There are two fundamental issues with the current quality of hire measures: the timing of the assessment and the definition itself as it relates to mid-senior level hiring.
For these more senior hires, it’s astonishing to observe that companies wait for six months or more to take a retrospective look at how well they have performed, and then define this as the “quality of hire.” What if the quality of hire turned out to be poor?
That company is now six months or a year in, and it has an under-performing mid- to senior-level employee.
Not only will they have to work with that person to try and improve their performance, or at worst manage them out of the business, but they also missed an opportunity to hire a star performer in place of this person. So the overall loss of performance is far greater than someone just not quite making the grade. There’s the opportunity cost of not having a great hire in there in the first place.
Also, defining quality of hire by existing metrics and whether a new employee “meets or exceeds” expectations as defined by the average performance of their peers in the business … there’s a problem with this definition. Average to the best company in the world may be excellent to a less-successful competitor. That’s not an issue to the market leaders, but for those trying to topple the leader in any given industry, being happy with “meets expectations” as defined by their internal peer group is not good enough. So why aren’t all companies benchmarking success on the best in the industry, rather than mediocrity in their own business?
That’s hard to do as you’re not going to have your biggest competitors sharing their employee scores. Also, the metrics they use to determine those scores may also be different. However if you seek for any vacancy to find the best person in the market and not just the best candidate on the market (“on the market” defined as being actively looking for work and “in the market” being the rest of the working population not actively looking), then you’re a step closer to raising the bar of your existing workforce.
If only it were as easy as it is in universities from a candidate selection standpoint. They know when they’ve recruited the best students into their university because of the relatively standard entrance qualifications tailored to each particular course.
Once a high-performing student enters a Cambridge-level university, they are all of a sudden surrounded by many other high-performing students, and consequently the bar is set very high. Where that student previously stood out from his or her peers in high school, they’re now potentially “average” among their peers in the university. If that same student went to a university where the entrance criteria was less challenging, that same student would likely stand out among his or her peers in that university.
Of course, universities have a very-well-defined entrance exam or qualification process based mainly on academics. This makes it easier for them to identify the best, and compare candidates fairly.
The same can’t be said in the corporate world, where it’s not necessarily about the qualifications, and important job factors are less easy to quantify and measure.
Where the university analogy runs out of steam is when you look at university candidate attraction methods. They’re appealing to a captive audience, and so advertising, appropriate branding, milk round presentations, and student engagement are all highly effective recruiting methods. The same can’t be said in the corporate world, as at a mid to senior level, great candidates aren’t always looking for work, so they have to be sought out, approached, and assessed in relation to their industry peer group.
This is where traditional headhunting techniques (versus the passive job board and “we are here, look at us” social media campaigns) come into play … having your in-house recruiters adopt a much more proactive approach, focusing on niche areas and doing detailed market maps of the main competitors.
As a brief example, for each of your corporate functions (e.g. finance, marketing, product, C-level, sales, etc) identify the top 10 competitors or target organizations (target organizations may differ from market competitors) you would like to hire from. This list should be drawn up with the business — the people who are working in the respective functions with knowledge of their market. The finance department target list may differ from sales, operations, etc. Then you should identify the teams in those target organizations and start to build your market intelligence, nurture ongoing dialogue with target individuals, and ultimately headhunt from them.
To define quality of hiring (rather than quality of hire) for mid to senior roles you should be able to answer one simple question:
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How mature is your hiring process? Answer these 5 questions and find out.
“Is our candidate slate made up of the best people we’ve identified and approached in the market at our competitors and target companies?”
Don’t confuse this with “Did we advertise on enough job boards and social media platforms?” That’s only going to get you the best candidates on the market, not the best in the market.
Unless you have the data and market maps and conversation records with target individuals at these companies, you can’t answer “yes” to this, and your quality of hiring cannot be described as “exceeds expectations.”
No doubt there will be people reading this thinking, “We don’t have the time (or skillset) required to focus on this sort of market mapping and competitor intelligence.” If you’re the recruiter, it’s understandable why you’d say this; you have a volume of hire metric to achieve. If, however, you’re the head of recruiting/HR, a trusted advisor to the business, then this response is what is wrong with in-house recruiting teams who haven’t yet adopted the dual approach to resourcing (high-volume advertising and referral-led recruiting at the entry to mid level, and niche, targeted headhunting at a senior level).
Why is it wrong? Heads of recruiting or those responsible in HR should be driving this: articulating the value to the business, the opportunity cost of not doing it, and giving serious attention to building a proportionately small in-house headhunt capability, a capability where the headhunters have different metrics to achieve than the higher-volume internal recruiters.
Companies should be ring-fencing their mid to senior and niche roles and recognizing that the metrics like number of hires per recruiter and cost per hire are totally irrelevant to this level of recruiting. Value and ROI to the business should be what’s important. “Are we doing all we can to find the best candidates in the market, not just those in the market?” Spending money and time on quality-led market mapping and headhunting from the inside will always be of value if done correctly (I’ve written before about the real ROI of in-house headhunting and also the ethics and legal position on competitor headhunting).
However, if your in-house recruiters only recruit through advertising, then base your quality of hire on retrospective metrics relating to whether they’re still in the company and how they compare to “average,” you’re going to create an eco-system of average hires and a culture of accepting mediocrity as a benchmark of success. One will feed into the other; new average employees will meet expectations and the average performance level will be reinforced by more and more average performances.
Instead, forget for a moment about quality of hire in the traditional sense, and shift your focus to quality of hiring. You may have heard of the saying, “take care of the pennies and the pounds will take care of themselves” (being a Scotsman I’m used to hearing this!). Focus on the quality of hiring and the quality of hire will have a better chance of exceeding the mediocre expectations your company may once have settled for.