New Research Reveals Surprising Findings About Quality of Hire

Article main image
Nov 8, 2022
This article is part of a series called Editor's Pick.

Finding meaningful metrics has proven to be recruiting’s white whale since the first candidate applied for the first job.

The challenge lies in the fact that recruiting leaders are trying to satisfy two different flavors of measurement: data-driven and perception-driven. Some of the data-driven metrics seem relatively straight-forward — time-to-fill, cost-per-hire, recruiting funnel counts, etc. 

The caveat here is that even these so-called “hard metrics” rely on subjectivity. Not everyone defines time-to-fill from req to employee’s first day. Cost-per-hire typically relies on averaged costs as opposed to actual. And your recruiting funnel? Depends on how diligent everyone is when updating candidate statuses in the ATS.

In short, recruiting metrics continue to be frustrating. And the most frustrating of these metrics is quality of hire. It’s challenging enough to get someone to accept an offer and actually show up on the first day. But then how do you measure if they were a good hire? Is it turnover within the first 90 days? Is it their first performance review? Is it a survey you email to managers to ask how it’s going?

Like I said, frustrating.

And yet, quality of hire is a vital component of a successful recruiting strategy. It could inform recruiting accountability, potentially pinpointing whether your “culture” issues are a hiring problem or a management problem. (Spoiler alert: it’s probably your management.) It also helps identify where your best candidates come from so you can spend your budget accordingly. 

Ultimately, quality of hire is a way to validate decisions made throughout the process to help refine your strategy, something every organization wants to do.

Can It Be Done? 

We know that many metrics are questionable at best. So how to measure quality of hire? 

Crosschq, a company that offers an array of solutions aimed to limit bias in hiring and boost talent insights, thinks it knows. It recently released a quality of hire report, having gathered data from an array of solutions covering the employee cycle — from HRIS, ATS, payroll, benefits, and interview tools to performance management, culture and engagement, sales management platforms and more. It also tapped its own proprietary data. Using AI to process the data, Crosschq subsequently shared key findings in its report..

Full disclosure: I haven’t talked to anyone at Crosschq. I simply read the report and reacted to its findings. I’m inherently skeptical around any “black box” approach to finding an elusive metric, but I also see that the team has a lot of high-powered data scientists who may very well have created a powerful way to measure quality of hire. Their report shares some of the insights gleaned from this data, which could help organizations make better decisions for their recruiting process.

Employee Referrals Aren’t That Great

Some of the more surprising findings were the ones that busted some of the myths that have shaped strategy for years, particularly the claim that internal referrals lead to better hires. 

According to Crosschq, internal referrals have a quality of hire that is 26% below industry average. That throws some cold water on a lot of referral programs. 

There are a lot of factors that play into this information, so it’s hard to pinpoint a single reason. It’s possible that internal referrals get more benefit of a doubt during the selection process, meaning red flags are overlooked because a hiring manager simply thinks the candidate is a good person.

Personally, I’m 50/50 on referral programs anyway. Given the level of effort that goes into tracking referrals, ensuring they are treated “special,” and following up with the referral bonus, this finding could sway me to recommend against referral programs in favor of building a more streamlined, evidence-based selection process. 

Some Assessments Are a Waste of Money

Speaking of evidence-based selection, don’t be so sure that an all-the-rage cognitive pre-hire assessment is getting you the return on investment you’re hoping for.  In fact, Crosschq found there was a negative correlation on quality of hire for candidates who scored well on a certain assessment. (Maddeningly, Crosschq doesn’t name the assessment, and there are a LOT of cognitive assessments out there. All I’m saying is that if you’re going to spill some tea, name names, ‘kay?)

Regardless, I’m glad to see a provider warning organizations to be really thoughtful about their assessment choices. While recent data suggests that candidates welcome assessments as a way to showcase their skills in a way not possible with a resume, not all assessments are created equal. You need to work with the assessment provider to evaluate both the validity data and to perform a thorough confirmatory job analysis to ensure both the assessment and the normed populations are correct. Otherwise, you’re just throwing money away.

Be Careful Who You Lay Off

One finding that I found very interesting is that quality of hire is 15% higher in terminated employees than retained employees. 

That doesn’t mean that everyone you fire for performance-related reasons are secretly amazing employees. Crosschq specifically called out reductions in force (RIFs) and layoffs for this one. Any HR professional who has had to help coordinate a RIF knows that identifying the criteria for who stays and who goes is tricky and a potential legal landmine. So most organizations pick something simple like tenure (last in, first out) as a way to identify the impacted population.

Not surprisingly, you’re going to lose some amazing new employees with this approach. Hence, Crosschq advocates using a more complete picture, like performance, engagement, and other factors to decide who will be a better contributor to the organization going forward. 

While I appreciate the sentiment, the reality is that a lot of performance reviews are an exercise in fantasy — managers score people too high or too low, depending on merit guidance or simply how busy they were when they were completing the review. Additionally, EEOC guidelines often prompt organizations to go the path of least resistance. But it’s definitely an intriguing finding that warrants more investigation.

Bringing It Home

Overall, there are some interesting findings fin the report; however, without more information around how quality of hire is found, I wouldn’t accept all the findings at face value. 

Of course, the report was released with the hope that the readers will ask for a free demo. I was a bit taken aback to see that a company that states its mission is rooted in eliminating bias in hiring doesn’t have the most diverse leadership team I’ve ever seen, but looks can be deceiving and the company continues to evolve. 

I also appreciate that the report wasn’t afraid to take on some of the bigger “beliefs” in recruiting, even while reinforcing findings like “most interviewers are not very good at identifying top talent.” Yeah. We know. 

In the end, organizations just need to be willing to question what they “know” is true. Question your assumptions about the way things have always been done. Don’t be afraid to experiment — try A/B testing to see what works better. Stop doing something you’ve always done and see if it really hurts anything. Identify metrics that matter to your organization and make that your quality of hire. 

Whatever you do, just keep trying to get better.

This article is part of a series called Editor's Pick.
Get articles like this
in your inbox
Subscribe to our mailing list and get interesting articles about talent acquisition emailed weekly!