Quality of Hire

Table of Contents

• What is quality of hire?
• Quality of hire definition
• How to calculate quality of hire
• Better methods to calculate quality of hire
• Quality of hire example

What is quality of hire?

Quality of hire is a quantifiable measure of the effectiveness of the recruiting process to hire productive employees. An effective hiring process — one in which the right talent is matched to the right position — can have a dramatic impact on overall company performance. Match a new hire to the wrong job and their performance rating suffers, thus reflecting poorly on the hiring process, not to mention what that does furthering organizational objectives. On the flip side, an employee that is engaged, performs well, and stays with the company is indicative of an effective hiring process. Either way, it is important to know how effective your hiring process is so that you can fix what’s working poorly and promote what’s working well.

Quality of hire definition

According to experts in the field, an effective measurement of quality of hire requires calculating both pre- and post-hire quality. Pre-hire quality may include new-hire attrition, time-to-hire, and candidate assessment scores, whereas post-hire would look at the time it took the employee to come up to speed, performance and/or productivity measurements, and peer rankings.

How to calculate quality of hire

For most companies, calculating quality of hire is easier said than done. They struggle to define quality of hire, let alone to measure it. This is, in part, due to different organizations having different ideas about what makes for a successful hire. Some of the common metrics used to determine quality of hire include employee engagement, job performance, turnover rates, and feedback from colleagues. And while these myriad of factors contribute to a quality of hire score, they are not quality-of-hire metrics on their own. Unfortunately, any talent acquisition process improvements are hindered by performance reviews that come at the end of the year and a lack of industry standards to quickly measure new hire quality. Plus, this would not take into account employees whose performance reviews are good, but who personally believe they are a poor fit for the job. After all, aren’t you more productive when you like what you’re doing?

Better methods to calculate quality of hire

There is a better, simpler way. The Net Hiring Score (NHS) from SmartRecruiters calculates the fit between new hires and jobs. Done as often as you like, the NHS is calculated by:

• Having hiring managers rank a new hire’s ramp-up time by asking the following question: On a scale of 0-10, how much of a fit is this new hire for the job?
• Having new hires complete the following question after ramp-up time: On a scale of 0-10, how much of a fit is this new job for you?
• Results are then gathered and categorized into the percentage of those who answered 9-10 (Great fits) and subtract it from those who answered 0-6 (Poor fits). Then multiply this result by 100 to determine your NHS.

Quality of hire example

A benchmark for ramp-up time for low-skill workers can be set at 15 days after their start dates and for knowledge-based jobs at 90 days post-start date. There’s no need to wait for year-end performance reviews to get a handle on how well someone fits within your organization. The NHS ranges from -100 to +100 and is reflective of overall hiring success. A higher score shows a better result. Having access to these critical figures will enable better, smarter hiring decisions in the future. For example, an NHS of -30, where the majority of managers and new hires ranked the job fit in the 0-6 range, might prompt your organization to boost investment in job advertising channels. This would expand the candidate pool and allow for greater flexibility in choosing stronger candidates. In addition, a more in-depth screening and evaluation of candidates could give hiring managers more insight into which prospects would be best suited to which job. This could be done using job-specific scorecards and skills assessments. To improve the new hire experience, companies may choose to reduce advertising budgets for those jobs in which applicants are plentiful. This would allow for a channeling of funds into better branding or an improved career site, both of which could improve scores for new hires who respond to the question of “how much of a fit is this new job for you." And by combining all of these tactics, the quality of candidates and satisfaction of employees would improve, resulting in a higher NHS and a positive impact on your organization. But what does this mean for your organization on the financial side? According to McKinsey Global Analytics, high performers are 400% more productive than average ones. By reducing the number of poor fits, you increase the number of moderate or strong fits, increasing productivity, which translates to increased financial gains. With that knowledge, it’s easier to see why an investment on the front end of the hiring process (better advertising and increased screening for example) is financially smart.