CEB, after exhaustive research, concludes that 20 percent of new hires are “regretted decisions.” If this is true, why aren’t more companies testing quality of hire improvement strategies?
Quality of hire is the holy grail metric for most recruiting organizations. Poor quality of hire can quickly destroy a team or company, while excellent quality of hire can, over time, take an organization to next-level performance.
But here is the problem: Measuring quality of hire is insanely difficult. So difficult, in fact, that most companies never bother to measure it. So, I’m going to outline several methods, some easy, some hard, but all possible.
Step 1: Define “Quality”
What is a “quality hire?” Before you can ever hope to measure it, you must first define quality for your organization. This is probably the hardest part of this whole process, as there may be differing opinions in your company. Try it. Ask 10 different leaders in your company to define a “quality hire,” and you’ll probably get 10 different answers.
Does quality mean culture fit? Team fit? Job fit? High performance? High ratings? Low turnover? All of the above and more?
Gaining internal agreement on a definition of quality is Step 1, and it’s a difficult one. For me, I would use “high performance” and assume that nobody can perform well without team fit, culture fit, and reasonable longevity. An even simpler definition of quality of hire: Someone who’s behavior and ability closely matches your very best employees in the job.
Step 2: Measurement Methods
Now, down to the nitty-gritty. Here are a few suggestions on how to measure:
Customer satisfaction method
Use a survey to ask your hiring managers how satisfied they are with the quality of their new hire.
Advantages: This is easy data to get, and you can measure it over time and provide trend data.
Pitfalls: First, the accuracy is suspect. Few hiring managers will admit that they made a hiring mistake, and most are satisfied early on or they would not have offered the position. Also, this is subjective.
Next, the data is obtained after the hire, so it cannot be used in the selection process. Inputs can only be used to adjust the process for future hires.
The last drawback to surveys is that hiring managers grow weary of completing them for every hire, and a manager who has hired 10 people won’t typically want to rate 10 people in a survey.
Advantages: If your performance review process has some rigor and there is a good distribution of ratings, this can provide a nice, objective measure of how good your new hires are compared to your highest-performing employees in a given job. For example, if your company has a 5-point performance review scale, and if all 5 points on that scale are used and there is reasonable distribution, then you will be able to chart how many 3s, 4s, and 5s your team has landed in the last cycle.
Pitfalls: Is your company actually good at measuring performance? Some companies are not, and there simply isn’t enough differentiation to tell how good someone is relative to others. Many companies have the bulk of employees meeting expectations (even if they are not). If this is the case at your company, this option probably won’t work.
Perhaps the biggest pitfall of the performance method is that you have to wait a year for your data. It is always post-hire, and so cannot be used in the selection process. Furthermore, it can’t be used in evaluating recruiter performance, as the recruiter is rated before you can gather new-hire performance ratings. Waiting a year for data is why most companies give up on trying to measure quality.
With this method, companies investigate the “data blueprint” of their high performers. Also called a success pattern, this allows you to use data-clumping to illustrate and measure what makes your high performers tick. Once you have defined a “success pattern” for job, you can measure anyone against the pattern to see how similar (or dissimilar) your applicants are compared to your known high performers. You can measure the gap and report on its size and shape. This “gap measurement” becomes a quality of hire measure. Higher quality is defined as “most similar” to your high performers.
Creating a success pattern requires a good assessment tool, and high performers to model for any given job. Without the high performers, a certain amount of educated guessing is involved, but you can still create a defensible success pattern drawing on industry data and your own understanding of the demands of the role.
Advantages: The “gap” can be known before the hire or before the promotion and can easily be measured (and reported). With higher confidence in quality, hiring and turn-down decisions are made with greater speed and confidence. Lastly, deployment of this strategy is relatively simple once you have the right tools.
Pitfalls: This is a predictive method, and so you should follow up on new hires to make sure that your success pattern is actually predicting success on the job. Success patterns should be jiggled and tweaked about every six months to make sure they are producing the desired result.
Of these three, using success patterns is by far my favorite, but it should be coupled with the performance method just to make sure your predictive analytics are, in fact, predicting. Successfully implemented, it has a track record of reducing undesired turnover by up to 50 percent, and it is worth exploring.