How Should You Measure Quality of Hire?

“How do I love thee? Let me count the ways.” – Elizabeth Barrett Browning

Not being Valentine’s Day, nor the 24/7 romantic, some of you might be confused. Of course, in this case I’m referring to quality of hire. It’s a worthy topic, but like a cloud, it’s hard to get your arms around. When should it be measured is as difficult to answer as how. “Why” adds another set of variables to the mix. I’ve just volunteered to help HR.com develop a curriculum for a new Quality of Hire educational program it’s launching, so I figured it might make sense to get some discussion going on this important topic, starting with what, when, why, and how. My viewpoint follows, but don’t hesitate to add your own to the conversation.

Why you should measure is probably the best starting point. Some of my reasons for measuring quality of hire revolve around the following:

  1. Determine how well your hiring process is working. If you’re not hiring people in the top half, or the top half of the top half, you’re not raising your talent. Measuring quality of hire by position will tell you how well you’re doing from an end-to-end standpoint.
  2. Track every aspect of the sourcing and recruiting process. Breaking down quality of hire by process step — e.g., sourcing channel, recruiter, hiring manager, etc. — allows you to figure out what’s working and what’s not. Sourcing channel quality of hire tracking should be high on the list here. Tracking candidate quality at this step allows you to allocate your budget precisely by calculating ROI by sourcing channel.
  3. Measure your assessment accuracy. By comparing pre- and post-hire quality of hire by candidate, you can determine the predictive value of your assessment process. You might discover that traditional behavioral event interviewing doesn’t differentiate too well between the top half or bottom half, or maybe it does.
  4. Determine if you’re hiring good people for the wrong job. Many top people underperform because they’re doing work they don’t like, don’t fit the culture, or don’t get along with their supervisor or their team members. Quality of hire needs to take these differences into account.

What — defining quality of hire. All of the whys listed above indicate the need for a common definition of quality of hire. Maybe this should be the starting point. To begin this part of the discourse, I’ll suggest the following definition for quality of hire, but don’t feel bound by this. Modify it or propose your own.

Adler’s Proposed Definition of Quality of Hire: the measure of how well a new person meets the performance needs of the job.

The reason I like this definition is it takes into account the actual requirements of the job and environment in order to measure candidate quality. It’s also simple, and should tie directly to the performance management process. Most important, it’s not based on an absolute level of quality, e.g., skills, experience, academics, behaviors, competencies, and the like. For example, without this fit and actual performance consideration, a talented person based on ability, training, academics, experience and potential might turn into an abject failure. Likewise, a person who might seem marginal on a skills and experience level could be a star if he or she thrives in the environment and doing the work actually involved in the actual job.

When should you measure quality of hire?

My take on this one is: always, and before, during, and after. If you wait until the person is hired to measure quality of hire, it’s too late. How could you possibly figure out the cause of a problem if you waited until the person was on the job and working? And if you’re going to wait until after the person is hired, how long will it take to learn if the person is in the top half or bottom half? Thirty to 60 days is too short, and six months to a year is too long. This is comparable to measuring product quality after the product has been sold and used in the field.

Since you need to measure quality of hire at each critical pre-hire process step — e.g., sourcing, interviewing, closing, etc. — in order to keep track of what’s going on, unique metrics need to be developed that best predict on-the-job quality of hire. For example, from a sourcing perspective you’d want to know which channels produce the most high-quality hires, and their cost. The definition of quality at this step, however, might not be the same one used to measure post-hire quality. Something like “number of candidates passing the quality screen and making it to the first round of interviews” might work. Regardless, whatever is developed has to correlate with post-hire quality of hire.

Always, or consistenly, is also part of the when-to-measure-quality-of-hire discussion. This way you can determine if a process step is getting better or worse and if some intervention is necessary. So daily or weekly needs to be added to the “when” consideration.

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How to measure quality of hire.

For purposes of this article, the best we can say is that it will be different before and after, but whatever measures used need to correlate with the ultimate measure of quality of hire: how the person performs on the job.

Here’s one solution. For the past 20 or so years as part of our search practice, I’ve been using a talent scorecard (download sample form) that compares a candidate’s past accomplishments to what needs to be done on the job across 10 basic factors. Some of the factors include technical competency, motivation to do the required work, team skills working with comparable groups, and planning and organizing comparable work. The evaluation is based on asking candidates to provide detailed examples of accomplishments that best relate to the actual performance objectives of the position.

Since all of the factors on our scorecard relate to real job needs, the same form can be used to measure both pre- and post-hire quality. This is a huge benefit. Subsequent differences between pre- and post-hire quality can then by attributed to changes in the job or environment, weak assessment skills, or hiring manager issues, and the like. This method requires that the performance expectations of the job be defined before hiring the person and discussed in detail during the onboarding period.

