What is quality of hire?

Quality of hire is a metric used to assess a new hire’s contribution to your company, and helps you understand whether the results of your recruiting strategy have been worthwhile. 

However, quality of hire can be hard to measure and assess: It's not immediately reflected when an employee is hired, and “value” is largely subjective. In fact, it takes a few months to accurately determine a new hire’s value to your business, considering factors such as:

• New hire performance
• Turnover and retention
• Hiring manager satisfaction ratings
• Feedback from colleagues

Why is quality of hire an important recruiting metric?

Quality of hire assesses candidates’ strength and the value they bring to their new role. Businesses spend about $4,700 per hire, so finding top talent for your openings is cost effective because it lowers your chances of turnover (we’ll expand on this topic in the next section). As a result, improving the quality of hire has significant benefits for your bottom line and long-term success. 

What is the correlation between a high quality of hire and a low turnover rate?

When you have a high quality of hire paired with a low turnover rate, it’s an indicator of a great workplace. 

A strong company culture is an excellent way to insulate your business against events like the Great Resignation. This is because it helps you maintain great performers and ensure that they want to stay with your company. Thirty percent of workers have left a job within their first 90 days. Of those, 34% cite poor culture fit as their reason for leaving. 

Employee turnover leads to low productivity, low morale, poor brand reputation, and additional turnover. An hourly worker costs about $1,500 to replace, so high turnover can cost your business thousands of dollars. Keeping turnover low and quality of hire high can help businesses control hiring expenses and better plan for the future.

Post-hire metrics to consider for quality of hire 

While quality of hire does have a level of subjectivity, there are a few post-hire metrics that you can use to help determine your organization’s baseline.

Job performance

Job performance metrics comprise a variety of employee performance measurements indicating specific ways new hires add value, such as assembling a target number of product units, meeting a sales quota, or attaining a particular customer satisfaction rating. 

There are several ways to measure job performance, including customer feedback surveys, productivity reports, and performance reviews at regular intervals. These assessments usually consist of a rubric that scores various aspects of the employee’s performance on a scale from 1-5. The intervals you choose may depend on your industry and your organization, but 30-day, 60-day, 90-day evaluations are common.

Employee retention

You can measure employee retention with a simple formula:

Employee retention rate = (Number of employees who stayed employed for duration of measurement period / Number of employees at start of measurement period) x 100

While employee retention rate can indicate whether or not new hires are a good fit, it may also reveal other issues—like poor onboarding and training, or inefficient management. 

Time to productivity 

Time to productivity is a key metric for determining onboarding success. This metric refers to ramp-up time—or how long it takes a new employee to reach full productivity. The longer it takes, the longer you can expect to pay a “productivity tax” in the form of a lower work rate. 

This metric is tricky to measure because it’s not an exact science, and it can vary greatly depending on the role. To measure it, companies will have to define what key performance indicators (KPIs) reflect ideal productivity for a particular position. Then, you calculate how many days it takes for your new hire to reach that productivity point for each KPI.

Hiring manager satisfaction

Hiring managers get to see the new employee’s performance first-hand. They have valuable insights into how new hires progress or need to improve—and even whether or not the employee is a fit at all.  

Hiring manager satisfaction surveys are the best way to get the above-mentioned insights. Surveys should ask for feedback on various aspects of the hiring process, like new hire performance, recruiting challenges, recruitment performance, and quality of hire. 

Employee engagement

Employee engagement measures how mentally and emotionally connected workers are—to their jobs, teams, and the organization overall. Ninety-two percent of business executives agree that organizations with highly engaged employees have happy customers, making this metric particularly important for frontline customer-facing roles.

Employee engagement surveys and pulse surveys are two ways to measure this metric. It’s recommended to conduct thorough engagement surveys annually. However, periodic pulse surveys (which are much shorter) are helpful during the new hire’s first week, month, 90 days, and beyond. 

How to measure quality of hire

Every organization has different priorities and hiring goals, so the factors they use to determine quality of hire will vary. For example, a manufacturing business may consider production volume to be important, and a fast-food restaurant may be laser focused on the number of tickets filled per hour.

To measure quality of hire, you determine an average of your chosen indicators. For example, if your business prioritizes engagement and job performance, your quality of hire formula would look like this:

Quality of hire % = (Employee engagement % + Job performance %) / 2 

How to improve your quality of hire

While quality of hire is a somewhat elusive metric, there are ways to quantify it in order to improve your hiring process. Here are a few strategies to enhance it:

• Use artificial intelligence tools:  With recruitment automation platforms, talent acquisition teams leverage AI to filter for specific criteria in candidate applications. This streamlines your recruiting workflows and ensures that the candidates that make it through screening have the exact qualifications you’re looking for. It also makes recruiters’ workloads less burdensome, which means the review and selection process will be faster.
• Improve your onboarding process: Research shows that nearly 10% of employees have left a job due to a bad onboarding experience. A well-thought-out onboarding process helps new hires integrate quickly into their new work environment.  
• Consider skills testing: Using a pre-hire assessment can help gauge whether or not a candidate has the right skill set. Businesses can use the results to narrow down the candidate pool so that only top talent moves forward in the hiring process.
• Review results regularly: Quality of hire isn't a set-it-and-forget-it metric—it's something businesses need to monitor regularly, particularly in high-volume hiring. Assessing your organization's relevant quality of hire KPIs will help you keep a pulse on what's working well and what isn't, so you can adjust your focus as needed.

Improve your quality of hire with Emi

One of recruitment technology’s fastest growing segments, AI, has tremendous potential for improving recruiter efficiency and overall quality of hire. 

By automating the hiring process and delivering a better candidate experience, our frontline recruitment automation platform can help you reduce time to hire by 50% and more than double the productivity of your recruiting team toward an average candidate satisfaction score of 88%. 

To learn how to start leveraging the power of AI toward better talent acquisition, hiring decisions, and quality of hire, request a demo today.