Quality of Hire: An Important Recruiting Benchmark

For hiring and recruitment teams, the pressure has never been greater to attract top talent. A common downside of this pressure is it can lead to “mis-hiring”:

Employing candidates who aren’t the right fit in order to meet hiring quotas and, in turn, contribute to a poor overall quality of hire.

At a macro level, this does a disservice to your org (i.e., the company’s long-term success). At a micro level, bad hires contribute little of value to their teams in their day-to-day, leading to frustration for their managers (and possibly even colleagues who must pick up their slack).

Mis-hires are estimated to cost companies five to 27 times an employee’s annual salary, when factoring in recruiting costs like advertising, employees’ time, and training costs.

In the U.S. alone, mis-hires cost businesses around $1 trillion annually.

If you want to regularly improve your quality of hire metrics (the “Holy Grail” of recruiting metrics) — including retention of top-performing employees you help hire — you need to routinely analyze the quality of your talent acquisition team’s data-driven recruiting efforts.

quality of hire talent acquisition

Understanding the “Holy Grail of recruiting metrics”: Quality of hire, explained for TA teams

“Quality of hire is a way to measure the value each new hire brings to your company and to evaluate their long-term impact in your org,” said Crosschq CEO Mike Fitzsimmons.

“Active employees who join your team for the long-haul add value to your culture and are continuous top performers are uniformly considered a high quality of hire,” Mike added.

On the flip side, Mike noted that “employees who are hired and then leave their role shortly after and never achieve productivity would be considered to have a low quality of hire.

Assessing quality of hire’s impact on retention is harder to measure than the “value” of a given staff member, based on their distinct business performance and long-term contributions.

That said, there are some variations of the metric that can reveal the “potency” of your recruitment approach. A few common quality-of-hire metrics include:

  • Overall potential: Just as “raw” athletes are drafted well before their primes by professional sports teams, many companies employ promising candidates (e.g., savvy engineering students fresh out of college who ace company-specific assessments) knowing they’ll need to train and develop them in time to tap into their true value.
  • Engagement level: Employee engagement can be measured in many ways. One of the best is to “calculate” this quality-of-hire metric to determine if a given member of your workforce proactively engages within their team and cross-functionally to ensure day-to-day success.
  • Review ratings: This is arguably the most straightforward metric. Performance review scores and insights from managers can help measure their quality of hire for employees in a way that directly ties to their ability to achieve individual goals and contribute to team and company goals.

Ideally, your people ops and recruiting teams can incorporate these attributes (and others you deem important) into a score that shows how cohorts of new hires impact the business.

“To use quality of hire, companies should first decide what ‘quality’ means to them, then collect pertinent data on those characteristics or company outcomes, scale it up, and measure,” said Crosschq Head of Data Chris Drake.

quality of hire metrics

How to improve quality of hire metrics by analyzing “pre-hire” and “post-hire” data

In times of disruption (see: 2023), hiring the “right” people takes some creativity and a coordinated effort among your key hiring stakeholders to navigate uncertain times.

To make informed, sustainable hires — regardless of external conditions that may affect your business — your hiring needs to rethink its entire hiring process:

From the first point of contact with a candidate, to the end of a new hire’s training cycle, to that person’s one-year review.

And to do that, you’ll need to think about your overall company goals and how they relate to your recruitment and hiring goals. Your C-suite, HR department, talent acquisition team, and hiring/people managers must ask yourselves:

  • Are the objectives laid out by leadership clear and well-defined?
  • Do all teams across your org agree on the chosen business goals?
  • Are objectives and target KPIs shared transparently company-wide?

Ultimately, every aspect of your org’s hiring strategy must tie into your agreed-upon business goals and executive staff’s desired outcomes — including continually increasing quality-of-hire “scores” for new and long-tenured employees.

  • For example, can you see a correlation between job performance and ramp-up time in onboarding through analysis your HR team’s data set?
  • If not, work with HR analysts and people managers to determine if there is some kind of relationship between the two data points you track.
  • You may end up discovering that one or more types of roles or positions filled for one particular team see lower- or higher-than-average quality of hire.
  • Perhaps you notice salespeople who partake in two-week onboarding periods tend to miss their prospecting numbers in the first few months on the job.
  • This could indicate a longer ramp-up period is required to better train them on things like cold outreach, lead database management, and which business decision-makers they should be contacting to pitch the product to.

Time to fill, time to hire, candidate diversity, applicants per role: There are countless other critical recruitment metrics to measure and monitor in addition to quality of hire.

The point is you need to be able to tie the efficacy of your talent specialists’ sourcing, nurturing, and interviewing efforts to the “strength” of eventually hired individuals you interviewed and advanced in your respective recruiting cycle.

data driven hr recruitment strategy

Why ongoing changes to your recruiting process are a must to gradually improve hiring quality

Companies that take an active role in improving their hiring quality are more likely to have a strong company culture supported by a diverse workforce.

Crafting a thorough hiring process at your org results in increased job satisfaction due to the assurance that the right employees are being hired for positions that are suited to their talents and the ability to grow internally.

When you’re known for your high-quality hiring process, you’ll generate more first-rate candidate interest and improve your employer brand.

The Great Resignation changed the hiring landscape. Job seekers are looking for openings at orgs they respect. However, they also want a streamlined recruiting process that helps them understand whether they’re a strong fit for a role and the business at large — and vice versa.

“By investing in improving the quality of your hiring plan, companies can ensure that they are attracting the top talent they are eager to hire,” Mike noted. “And employees will be more likely to refer friends and promote working for your org amongst their network.”

The first step to realizing a higher-quality workforce is to ensure you have an equitable and inclusive recruitment process in place. Specifically, one that reduces bias during the whole hiring process — and leads to the engagement and employment of qualified, diverse talent.

Hiring bias (intentional or otherwise) has the power to stunt the growth of otherwise thriving companies and lead to a homogenous workforce.

With a unified effort to implement structured processes around interviewing; providing, collecting, and analyzing candidate feedback; and conducting reference and background checks, you greatly reduce the risk of bias creeping into your hiring decision-making.

Improving your quality-of-hire metrics is vital to your long-term business success. And you can accomplish just that with a complete talent acquisition suite like LeverTRM.

lever levertrm ats crm talent acquisition suite demo

Further reading