Why You Are Not Ready to Talk About Quality of Hire

HR as a field sure loves to have a carousel of buzzwords that fade in and out of our conscience in 12-to-18 month cycles. Often those buzzwords are used as crutches to define value, without ever really producing value. Some recent examples: big data, passive candidates, gamification, etc. etc. etc.

My new returning favorite is quality of hire.

Quality of hire is a complicated measure with numerous data points that requires a significant amount of discipline around collection and analysis. In my experience, most organizations have been unable to figure out how to accurately collect and analyze something as easy as source of hire data and the associated ROI, so I’m amazed when companies swear they can get this right. Heck, I’m lucky enough to have one of the most sophisticated analytics capabilities and we struggle with true quality of hire. Of course, there are a legion of vendors out there ready with their “magic” solutions to do things for you to “increase” your quality of hire and even more ready to take your money to do it!

That’s what actually started me down this path. I had, in my opinion, a humorous exchange with a vendor about increasing quality of hire. “Who doesn’t want to increase quality of hire? Quality of hire is the key to an organizations success! We’ve improved every one of our clients quality of hire!”

Great, kudos to you. Now prove it. Seriously, prove it to me.

At this point one of two things occurs. Either there is dead silence or I’m faced with an onslaught of P-hacked data that means nothing.

This becomes the crux of the issue: how can a vendor prove something a company can’t even prove for themselves?

Very few companies take the time and/or have the discipline to truly measure, analyze, or understand quality of hire. Most organizations that have a quality of hire measure base it solely on tenure. Think about that for a minute. That should strike horror into you. That presupposes that results are less important than time in a role. If tenure is your only measure of quality, then the assumption is made that it is better to have a poor performer stay in their role longer than a great performer who stays for a lesser amount of time. Tenure only matters as a stand-alone measure of quality in the narrow confines of roles where there is no differentiation in results based on performance.

The next most cited measure is hiring manager satisfaction. Again, not a good measure, unless you have proven the causal relationship between hiring manager satisfaction and quantifiable performance differentiation (to keep it simple: it’s either the employee’s direct contribution to money made or money saved).

This gets us closer to the root of quality of hire measures, and our inability to get it right. It’s all about performance, and performance is about results (what and how). Quality of hire measures shouldn’t be about creating a stick for performance management, but about beginning the journey to predictive hiring analytics for your talent-acquisition team, as well as other areas of impact outside of talent acquisition.

To keep this from turning into a book, I will try to simply outline what is needed to even begin contemplating quality of hire:

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  • Positions being measured against quality of hire must have clearly defined KPIs. These must relate to quantifiable measures of monies earned or monies saved; if not, you will find it nearly impossible, and most likely without value, to measure quality of hire.
  • Those measures have to be shared knowledge, not just existing in the hiring manager’s head, as they need to be fully understood in the recruiting process.
  • A structured interview process where technical skills and desired competencies are measured and quantified on an agreed-upon and universally applied scale.
  • Regular quantifiable performance measures and documentations that are objective and not subjective.
  • Highly trained and disciplined leaders that can quantify their employees performance in light of their specific impacts to revenue and/or savings.

Give yourself extra credit if you do this as well:

  • Calibration of performance and relative value for roles across the organization.

None of this takes into consideration that you will also need someone/something to record and tabulate all of the data, someone/something to analyze it, and someone/something to turn the analysis into practices that can capitalize on what is discovered.

Compound on this, the fact that based on the size of your sample, it could conceivably take years to see true trends and determine the necessary causality to drive action.

The good news it’s doable. The bad news it’s hard. I know this is the central topic for the upcoming ERE Conference in Atlanta, and I’m actually excited by that. Rob McIntosh is working tirelessly to help our profession have clearly defined terminology, so what I call quality of hire is the same as what you call quality of hire. Additionally, there is a great roster of speakers and attendees so that collectively we can explore, discuss, and challenge each other on to how best present quantifiable quality of hire and thus quantifiable value of talent acquisition to our employers.

 

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Jim D'Amico is a globally recognized TA Leader, specializing in building best in class TA functions for global organizations. He is an in demand speaker, author, and mentor, with an intense passion for all things talent acquisition. Jim currently leads Global Talent Acquisition for Celanese, a Fortune 500 Chemical Innovation company based in Dallas, TX, and is a proud Board Member of the Association of Talent Acquisition Professionals.

