What Does Quality of Hire Mean and How Can You Evaluate It?

Quality of hire is an important metric. You may know this instinctively, but if you are new to HR, you may be wondering about the official definition. Here’s what you need to know.

What Does “Quality of Hire” Mean?

Quality of hire measures the value which new hires bring to a company. An entry-level employee who shows up, works hard, and is productive may have a better impact on the company than a VP who performs at an average level. 

How to Measure Quality of Hire

No single metric can cover everything that goes into measuring the quality of hire. Some metrics, of course, will be specific to the job. Because you need to see the impact a new hire has on the organization, you often will have to measure the employee’s performance six months or more from the time of hire. This time lag makes seeing immediate results difficult.

General Metrics to Consider

These are general metrics you can consider using.

• Employee Turnover: In employee turnover, you look at the percentage of people who quit or who you must fire within a specific time frame. A person who leaves after two weeks was a poor fit for the company; someone you have to fire was an even worse fit. That is obvious, but looking at turnover as a whole can tell you and give you an overall feel for the effectiveness of your hiring processes. Looking at how turnover in the first six months changes is a valuable tool for evaluating how you hire.
• Job Performance: There are a couple of ways to look at job performance. The first way is to use quantitative metrics. For example, you can look at how fast a grocery store cashier scans items. By comparing the results of your new hire to other employees and other new hires, you can judge the quality of the hire by how quickly and efficiently they perform their duties. For other jobs, you can look at overall performance ratings. If your company does performance reviews, you can measure the success of your new hires. Are they performing as expected? Or are they above or below expectations? Is the pattern different from what you experienced with previous batches of new hires? 
• Promotions: This, again, is a long term look at the quality of hire. How long does it take for an employee to earn a promotion? What percentage of new hires receive promotions within two years?
• Employee Engagement: Are your new hires engaged at work? Run an employee engagement survey and find out how your new hires feel about your company culture, workload, pay, and any other indication of employee engagement you want to measure. This not only gives you information about the quality of hire but of the effectiveness of your onboarding program. You can also measure how long it takes for a new employee to feel integrated.

How to Improve Your Quality of Hire

It can be easy to pay well, hire good managers, listen to your employees, and create a great company culture. However, how you do that depends on your current situation and your current new hires. Generally speaking, this is how you can use your quality of hire metrics to improve your hiring practices. 

Keep Good Records         

Because the quality of hire takes time to determine, you must understand how you made hiring decisions six months (or more) before gathering the data for that metric. How did the hiring process for this batch of new hires look different than the hiring processes for the last cohort?

Look at Your Strengths and Weaknesses

If your new hires have high-performance ratings but also high turnover, this can point out a bigger problem. It may be that you’re great at hiring the best people, but your managers are not supporting the new hires properly. Alternative, perhaps it’s a problem with your onboarding process.

Make Changes

It does you no good to keep metrics if you don’t make changes based on your findings. When you determine that there is a problem, you need to make changes to fix it. If you’re experiencing a high turnover rate, you can sit down with your managers and say, “look, these are people who perform at a high level, but they are leaving, so we need to make changes.”

You need to pay special attention to engagement surveys and exit interviews as well, so you know where the problems appear. Do employees experience a lack of information? Micro-managing supervisors? Whatever the problem is, work to fix it.