Not Measuring Quality of Hire? You Should Be

By Linda Brenner | January 13, 2015

Everyone seems to be concerned with quality of hire these days; it’s become one of those buzzwords that people like to throw around. But how many truly understand what “quality of hire” means, how to track it, who owns it, and the ramifications for talent acquisition and talent management?

Too many companies fall into the trap of viewing quality of hire as merely what the hiring managers think of the recruiting process and whether they were pleased with the quality of candidates presented to them. Alternately, they may think of quality of hire as the retention rate of new hires within a 90-day period or some other arbitrary amount of time. If a candidate makes it through that stage, then quality of hire is strong, they may assume.

In reality, quality of hire is neither. We define it as the level in which a person in a new role (whether a promoted employee or external hire) contributes to the business over time and across four measures: retention, performance ratings, potential ratings and promotion or pay history. By measuring quality of hire in this way over a period of time (e.g., at least two years), a company can understand what makes a good hire – and adapt their talent acquisition strategy to make more of them. But doing so is dependent upon first measuring quality of hire.

The need to measure, and ultimately improve, quality of hire is driven by the fact that most companies build business value through their intellectual capital – the knowledge workers who build brands, proprietary knowledge and more. When such critical talent leaves, the value of the business can decrease. And with turnover on the rise, it is more important than ever for companies to ensure they hire the right people – particularly into mission critical roles or functions - when given the opportunity to do so.

For these reasons, the ability to measure quality of hire is necessary to the hiring of consistently high-performing talent, and also critical to showing the return on talent acquisition investments. Recent research shows that 85 percent of companies that do measure quality of hire believe doing so has a positive impact on hiring quality. When companies focus on this metric, they can better understand the strengths and future potential of their employees and identify the characteristics they should look for when hiring new talent. The result is an optimized hiring process for identifying the people who can elevate intellectual capital and drive business value for the company.

Without a doubt, there is a link between talent acquisition and business success. The challenge in making that connection, however, lies in the ability to measure quality of hire. As the talent a company employs increasingly serve as its biggest differentiator, understanding how they contribute to organizational success is essential to maintaining competitive advantage. And that’s what all of the buzz should be about.