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22 Comments on “Why You Are Not Ready to Talk About Quality of Hire

  1. Excellent article, one of the best I’ve read on here so far. There are some other considerations to take into account as well. One, when you write, “If tenure is your only measure of quality, then the assumption is made that it is better to have a poor performer stay in their role longer than a great performer who stays for a lesser amount of time,” that may indeed be the case. The chronic employment of the mediocre may indeed produce better long term results than the acute employment of the stellar. As an analogy, when it comes to workouts, both cardio and weights, 100 mediocre workouts are better than 10 stellar workouts. More importantly, to keep the analogy going, it’s harder to maintain a stellar level of workout over a prolonged period of time. The real take home is companies will have to consider, though many if not all will be loath to admit it, that there is a ceiling on the talent they can afford to acquire and retain where diminishing returns kicks in and it’s just not worth the extra effort. Most companies don’t need and can’t really use game-changer level talent like Steve Jobs.

    Another two issues that would have to be addressed are the affects of the culture on retention, and comp on retention. Using this approach people will be figured into finances much the same way capital equipment is, and maintenance is an important part of that approach. Company leaders are going to have to face the realities of the effects of low salaries and burnout due to lack of PTO, or lack of maintenance on their human capital. And they will have to face those aspects of their companies which drive people away, such as screaming and otherwise abusive bosses, and ridiculous hours. And those are also issues they will be loath to address. The reality, in my opinion, is that companies have been sabotaging their own success for a long time by treating people as disposable resources, and they will not be quick to embrace any change to that approach. Too many people have their careers staked on it, too many people are unable to admit error, and too many ‘consultants’ make too much money enabling idiotic managers.

  2. While the spirit of Jim’s remarks is well taken, one does no favors to the search for practical measures of Quality of Hire by going too far in the direction of pristine objective truth. Defining measures that are either impossible to collect or that don’t reflect the contribution value of pivotal performers, even if measured with complete objectivity, gets us stuck in analysis paralysis.

    There are bad subjective measures– vaguely defined with no performance level anchors– and good subjective measures– clearly defined constructs with specific performance level anchors, completed by unbiased persons who have observed the performer at work over time. There are also bad objective measures— mechanical or electronic counts of items produced, sales achieved, defects detected— that don’t count what matters or don’t relate to the specific performer being rated (due to lag times or intervening variables). Some very good validation research (relates quality of hire to specific selection methods) rests on professionally (vs. objectively) scaled performance measures. While PDI was never (according to the lead psychometrician for their Employment Inventory business) able to validate their entry-level hiring assessment against existing subjective performance appraisal ratings, they were able to validate it over 200 times using a behaviorally defined subjective performance rating (in addition to studying the impact on turnover).

    So before Talent Acquisition directors and specialists throw up their hands at ever being able to adequately measure Quality of Hire, they would be well advised to get some advice from an I/O Psychologist specializing in selection systems who can assist with finding the right combination of objectivity and relevance that leads to drawing compelling conclusions.

    1. Thanks! I agree. I work very closely with our OD psychologists. They are embarking on a multiyear quality of hire project with us. We are combining their expertise, the expertise of our Human Capital minds that understand workforce differentiation, and some of the best AI tools to assist with data analysis. In the end it still comes down to knowing who and how your employees make money or save money for the organization.

      1. Sounds like you are in good hands on a meaningful project with the scope and expertise to turn up valuable findings. We are embarking on Value Calibration Partnerships with new solutions that combine psychometrics with AI latent semantic analysis. You might be interested in how our automated (and thus more objective) behavioral interviews and insight maps boost Quality of Hire as well as Workforce Return. You can learn more at http://www.BiLABs.Science And we are now connected on LinkedIN.

  3. Nice post Jim. How could I not weigh in on such a topic. You only have to stick the word ‘Quality’ in the headline and you will get my attention.

    I think the first and most important thing we should get straight based off all the conversations and observations in the last 5+ years, is that It will be a long time before we all agree on this topic.

