Measuring quality of hire: A guide for employers

Quality of hire is a key metric for any effective recruitment strategy. It pinpoints the value of a new hire and assesses their contribution to the bottom line. It also helps organisations to make data-driven decisions about employee engagement programmes and reduce staff turnover.

Employers who measure their quality of hire have tangible facts and figures at their fingertips about what’s working and what’s not, giving them the insights they need to make effective hiring decisions.

In this article, we’re taking a deep dive into how to measure and improve quality of hire, including practical steps to help decide on relevant metrics, data collection and how to use the information to boost the quality of hire and gain a competitive edge.

So, what does quality of hire mean? In simple terms, it’s a way to evaluate how effective an employee is. It’s one of the most useful metrics for calculating how much a new employee contributes to the output of a business compared to the expectations outlined in job descriptions at the recruitment stage.

What counts as ‘quality’ will of course vary between organisations. But typically, a measurement looks at:

• The cost of recruitment

• How engaged an employee is

• Job performance

• Productivity

• Whether that hire is retained after a certain length of time

In other words, it’s a way for employers to assess the benefit of a new hire by calculating how much value they add.

Building a high-performing organisation requires identifying and onboarding high-calibre candidates who can contribute to long-term goals and objectives. This means that not only is top talent recruited, but that once in place, employees are happy, engaged, and productive, leading to a stable, retained workforce.

Gauging the value of each hire helps employers track the direct outcomes of their recruitment strategies. The information can then be used as a way of identifying what’s working and what’s not, and where improvements could be made.

Measuring quality of hire can take time. But the data you collect can shape everything from recruitment drives to employee engagement programmes and reduce the significant costs of staff turnover.

Quality of hire is an effective way of calculating return on investment during the hiring process. It monitors a new team member’s performance to determine if they are meeting expectations or if they are a mis-hire.

Some of the other core benefits of measuring quality of hire include:

• Data-driven selection: Assessing quality of hire allows you to make decisions based on quantifiable data relevant to your organisation.
• Informed recruitment strategy: Quality of hire scores allow you to see which sourcing channels have led to the most success. You can then direct your spending to the channels that work best for you. The same goes for assessment methods and interview techniques.
• Proactive talent management: Continuous measurement allows for early identification of performance issues, enabling timely interventions to help employees engage with the organisation.
• Cost savings: Effective hiring reduces the need for frequent replacements, lowering recruitment and onboarding costs.

The first step towards finding top performers and reducing staff turnover is to identify the relevant metrics to measure the value of a hire. When it comes to measuring quality of hire, it makes sense to split the metrics used between pre- and post-hire.

Pre-hire metrics might include:

• Candidate assessments: Assessments such as cognitive/personality tests and technical tests can evaluate candidates’ skills, knowledge and how well they might fit with the culture of the organisation. Gauging whether these assessments resulted in the right hires helps to work out which assessments work best.
• Interview performance: Taking an analytical, consistent approach to interviews, from asking the same questions to following the same structure, is a fairer way to conduct the process. It sounds obvious but some candidates are more confident talking about their abilities. Having a standard approach means more reserved candidates who may be better suited to the role are not overlooked.
• Reference checks: It makes sense to follow up on references and collect insights from previous employers to uncover a candidate’s past performance and behaviours. Calling the references may give you more insights than you get with a written reference.

Once a new hire is in place, there are a host of other metrics for employers to consider when looking to measure quality of hire. These include:

• Performance reviews: Appraisals and reviews can help to improve employee engagement and retention. The key things to consider here are goal achievement, quality of work and productivity.

• Cultural fit and engagement: Assess how well new hires integrate through employee engagement surveys/feedback. These can be sent to the new hires, as well as to their managers to gain an understanding of how well they have fitted into the organisation.

• Retention rates: Tracking retention rates is crucial to understanding long-term suitability and satisfaction. Employees who are engaged and retained are likely to be valuable hires. If staff turnover is high, there are lots of employee retention strategies to help your talent to thrive.

Collecting and analysing data can help employers significantly increase their chances of making the right hires. This can be done by utilising:

1. Surveys and feedback from managers: Managers can provide valued opinions and ideas, so ask how many good hires there are in the department, the staff turnover rate, how long a hire took to perform as expected, and how they think this could be improved.

2. Employee self-assessments: Ask new hires to reflect on their own performance/areas for improvement and find out where they might need more support or training. Engaging with new hires is a chance to smooth out any issues early on.

The formula above requires employers to quantify each indicator, ideally out of 100. This is particularly useful when calculating an average quality of hire (QoH) score for overall new hires, as opposed to doing it for individuals.

Let’s take an example:

Quality of Hire (%) = (Post-Hire Performance + Candidate Satisfaction + Retention) / 3

Small tweaks may be all that’s needed to boost your overall quality of your hire. It can be as simple as the way you frame and write job adverts, or the way you conduct exit interviews when employees move on.

The key points to consider are:

• Define clear role requirements and qualifications for the job: By focusing on the specific skills candidates need to excel in a role, you can write a job advert that directly appeals to candidates with the skills they need to hit the ground running. Writing an effective job advertisement that attracts job candidates means including an accurate and appealing job title, salary, location, and the key responsibilities that the role requires.

• Implement effective candidate screening: A basic checklist is an effective way to screen candidates at the first stage. Is the candidate allowed to legally work in the UK, for example? Do their skills match the requirements of the role? Do they have the qualifications they need?

• Data-driven hiring: Using relevant facts and stats to inform your hiring process is an efficient way to improve your recruitment and save money. Here’s where measuring the quality of hire comes in – you can analyse the data you’ve collected to improve your recruitment process.

• Use skills assessments: Our research shows that 3 in 5 (59%) businesses are experiencing increased competition to find the talent with the right skills. Skills assessments are your opportunity to look beyond a candidate’s CV, mitigate bias, and elevate your hiring process to find exceptional talent with the perfect skills for the role.

• Improve onboarding for new hires: Nearly three-quarters of employees who had exceptional onboarding experiences say they have the best possible job. Yet research shows that only 12% of people say their company does a good job of onboarding. Develop a structured onboarding plan from meetings to training and activities to boost staff retention.

• Gather feedback from departing employees: Identifying the real reason that an employee is leaving can help you retain other valued talent. Conducting exit interviews and asking the right questions can provide insightful answers about the culture of the organisation and why the hire didn’t work out. You can then use the feedback to implement the changes needed to retain your star hires.

Employers who actively measure and analyse their quality of hire are better equipped to identify what works and what doesn’t during the hiring process. That’s because by understanding the true value of each new hire, employers can make informed decisions that drive long-term success, with data-driven insights helping to refine recruitment strategies, enhance employee engagement and reduce costly turnover.

In an increasingly competitive hiring landscape, leveraging quality of hire metrics provides a clear competitive edge, enabling organisations to build high-performing teams aligned with their goals and objectives. Ultimately, investing in the measuring and improvement of quality of hire can lead to a more productive, satisfied, and stable workforce.