The Decisive Virtue In Talent Acquisition – Quality

The Decisive Virtue In Talent Acquisition – Quality

This article is a part of the All Things Talent Magazine (May 2018 Edition) – An Initiative By |

“Often the best solution to a management problem is the right person.”

Edwin Booz

In the advent of changing times, no organization can promise a guaranteed future. The only sustainable advantage that one can have is the effective utilization of the ‘talent’ available. More so, the ability to hire and retain the best people is an art. A good hire’s contribution to the result is immense. On the contrary, an average or poor performer not only affects the bottom-line but also impacts the company’s brand image, results and reputation.

Most companies make use of measures such as cost per hire, the volume of hires, or even the speed of hire. However, these are at best misleading and at worst, an inaccurate measure of staffing performance. The primary (or perhaps sole) measure of hiring success should be the quality/performance of the hire. Thus, it becomes imperative to focus on the long-neglected ‘quality of hiring’. Quality of hire represents the value new employees bring to the company, and therefore demonstrates how effective the recruitment team is at finding and connecting hiring managers with the right people for each available job. What sets it apart from all other metrics is its ability to be omnipresent in all industries. 

Global Trends in Quality of Hiring

Talent leaders continue to value the quality of hire as the most important metric to track performance, and most organizations are measuring it with employee turnover. This could be why employee retention has emerged as a top priority over the next year. Also, employee referral programs are a key source of quality hires and are growing as a long-term plan. Lastly, talent acquisition is investing in employer branding, and working with cross-functional partners more than ever. Following are a few facts, which reaffirm the above statements

  1. 39% agree that quality of hire is the most valuable metric of performance.
  2. 50% measure quality of hire through new hire performance evaluation.
  3. 50% measure quality of hire through turnover or retention statistics.
  4. 49% measure quality of hire through hiring manager satisfaction.

Since it is a difficult metric to track, the biggest challenge lies in its implementation. Talent leaders aren’t convinced that they are measuring the quality of hire effectively. Only 33% of respondents feel that their methodologies are strong, and an even smaller 5% felt “best in class”. Therefore, there’s a lot of opportunities to improve how you calculate and present quality of hire.

“A good hire’s contribution to the result is immense. On the contrary, an average or poor performer not only affects the bottom-line but also impacts the company’s brand image, results and reputation.”

The figure given below reaffirms the aforementioned facts:

Figure: Global respondents on the effectiveness of current measures

Effectiveness Of Current Measurez 

“A good manager is a man who isn’t worried about his own career but rather the careers of those who work for him.” 
-H. S. M Burns

Ways to calculate Quality of Hire

The measurement of quality of hiring is still an evolving process. There is no full proof formula that can be considered. This can be attributed to the fact that each organization prioritizes different parameters with changing times.

There are two ways of measuring the quality of hiring. These are as follows:

  1. Before Hiring – This can be carried out by implementing pre-employment tests and by using candidate information available at the time of the interview. These include the number of counter offers received, the number of top performers that know about them etc.
  2. Post Hiring – Here, once a candidate is absorbed in the organization, various parameters are used to evaluate his/her effectiveness in the organization.

Thus, Job performance and productivity, ramp-up time to reach acceptable work levels, engagement with the company, cultural fit, and job tenure should be on every HR leader’s mind in relation to the quality of hire. This is usually done post hiring.

Here’s one example of a quality of hire formula:

Quality of Hire (%) = (Job Performance + Ramp-up Time + Engagement + Cultural Fit)/N

(All scored out of 100, N = number of indicators)

Then by averaging the quality of higher scores for each new employee, combined with your turnover rate (number of hired employees who quit or were fired, divided by the total number of employees hired) you can calculate the overall success of your hiring process:

Overall Quality of Hire (%) = [Avg. Quality of Hire score + (100 – Turnover Rate)]/2

Another method to calculate the company’s overall quality of hiring scores is using components from the individual scoring formula to create a company-wide formula: 

Overall Quality of Hire (%) = (PR + HP + HR)/N

  • PR = Average job performance rating of all new hires
  • HP = % of new hires with acceptable ramp-up time
  • HR = % of new hires retained after one year

Advantages of measuring Quality of hire

There are various benefits of measuring the quality of hire as enlisted below: 

  1. Enables to build strong and competitive teams. By measuring ‘on-the-job’ performance of the new hires, one can easily recruit high performers and improve the overall results.
  2. Improvement in candidate selection criteria. This metrics enables one to identify what are the key traits of the top and average performers. Through this, we can map the traits that may be required to predict the success of the candidate, based on the ‘on-the-job’ performance.
  3. Helps deduct the number of hiring failures. This helps to reaffirm the robustness of the recruiting mechanism and reduces the need for replacement searches.
  4. Increased conversion ratio & offer acceptance rate. Once a considerable time has been spent on identifying the top performers/hires, the offer acceptance tends to increase. Moreover, even when the numbers of candidates recruited are less, yet the conversion ratio becomes higher.
  5. Helps to identify weak hiring managers. The assessment accuracy usually varies from 80% to 20%. The quality of metric can be used to determine the accuracy of their hiring.

Though there are many more advantages, yet these hold a high importance in regard to the marketplace. Despite these benefits, a large part of the population still criticizes the metrics due to its high subjectivity. 

Critical Analysis of Quality of Hiring

The following are the aspects that could decrease the overall effectiveness of this metrics: 

  1. The high subjectivity of the data used for quality of hire calculation. Employee engagement and cultural fit are especially difficult to define in numeric terms.
  2. High coordination required between HR leaders and senior leaders across all departments. This will help to come up with an effective quality of hiring metrics.
  3. It could become a time-consuming process. The comparison should be done with one’s own organization over years to gauge the trends and to make most out of the metrics.
  4. It requires a high amount of accuracy in data collection and analysis. The calculation of this metrics requires numerous data points and hence accuracy of data becomes imperative for precision in results.
  5. Demonstrating the ability to convert their quality of hire statistics into dollar impact to demonstrate the economic value of recruiting top performers. Its absence would lead to chaos.

“The assessment accuracy usually varies from 80% to 20%. The quality of metric can be used to determine the accuracy of hiring teams.”

All in all, Quality of hire has always been a neglected metric. It’s time it is given its due. We’ve all heard this before “You can’t improve what you don’t measure,” and hence measuring the quality of hire becomes a priority for HR professionals. Especially when we know that nearly half of all new hires are classified as failures within 18 months. Rather than fearing such an important metric due to its subjectivity, HR leaders should embrace the quality of hire. It’s a metric that can be used to calculate, and then improve, their own results and those of the organization in the long run.


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