The idea of measuring quality of hire before the actual yes/no decision is made has a lot of intuitive appeal, especially if the post-hire measurement technique is essentially the same, and there’s a high correlation between the two. In this case, pre-pre-hire quality metrics can then be developed to measure both pre- and post-hire quality. One of these would be the number of formal manager interviews per hire, which could then be tracked back to the recruiter and sourcing channel. Tracking quality by active vs. passive and inside vs. outside recruiter would also help isolate the best techniques to maximize quality.

This performance-based approach to measure and control quality of hire is only one of many possible, but it meets a lot of key needs. For one, it’s not that difficult to implement. For another, it can be easily tracked from a process control and feedback standpoint. But don’t stop here. Add your thoughts and possible approaches to the mix, but try to meet these overriding requirements: simple to use, it works, and it’s part of an end-to-end process control system. To me these three conditions are essential. HR.com is planning on a major educational program around this topic, and if the hiring market improves it will be a critical component of any company’s hiring strategy. On this basis alone it’s worth developing a workable solution.

Lou Adler is the CEO and founder of The Adler Group – a training and search firm helping companies implement Performance-based Hiring℠. Adler is the author of the Amazon top-10 best-seller, Hire With Your Head (John Wiley & Sons, 3rd Edition, 2007). His most recent book has just been published, The Essential Guide for Hiring & Getting Hired (Workbench, 2013). He is also the author of the award-winning Nightingale-Conant audio program, Talent Rules! Using Performance-based Hiring to Build Great Teams (2007).

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6 Comments on “How Should You Measure Quality of Hire?

  1. Wow!

    1) A common-sense definition of “quality of hire”!
    2) Logical, timed measurements of “quality”!
    3) A straightforward, simple form to gather the data!

    Bless you, Lou Adler.

  2. Thanks, Lou. Quality is very important. Therefore, hire a Recruiting Quality Specialist. Recruiters are too under-resourced as it is to take on more responsibilities-
    “We put butts in chairs, we don’t see how well they fit or how long they sit there.”

    Managers are usually required that their product or service comes out on time, within budget, and within quality tolerances- no excuses. Including hires with those requirements i.e., requiring hiring managers to be responsible for the timeliness, cost, and quality of their hires would go far to see the improvement in quality that is discussed here.

    Cheers,
    Keith

  3. I look forward to seeing your contributions on HR.com. What is the time frame for the project and what do you expect the final format to look like (seminars, online program, webinar…) Thanks Lou.

  4. Really glad you raised the question of measuring quality of hire. As you indicated, so much depends on how “quality of hire” is defined. Especially because it’s going to be THE key driver of which companies deliver superior performance over the next decade (much like CRM and Lean Enterprise were in their decades).

    Since you labeled your definition “proposed”, I’ll assume you’re open to additional perspective. I think your proposed definition should work pretty well for non-exempt positions. However I think the definition of quality-of-hire for the C-level / Executive / Manager / Professional Individual Contributor (“C/E/M/P”) levels ought to be very much different from that for non-exempts.

    That’s because getting the most out of any hiring decision is really a matter of getting right what I would describe as the reward / risk ratio inherent in the specific position. By reward / risk ratio I mean the potential for a superior hire to achieve Upside Value-Added (“UVA”) divided by the potential for a below-average hire for “Downside Value-Destroying” results (“DVD”).

    Generally non-exempt positions have a small UVA to DVD ratio. That is, the important aspect of a non-exempt position is to do the job as it is defined, to “meet requirements”. While you’d welcome any above-average performance, you wouldn’t risk the DVD that could result from encouraging “non-standard” behavior.

    BTW, that’s why your “meets requirements” quality-of-hire definition aligns so well with the way Quality is defined in Operations. Quality of things like material inputs, capital equipment, production processes etc. are all characterized by a small UVA to DVD ratio too. In other words you wouldn’t seek out, or pay more for, a substitute material input B that lasts twice as long as the standard, on-spec input A as long as A meets the specification.

    The situation with C/E/M/P [executive / managerial] positions is completely different. Generally the UVA of a superior hire in that kind of position is so much greater than for an average, standard, “meets requirements” hire. After all, this is where the great majority of product and process innovation, the principal source of profit growth, comes from.

    To set a “meets requirements” standard for these executive / managerial type positions will inevitably lead to hiring decisions focused on risk minimization rather than upside maximization. That’s because the “meets requirements” quality-of-hire definition gives, effectively, a zero implicit value to the potential for upside performance.

    What do you think about modifying the quality-of-hire definition for C/E/M/P [executive / managerial] positions to motivate hiring decisions more toward capitalizing on the upside potential of superior hires?

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