    That being said this is also what we should stop doing: Complaining that there are too many variables to measure quality of hire and constantly hiding behind not taking action because we are too busy pointing fingers at the business, HR or other functions saying “I don’t control the hire” or “On-boarding is not my problem” OR “What if they get a shitty manager, that’s not my fault”….I could go on and on.

    We need to at least start the journey as imperfect as it might be. We need to make the focus not about getting the perfect one size fits all answer, because that is why most of our profession does not make Quality a priority…….I hear: ‘It’s too hard or not my problem as I can’t control it'[

    I say, just start the freaking journey, have the conversation as you might be surprised what you might find or how the business engages differently vs the overly weighted conversations around measures of just Speed and Cost.

    For this last point alone, I commend the Jim D’Amico’s of the world…..We need more of them willing to at least start the journey as imperfect as it might be!

    1. Rob, as you know I agree 100%, let’s get off our butt’s and do it! I really appreciate the work you are doing to help bring consistent understanding around metrics in our space, it removes another excuse for inaction.

    2. Fair point, but the problem would be people going in the wrong direction on this journey. Data and how to use it doesn’t not compute with most people since they use fallacious reasoning and look more to justify their existing ideas than draw them from data.

      1. Medieval – I hate quoting myself from another article (way to self promoting) but I am unfortunately going too in this case…..hopefully you will see it for the point I am trying to make vs the former :-).

        https://staging.eremedia.com/ere/so-you-want-to-be-the-head-of-talent-acquisition/

        Don’t fly under the radar — Step up and volunteer for things others shy away from. Trust me, leaders notice people who are willing to try tackling a tough task vs sitting back and not taking the risk. There were a number of times early in my career where peers said, “you know, that could be a career-limiting move taking on X or dealing with manager Y.” Guess what, that is the biggest wive’s tale I have ever heard. What I have learned is that leaders crave people to step up and take on BHAG goals (you can look that up in Google if you want. ). They want people in their business like that. They want lots of them, actually.

        My Point: Data will never be 100% correct when people are involved. Make your judgment based off being directionally correct, then adjust from what you learned.

        My advice is more leaders want people to take a risk and make a breakthrough. If you work for a company/CEO who does not recognize the value of taking risks to change the paradigm or make a breakthrough that gains a competitive advantage, then go find a place to work that will.

        1. We need more “Courage to be New”. No question. There are reasons it is in such short supply. HR leaders get to retire with comfortable net worths by being very sure not to try something that falls flat or lands with a splat. Executives reward not being noticed far more than they reward good tries that did not turn out as planned.

          But beyond the courage to be new we also need the appreciation of expertise. To thump a tub I have thumped before— we are not talking about rocket science, but we are talking about people science. There are people scientists and they have a literature. It is called Industrial/Organizational Psychology. Hubert Brogden wrote about “The Dollar Criterion” in the 40s. Cronbach and Gleser wrote a book on “Psychological Tests and Personnel Decisions” in the 60s. We don’t need to reinvent the language and the evidence each time. It’s very efficient to start with what we know, particularly when we have the expertise to tell the difference between opinion and accumulated knowledge. The selection utility equation is a formula that can be algebraically proven, and with a lot less gymnastics than e=mc(2). It is not the whole story by any stretch, since it is limited to evaluating hiring processes that involve only one decision point. Few exist. But it has been expanded since then.

          So when I see smart, capable, and courageous people fearlessly assert that “We have known, for decades, that job performance among jobholders varies in direct proportion to both the mean utility of the job and to the information processing demands of the job.”– I cringe. Direct proportion means 1:1. There are no 1.0 correlations here. And it is not job performance that varies but the financial value of that performance variation that shows a relationship to the two constructs mentioned. Picky picky, I know. Who cares? Well, executives can smell imprecision and pounce on it (or quietly sideline the proponents) because to accept the evidence-based argument limits their freedom. And they don’t like that— one bit. So you had better have it right and be able to back it up, all the way, or they will continue happily with their personal opinions.

  4. If they make the effort, businesses can reasonably establish the mean (expected or average) utility of every job. That utility can be measured either in money terns or as specific outcomes, per unit time.

    We have known, for decades, that job performance among jobholders varies in direct proportion to both the mean utility of the job and to the information processing demands of the job. For two jobs with the same mean utility, the one with the higher information processing demands will exhibit greater performance variation among jobholders. For two jobs with the same information processing demands, the one with the higher mean utility will exhibit greater performance variation among jobholders. The often referenced “80/20 rule” for salespeople reflects both the high mean utility of sales positions and the high information processing demands of targeting and making sales.

