The Value Of Measuring Quality Of Hire
The battle for high-quality talent is heating up and technology is assisting recruiters in finding and securing the best talent. But how do we even determine the value or quality of hire in the first place?
Again, technology can help. As with all elements of a business, every decision should now be or will soon be measurable and quantifiable using data and technology. Human resourcing and talent has historically been difficult to measure, and almost taboo to try to quantify. However, with the new technology available and the increasing competitive pressures on all businesses, measuring the value and quality of hire has now become more achievable and imperative than ever.
An ideal “quality of hire” metric would indicate how much value a new employee brings to the organisation in the short-term and long-term. This metric helps to determine hiring strategies and resourcing allocation, and eventually lead to a high-performing and well-allocated workforce over time. At an organisation-level, creating a quality of hire metric will enable the business leaders to understand the effectiveness of your recruiting process and prove its strategic value to stakeholders.
At an organisation-level, creating a quality of hire metric will enable the business leaders to understand the effectiveness of your recruiting process and prove its strategic value to stakeholders.”
So how do we actually measure the quality of hire? This metric seems almost unquantifiable and immense to measure at first – it needs to include a wide range of variables, from the short-term elements like speed and efficiency of hiring to long-term variables like performance, culture fit and meeting business goals – and all of these elements can be both extremely subjective and hard to quantify.
As always with these nebulous measurements, there’s no single or magic metric for all organisations. Each organisation’s measure will be different, for example, speed and efficiency in one industry might be considered incredibly long in another industry and vice versa.
Google Hire (2020) recommends this formula to organizations to help measure quality of hire:
Using the range of indicators that are most important in your given organisation or industry, setting the indicators to a scale of 0-100 and then calculating using the formula above goes some way to help you measure the quality of the hire. It will never be an all-inclusive and all-knowing metric but it can definitely lead you in the right direction in terms of identifying trends and gaps. Some examples of the indicators that could be used by organisations are: performance appraisal scores, employee retention, employee satisfaction, and traditional performance reviews.
Calculating the quality of hire metric, and determining the relevant indicators for your organisation can be a work-in-progress which is regularly tweaked or updated. This may take time and be a continuous project but we believe it can provide significant value to your business in many ways:
Cost – good hires save you money both in the short and long-term. There is lesser need for training, they can hit the ground running and as they are more suited for the role, they are likely to stay in the organisation for a longer-term. The cost of retention is lower than the cost of hire, due to the initial training costs pegged to a new employee’s learning curve within the organisation. The suitability of the employee for the organisation can drive employee satisfaction and the desire to stay with the organisation for a longer term.
Culture – a good hire can help to improve your company’s culture through positive enthusiasm for a role, which in turn serve as a morale booster for the workplace. Bad hires, on the other hand, can have an even more significant negative effect on a workplace by spreading discontent to other employees and increasing conflict.
More informed decision-making – Through the analysis of the various indicators, it provides a deeper insight into your organisation’s hiring strategy. It would be difficult to improve your hiring decisions without having the evidence and data to show the trends. Informed hiring decisions, prevent a waste of human and financial resources in the long term as companies are able to streamline and apply targeted and strategic hiring strategies for the right hire in this competitive market.
Measure the effectiveness of your recruitment technology – It can be hard to quantify the benefits of using recruitment technology. However, through “quality of hire” data collected, organizations can identify hiring and retention trends resulting from the implementation of new technology and prove the value of well optimized human resource technology to internal stakeholders, driving confidence and ensuring future buy-in.
Insights into the candidate experience – in this competitive hiring market, an impressive candidate experience can ensure you are securing the top talent. Measuring the quality of hire can highlight gaps in the candidate experience and also demonstrate a positive candidate experience where the quality of hire is high from commencement.
As can be seen from these benefits, it is important to use metrics from before and after the hire to determine the overall quality of hire. Pre-employment communication or assessments can be used as well as post-hire performance and reviews to give a holistic view of a new candidate.
The availability of SaaS ( Software as a Service) applications, machine learning and AI technology, allows recruiters and HR departments to be better equipped in the assessment of quality of hire.
As the hiring market continues to speed up, one must be conscious and proactive in researching and understanding your options when it comes to the quality of hire.
We, Sterling RISQ, are here to help. Get in touch with us today, to learn more about implementing quality of hire metrics at your organisation.
This article appears in our Q1 2020 Newsletter. Click here to get your copy today!