The Quest for Quality of Hire

Jun 4, 2013

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 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.

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