    Job performance typically gets modeled as a normal distribution (bell curve), which turns out to both a convenient and a conservative assumption. For convenience, the normal distribution facilitates statistical calculations; for conservatism the known upward skew of the real-world job performance will make the average of actual outcomes higher than the average of predicted outcomes.

    Employers should universally want employee selection processes that systematically beat the averages, because they use a combination of procedures that have high predictive validity for job performance and job learning, with reference to each particular job. Properly developed and conducted Structured Interviews constitute one such employee selection procedure. Others procedures that add measurably to predictive validity include: (i) tests of General Mental Ability (GMA or g), (ii) tests of Integrity/Conscientiousness, (iii) tests of Job Knowledge, (iv) Job Simulations and (v) Work Samples.

    Value to the business equals the utility of talent less the cost of talent. Productivity equals the utility of talent divided by the cost of talent. These metrics can be applies at the level of an individual, a work group, a department , a business unit or enterprise wide.

    When Value and Productivity rise in concert , business performance compounds, systematically.

    The good news is that its doable and that doing it right takes less time and effort than the cumulative waste incurred regularly in most organizations by doing it wrong.

    1. “Employers should universally want employee selection processes that systematically beat the averages…”

      Indeed they should and do want that. The problem arises with that very distribution you mention; the majority will ‘sort of’ achieve that, a lot won’t and a very few will. So, the question arises that when these people employ all the tools and methods that should allow them to beat the averages and they only do that 50% of the time or less, will they face up to the fact that it’s possible other factors like pay, PTO, benefits, and the overall behavior and approach of management there are negatively impacting their ability hire and retain people? If I had to lay odds, I’d say 99.9999999% of them will never even raise the possibility, and instead blame the tools or their employees.

      1. Yup! That’s why I started off with “If they make the effort …”

        As to employee pay and benefits, if employers don’t know what their jobs are worth, or how much more a top performer could contribute in any given job, then they certainly might tend to “cheap out” on compensation, in an effort to cover their own dumb $%ses.

        As to the quality of management, that’s the place to start with REAL “quality of hire” initiatives. Gallup recently (3/27/15) reported that fewer than one in five (only 18% of) managers had what it takes to manage people. How much might that cost?

        1. I have a feeling they don’t care. That cost, among others like the cost of turnover, is largely unseen and even unacknowledged by many companies. You can only make a cost savings argument when the cost is acknowledged and accounted for, which it often isn’t, which kind of indicates how far many companies are from being able to do what you suggest. I think your point is spot on as is Jim D’Amico’s. But then consider, Jim’s point is many companies don’t even understand what quality of hire is, much less have the tools and wherewithal to track it and use the information. Basically recruiting and HR are, relatively speaking, still in the stone age when it comes to management. We’ve got good tools when it comes to HRIS and ATS, more or less, if your priority is data tracking and compliance. But beyond that these tools are essentially useless. The very systems which dominate our professional lives were designed around the idea of employees being liabilities to track, and the risk of holding them to be minimized.

          My conclusion is simple: most companies couldn’t care less about their employees. Everything to the contrary and about performance is lip service, it’s something they know they’re ‘supposed’ to say. But, if a CEO started demanding his or her employees throw their first born children into wood chippers to appease the god of profits and ensure the company’s future success, most HR people would go along, and they would tally the potential cost and find the legal justification to keep the practice going, and the Sales! people in recruiting would try and convince everyone it’s a great way to trim their family’s overhead, and still low ball the offers.

          1. In the same Gallup report that I mentioned, above, Gallup Inc. Chairman and CEO, Jim Clifton wrote: “Most CEOs I know honestly don’t care about employees or take an interest in human resources.”

            I expect that Jim knows more than a few CEOs, so that’s a pretty damning statement, coming from someone who undoubtedly knows more than a thing or two about talent management.

            Why would performance-oriented CEOs tolerate such gaping holes in their goody buckets? Why do CFOs, CHROs and CLOs similarly ignore the elephant(s) in the room? Is it stupidity? Bad information? Denial? Incompetence?

