Quality of Hire: Why You Should Measure It

I consider the single biggest fault with corporate and external recruiting functions to be their almost universal failure to measure the quality (or performance) of the people they hire. Nearly every other “overhead” function, from supply chain to package delivery, has jumped on the ISO or six-sigma bandwagon, but recruiting has continued to resist. If it’s fear of being exposed that’s keeping you from measuring the performance of your hires, I can’t help you. But if you just don’t know how to measure quality, this article series will answer all of your questions. It’s long and detailed, but full of answers?? if you are up to the challenge of becoming a six-sigma recruiter! This article series will cover four key areas of quality measurement: Part 1:

Introduction

Why measure the quality of hire

Part 2:

What to measure
When to measure it

Introduction Most employment managers go about measuring great recruiting the wrong way. All to frequently, they use misleading?? and at worst, inaccurate?? measures of hiring success, such as the cost of a hire, the number, or even the speed of the hire. The primary (or perhaps sole) measure of hiring success should be the quality or performance of the hire. But unfortunately, many employment managers can’t seem to figure out how to measure the quality of a hire. There are a variety of ways to measure the performance of your hires. Most organizations settle on three to six measures, so you’ll need to pick and choose from the list in Part 2 of this article series depending on what best fits your culture. What I do recommend is that you “triangulate.” Get three to five independent assessments to ensure initial accuracy. Firms usually start with a longer list (six to ten) and pare it down based on discussions with managers and the CFO. Over time, usually no more than five measures (which are often combined into a single index based on cost, accuracy, ease of assessment and “face validity”) need to be used. In case of doubt, start with the measures that are listed first. They are the most powerful. Let me be clear: the single most important thing you can do to improve any staffing function is to measure and reward the quality or performance of the people you hire. Everything else pales in comparison when it comes to changing the way your recruit! Incidentally, if you can’t measure quality at all levels, you need to at least do it at the top jobs and in key positions. In addition, if the cost or difficulty of measuring the performance of the hire seems too high, sample every tenth hire or only do it for key jobs. Most of the quality-of-hire measures fall into five categories:

Output and performance of the hire
Retention rates of top performers
Percentage of qualifications met
Compensation and promotional rewards given the hire
Subjective assessment by managers and others

Why Measure the Quality of Hire? Before we delve into how to measure quality of hire in Part 2, let’s look at some of the reasons why HR should (but often doesn’t) measure it:

How can your firm be an industry leader without quality hires that produce new ideas and innovation? Filling uniforms with “warm bodies” doesn’t win football games or market share.
Productivity does matter. It is arrogant to assume that all hires or employees perform the same. If top performers produce better products, customer service, and revenue, it’s essential that we continually adjust our process to hire those that make the biggest contribution to the business as well as to shareholder and customer value. If value is part of our mantra as a firm, it also needs to be our mantra in staffing.
You can’t improve what you don’t measure. In a market that demands continued product improvement, people processes can not be exempt from continued improvement either.
The rest of the firm has adopted ISO or six-sigma standards. So why should HR be the last one?
People do what is measured, and they do it faster if it is also rewarded. If you care about something (i.e., the performance of the hire) you need to measure and reward it.
HR has a bad habit of going with feelings and intuition. This has hurt them in being assessed as business leaders. The language of business is dollars and numbers. If HR is to be a player, it must prove it’s contribution using the language managers understand.
Your customers and suppliers do it. And they expect you to measure it too, for fear that problems may appear in the supply chain if you don’t.
Quality hires and terminations in top positions can impact your image and how analysts value your stock.
Without measuring quality, you may end up wasting money on outside vendors and search firms, which are not worth the extra money if they don’t produce quality hires. You can’t adequately select among the different vendor firms if you don’t assess the quality and performance of the hire their systems produce.
Not all jobs require top quality candidates. If your processes produce uniform quality in jobs where quality has little impact (janitors?), they are wasteful. In times of tight resources, it is essential to focus the best recruiters on the high impact or “priority” jobs.
At most firms, managers don’t get measured or rewarded on being great people managers. As a result, they don’t see themselves as the “owner” of quality (or the process). Many in HR say it’s a manager’s responsibility to assess quality, but unfortunately, we generally fail to convince them it’s their job. Putting the burden on them without reinforcing it with metrics is also likely to result in little focus on measuring or delivering quality,
How do you identify the top recruiters and weed out the weak ones without a quality assessment? At the very least, when recruiters are measured on speed, cost, and satisfaction equally, quality should be the tiebreaker.
You can’t refine your sources without it. If this were football for example, failing to check to see if the top schools produce top quarterbacks by checking the players performance after a hire would get you fired. Look at the two quarterbacks from the 2000 Super Bowl, for example. One was from San Jose State and the other from Alcorn State. Hardly top schools. Everyone knows to recruit at top schools, but great recruiters know how to get the very best from no-name schools. Only after-hire performance measures can tell you where the best come from. If this were basketball, filling all of the reqs fast but not checking individual and team performance to make sure the hires could score would be silly.
Many reqs contain inaccurate or “too high” KSAs and competencies. By looking at the performance of the hire you can help determine which competencies are really needed and which can be dropped.
If no one else does it, then maybe that is an excellent reason to do it! Leaders are the first to do things and the best leaders do the “hard stuff” first. That’s how you gain a competitive advantage?? by being first. Being cost conscious but ignoring quality means you are likely to only attract the easy-to-attract active candidates, which will result in a low quality of applicant.
Assuming that good people some how automatically produce quality results doesn’t work in the product area or service areas. So why would it in the people area? You don’t gain the respect of the line managers if you have lower standards in staff functions.
If you work for an engineering or technical firm, most of your employees constantly live in a world of metrics and quality assessments. Playing by different rules can only hinder teamwork, respect, and continual improvement.
As a company becomes geographically dispersed, it becomes harder to track processes by word of mouth. Quality can suffer in some regions, and it might take some time for “corporate” to find out about it.
GE, the largest market cap firm in the U.S., has instituted a company wide six-sigma program showing the importance of quality to top firms.
Massive cost cutting (typical in HR) can slow down and weaken the hiring process. Unless you track it you would never know the resulting impact on the quality of hire caused by excessive cuts
A low quality of hire could be partially caused by subtle discrimination. Measuring the quality of hire also includes legal issues and diversity.
If the metrics and rewards you currently use for managers and recruiters focus on meeting hiring quotas, they may force an overemphasis on quantity.
The Saratoga institute (the leading HR benchmark organization) includes quality of hire as a primary employment metric.
Few organizations actually measure the accuracy of their screening process?? even though there can be serious legal consequences if you can’t prove screening validity, reliability, job relatedness, and lack of adverse impact.
Shifts in the economy cause people to look and take jobs for different reasons. Without a quality-of-hire metric, you will have no idea if your “offer and selling” systems stop working as the economy shifts.
If you have to fire new hires that are bad performers, a feedback loop to the recruiter can turn failures into a learning opportunity for process improvement.
We already know from retail sales data that measuring and rewarding volume alone can result in some ugly sales practices. Satisfaction data helps make sure that recruiters don’t harm your external image by “abusing” or lying to candidates.
TQM (total quality management) taught us that quality matters in all processes that have a major business impact. The fact that quality is difficult to measure is a weak excuse when other processes, like supply chain and CRM (customer relationship management) have figured it out. Top HR people get paid big bucks to do the hard things first.
Even great processes have breakdowns. Without quality assessments at each level of the process, finding the “leak” is difficult.
If HR is to be an ROI function, it is essential that ROI be a key measure of one of the largest and most important HR processes. The R part of ROI (return) requires a performance/quality measure.
If your competitors measure quality then they are likely to improve at a faster rate than you. This will give them a competitive advantage.
In a tight, competitive market, recruiter quality can suffer as well (hard as that is to believe). Quality of hires can tell you which recruiters are not up to par.
Great candidates drop out as a result of bad interviews and offers. Measures of quality at each level (prospect, candidate, finalist, new hire) allow us to seek out the causes of any weakness in the process.
What if the process doesn’t assess “fit” correctly and the candidate’s productivity suffers or they quit? Quality and retention measures allow you to identify the root cause.

Now you know why it’s an absolute must that your organization implement some form of quality or performance measurement for your hires. In Part 2 next week, we’ll get into the nitty-gritty details of what aspects of quality to measure and how and when to measure them.