable approach that can have long-term positive effects on your entire company. By using the many tools and resources available to you in today’s hiring landscape, you’ll be securely on your way to onboarding and retaining top talent.