            Hint: For more than half of recently surveyed CEOs, their biggest fear is “being found to be incompetent”. Do competent people think that way?

            I’d love for a CxO or two to step up to plate and tell us the Why? of abysmal talent management on their watch … right here, right now! But don;t expect that. They think it better for them to keep ignoring the elephant(s) ─ i.e.the 20-50% of annual payroll waste, as well as the legal and regulatory noncompliance. Their biggest fear seems to be getting sideways with their incompetent, yet decisive CEO.

          2. I think the reasoning is two fold. One, economic. There’s a near permanent shortage of jobs in the world. That’s partly incidental, partly by design, but the end result is the same, the devaluation of labor making it increasingly disposable. Two is sociological. In the US it’s just the culture to regard the employer as ‘superior,’ and the employee as the ‘inferior’ in the relationship. In reality both are equal participants as in any exchange. But our culture goes back to Puritanism and Calvinism, which regarded work as an end unto itself. Toil was lauded, work was an opportunity to show how godly you were, the person or organization who gave you that opportunity was a benefactor of sorts. Salaries were just an incidental thing you were ‘lucky’ to get, and that attitude continues today.

            Now in Europe their culture grew up with royalty and feudalism and guilds. It took the Black Death wiping out a third of the population to finally get employers to realize a wage rate hike was called for due to short supplies of labor. The laborers in Europe knew damn well that, as ‘capitalism’ rolled in, that if they didn’t force some equity via government action, then the companies would just capture the secular government as easily as they did the royal families and proceed to screwing everyone else. Here in the USA everyone bought the ‘land of opportunity’ line even as corporations were capturing and manipulating policy to their own ends.

            Those CEOs are unaware and uncaring because they can be, plain and simple, and they will continue to be until the peasants show up at their doors with torches and pitchforks, and then those same CEOs will be totally amazed at how such a thing could happen. They will actually be annoyed at the presumptuousness of ‘the little people,’ demanding more when they pay a perfectly fair wage, at least in their eyes. It won’t occur to them that if they have six mansions all with indoor heated pools and four personal jets while their ’employees’ are scavenging food from dumpsters, that something is wrong with that picture. Nope, they’ll just say those people just need to pull themselves up by their bootstraps and work harder.

            You see, you guys are optimists. I’m not. In the entire history of the world there hasn’t been a single country or empire that hasn’t eventually collapsed due to a massive concentration of wealth in the hands of a few who repeatedly send out the sons and daughters of the poor to toil and die in wars and borderline, or just straight across the border slave labor. This leads to a revolution, usually a bloody one, in which case some lucky few capture the apparatus of oppression and start the whole damn thing over again, never learning a single lesson from the past. I truly have little to no hope this cycle has ended.

  5. Great post, Jim! I have been thinking on this topic a lot myself. Having KPIs would be ideal, but I suggested in a blog post mini-performance review data from the hiring managers (http://www.neorecruiter.com/2015/08/the-minimum-requirement-for-improving-quality-of-hire/). Include some KPIs in the review and it would be better yet…but if we (as recruiters) just see consistent and timely feedback, it would help a great deal and allow us to measure changes based on our “improvements” to the system.

  6. Jim, great post. Coincidentally, I wrote on the very same topic a couple of weeks ago: http://www.hireiqinc.com/blog/entry/QOH. Effective QOH means that recruiting and its stakeholders need to exchange meaningful data and agree what constitutes a quality hire. Your six points are a great framework to have that conversation between the constituents. While you are correct that it’s hard to do, it’s certainly not impossible.

    This is a perfect example of applying big data and machine learning. By uncovering the traits of excellent performers during the pre-hire phase of their employment and correlating these characteristics with their post-hire performance a model can be created against which subsequent candidates for the same position type can be evaluated. Lather. Rinse. Repeat. Letting the computer do the work means results can be seen quickly, even with a relatively small sample size.

    Granted, this approach works best at scale – call center, retail sales, branch banking are just a few examples – but these concepts apply to just about any position that has objective metrics associated with it. And, let’s face it, what position doesn’t?

  7. For us quality of hire may best be described as quality of team player. As far as gamification of which I’m I’m a believer, when professionally designed can provide valuable feedback and quantifiable returns.

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