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The Quest for Quality of Hire

by
Yves Lermusi
Jun 4, 2013, 6:13 am ET

About a month ago, I was at ERE and a session caught my attention: “A Framework for Improving and Measuring Quality of Hire.” I was delighted. Would talent management be ready for it? Would this be the turning point for the profession? My skepticism has been high; over 10 years ago I wrote one of the first, if not the first report on quality of hire when I was leading Taleo Research, and more recently we organized a roundtable with leading organizations from the Bay Area, but did not see much progress in between. Are we at a crossroads, at the tipping point? Are we at that place when finally talent acquisition will see themselves as more than just filling requirements?

The presenter Rob McIntosh, senior vice president of global talent acquisition and recruitment of Avanade, has a rich background with Microsoft, Deloitte, and Robert Half International. He also has some executive search and global experience. In addition, he has not been in talent acquisition his entire career; he was in computer programing/operations and account management before being in recruitment. All in all the perfect background to lead this holy grail quest, the gold standard in my eyes of what could transform the profession.

He started by showing the huge difference we see between what hiring managers want: a quality employee and what talent acquisition focuses on: filling a requirements. Two stats stood out: First, a Staffing.org survey where C-level executives rated new hire quality as the most important HR performance metric out of 20 possible metrics; it was rated 9.6/10. Next, the CareerXroads 2012 survey where 75.6 percent of recruiting leaders do not track, or minimally track, quality of hire.

Let me repeat this in other terms to make sure the data sinks well: Most of your customers want A, but less than one in four of you even pay attention to it! However, Rob was fast to acknowledge that even if you are motivated and mandated by your CEO, like he is, it is not an easy task. That is why it is a journey, but unless you want to drift into irrelevance, you need to start that journey.

What Rob and his team did was to define a metric that included the key elements of quality. What they also did very well was define what the intended results were: “improved new hire performance and to help reduce attrition in the first 12 months of employment.”

We were also happy to see a nice formula: Performance QoH Metric = (APR + AE + HMS + ER) / N

The components were:

APR = Avg. Performance Rating  for new employees in first 12 months

AE = Employee Performance as a % of Achieved Expectations of performance in first year.

HMS = Annual Hiring Manager Survey Q: “Overall quality of new joiners”

ER = % of Employee Retention in first 12 months of employment.

N = Number of indicators used.

For instance:

QoH=(APR + AE + HMS + ER) / N

83%=(68% + 94% + 80% + 90%)/4

When the room was so happy to see the dashboard with the numbers and trend indicators, Rob was happy to admit that this definition was not what they selected or working with now. The hope collapsed in the room; we will not get the Holy Grail in this presentation! The main concern they found was that because most performance management frameworks are built on a distributed bell curve, the performance indicators in the equation skewed the final QoH. This made them look at evolution of key indicators on their own versus this composite metric. Those KPIs include retention, promotions, performance per source, and business satisfaction.

We had a very smart talent acquisition leader to show us his path towards a number, what we hoped was “the” number, then when he defined it and tracked it, it all became an abstraction and he decided to kill it! Are we now lost? Is there no promised land?

I believe there is one, but maybe the one we are looking for, in my view, is that any definition that will focus the attention on the quality of the outcome of the hiring process is better than any process focus metrics (time to fill, cost per hire…) for the simple fact that they help to improve what really matters to your customers. The quest for the metric, even if I would suggest one myself, is less the point than the gain that your organization will have by focusing on those types of metrics. That is exactly what Avanade has been achieving, and it was a major section of the presentation. Rob’s team focuses on how to impact the result of the hiring process, i.e. retention and new hire performance, which at the end of the day that is what really matters: delivering candidates who are better today than they were yesterday, having one standard metric or not.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  1. Joseph Murphy

    Yves
    Thanks for keeping the conversation alive!
    THE metric is a bit misleading. An early definition of Quality that resonates with me is “more of what you want.” So for QoH, the question/metric is determined by what is it that the organization wants?

    I too have been writing and speaking on QoH for some time. For the interested reader, here is a link to a few of my musings and a recent discussion on DriveThruHR

    http://www.shakercg.com/blog/tag/quality-of-hire/

  2. Keith Halperin

    Thanks, Yves. QoH and retention are two useful statistics, but both are beyond the scope of what recruiters can do/control- we neither hire them, nor keep them when they get there.

    Cheers,

    Keith

  3. Edward Woycenko

    Quality of hire starts with the question of whether the hiring manager really knows what he is looking for and whether the expectations that are set for performance are realistic. Recent statistics indicate that 80% of new hires failed to achieve the goals and objectives that were laid out in the interviewing process, which is an indication that either the hiring manager really doesn’t know what he is looking for, selected the wrong person for the position, or the expectations were totally unrealistic to begin with. Quality of hire involves more work and a commitment to excellence and a process that works than most companies want to engage in.

  4. Paul Basile

    Yves,
    QofH is a key and under-exploited topic, for reasons you cite. Yet there is a lot of data and much careful and detailed thinking about what constitutes QofH. SRHM, among others, has published on this. There is no single metric, as others have pointed out, nor should there be. But since research has shown pretty conclusively what predicts performance, I would (and do) use that. In each case, one must modify in keeping with organization desires and imperatives and these will change over time. But starting with what predicts performance gives the best chance of most accuracy and relevance in measuring QofH.

  5. Keith Halperin

    @ Edward: Very well-said.
    If I may define a “quality” hire:
    “Someone who makes the hiring manager look ‘good’ for as long as the hiring manager needs them to.”

    -kh

  6. Nancy Robin Gillman, MBA, SPHR

    Quality of Hire is a very abstract measurement basically because of the human factor and because of the Halo/Horn effect regarding performance appraisals.

  7. Keith Halperin

    @ Nancy: The more abstract it is, the more ways you can make money off it….

    Cheers,

    Keith “They Should Add That to the Rules of Acquisition” Halperin

  8. Gareth Jones

    I think that if we spent less time obsessing about the metric and actually DOING something to improve quality of hire, we might actually get somewhere. @Edward is spot on when he says it starts with knowing what you are actually looking for and the reality is that most Hiring managers/recruiters don’t. Sure, they can usually tell you that they want someone with this and that skill and this amount of experience, but using these attributes as the basis of hiring is the short cut to failure. As Ed rightly points out, your accuracy wont get above 20% if you do. This is because skills and experience – the core measure for recruitment in most organisations – is the least reliable predictor of performance in role.

    If more organisations invested more time in measuring what they are looking for properly – this includes accurate assessment of someones intellect, values, motivations and behaviours – their hiring accuracy would increase over night. Furthermore, you wouldn’t have to waste months of your life looking for the holy grail measure of quality – your business will feel it!

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