The Failure of Traditional Hiring Metrics

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Oct 22, 2020

Here is a universal plain and simple truth: What you measure is what you get. But a better statement, from the historian H. Thomas Johnson, is: “Perhaps what you measure is what you get. More likely, what you measure is all you’ll get. What you don’t (or can’t) measure is lost.” 

In hiring, can we live with what is lost?

We cannot and need not. Let me explain why.

It’s an unfortunate reality that the most important outcomes in life are almost always extremely hard to measure. Take education: It’s like having a kid who is studying for a test on facts that she could simply Google, when what really matters is her complex problem-solving skills that can’t be easily tested. Or take economic measures: Strip mining your country could increase GDP in the short-term, while ruining your long-term future. Or the weather: How many times have you cancelled your planned outdoor activities because it was supposed to rain, when it ended up being a gorgeous blue-sky afternoon? 

The Failure of Traditional Hiring Metrics

In hiring, the traditional measures are time and cost to hire. Lower is better, right? Sure, all else equal. But in reality, all else is rarely equal. If you are able to fill an opening in an hour for $10, but the new employee steals all your trade secrets and sells them to your biggest competitor, is the low cost and time worth it? 

While that is a seemingly unlikely scenario, this situation does in fact play out every day all over the world. Time and cost to hire are readily apparent metrics, and it is all too easy for companies to stop there and assume (or hope or pray) that these metrics adequately capture the success of your hiring processes. But they do not, and they never will, because they do not measure what really matters –– the elusive and difficult-to-measure concept of quality of hire. The fact is that the economic impact of quality of hire to your company is vastly greater than a bit of cost or time saved in the hiring process. 

Quality Matters Most

Why is quality of hire so important? The variation in performance among new hires is often massive, and finding the diamond in the rough that can significantly contribute to your organization is truly a glorious and impactful thing. The magnitude of impact that quality of hire can have on an organization simply dwarfs the impact of all lesser metrics. 

As with many high-value metrics, measuring quality of hire is more complicated than calculating cost of and time to hire –– but that is no reason to ignore it altogether. To get started with tracking and measuring quality of hire, consider analyzing the following data points:

  • Job performance metrics. Some –– though not all –– jobs have several quantifiable metrics that companies keep track of. Call center agents, for instance, have a lot of tracked metrics, such as sales volumes, call quality, average handle time, net promoter scores, and even bathroom breaks (though I recommend against tracking that last metric). For any role, the goal is to access a large sample of ratings over at least a few months of time. 
  • Supervisor ratings. While these metrics can be very valuable, they’re not as useful to judge the quality of your hiring process if these are only collected once every year for administrative use, since they have little to no variation. Instead, ask supervisors for ratings on new-hire quality in a separate survey, and encourage them to rate accurately and confidentially for the purposes of your analysis. 
  • Turnover data. Who is leaving, and why? Capturing this information, and noting the real reason that an employee left your organization (not the one his or her manager cited), is crucial. Employees often leave jobs because they don’t get along with their bosses, while other common reasons for turnover include fit for role (or lack thereof) and compensation. There is a veritable cornucopia of rich data here to be analyzed, and it is vital to understand whether and why you are systematically losing high-performers. 
  • Candidate feedback. This is important for many reasons beyond the scope of this article, but suffice to say that a good candidate experience translates to substantial ROI during and far beyond the hiring process. Check out this calculator from the Talent Board to explore this ROI further.

Collecting good quality metric data is not always easy, but it is imperative to understanding the effectiveness of your hiring process. It is the target that we aim to hit with predictive pre-hire data like assessments and interviews, and without it, you are shooting blindly.

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