How to Measure Quality of Hire: Track These 7 Data Points to Measure Quality of Hire Today
Hiring has been challenging throughout the pandemic recovery as it led to an outright labor shortage that made matters worse. Now, fears of a recession have more employees sticking it out in their current roles instead of job hopping to find better pay like they did during The Great Reshuffle. Unemployment rates are currently at 3.4% which means there are fewer job seekers on the market to choose from and companies will simply have to hire better quality employees focusing on quality not quantity as the saying goes.
Better hiring also leads to more productivity and lower chances of workplace misconduct or injury, but if it were easy to identify ideal quality of hire metrics to improve recruitment then every company would do it. Right now, only 32% of organizations feel they effectively measure quality of hire.
Here are seven metrics and considerations of a quality hire your business should consider tracking to tangibly measure and improve hiring outcomes:
#1. Offer Acceptance Rates
Offer acceptance rates measure the percent of job offers that candidates accept. A high acceptance rate means your recruiting process is attracting and engaging the high-quality candidates you want to hire into your organization. You can measure offer acceptance rates by dividing the number of offers accepted by the number of offers offered.
#2. Job Performance
How well an employee is able to do their job and contribute to company goals is an essential aspect of determining quality of hire. Companies generally have their own employee review process already in place, but self-evaluations can also provide valuable insight into how well hires think they are doing and where they can potentially use more training.
If employees meet or exceed expectations for their job and add value to the team and organization at large, they are a good hire. If they are underperforming, they might not be the best person for the job. This can be measured during your annual performance evaluation process.
#3. Employee Retention and Turnover Rates
Employee turnover can have a major impact on organizations. The impact largely depends on several factors, like whether your best employees are leaving and how many people are leaving. If your under-performers are leaving, it might be a good thing for your organization. However, if a lot of your top performers are leaving, that can be a big and expensive problem. This is not a problem impacting a small percent of employers. Research from Aspect43 finds that employee retention is the #1 priority and concern of organizations today.
Hiring better employees can reduce costs associated with employee turnover — onboarding and training a new employee alone can cost 1.5 to 2 times the amount of the departing employee’s salary. That’s not even the cost of hiring the new employee and the impact of losing that team member has on the rest of the team who has to pick up slack in their absence.
A high turnover rate could stem from a few things. It may mean the company has a toxic environment that no one wants to work in. It might simply be a matter of creating better job descriptions and aligning those expectations with the hiring team and candidate during the hiring process. Or, it could be a matter of needing to improve your hiring process and what you consider a “quality hire” to attract, hire, and retain higher quality employees.
Measure retention by averaging the number of employees, subtracting that by the number of employees who left, and then dividing that the average number of employees.
#4. Cost Per Hire
Cost per hire measures how much it costs your organization to hire an employee. Analyzing this can help determine how efficient and effective your recruitment process is. Whether the employee generates more value than cost for the company can be an indicator of ROI. Value can be in the form of revenue generated, cost savings, positive contributions to the team, department, or company, and more.
Measure cost per hire by adding internal and external recruiting costs and then dividing the sum by the number of hires. Internal costs may include the cost of sourcing, interviewing, onboarding, and training the new hire. External costs may include job board costs, technology costs, and more.
#5. Team Feedback and Customer
Feedback can be a great way to tell how well someone is doing in a variety of situations and scenarios. Self evaluations offer employees a way to talk about their wins, where they struggled and may have needed additional support, and share their career goals with the team for consideration.
Peer reviews and feedback from team members can provide invaluable insight into the daily work ethic of employees. With ratings across several team and department members, companies can get a general sense of how the employee works and the quality of work product. It can be helpful to have a system where teams can anonymously rate new members on a scale of 1 to 10 to ensure that results are consistent and reliable.
Beyond feedback from an employee’s team, it’s generally helpful to get feedback from customers for those in customer-facing roles. This can be measured through surveys following customer interactions or in Net Promoter Score surveys to gather feedback on the quality of the experience and whether there are areas that require improvement.
#6. Time to Fill
Time to fill is one of the oldest hiring metrics as it was one of the only data points that the first hiring technologies could calculate. This metric measures the time it takes to hire a candidate from the top a job requisition is posted to the moment the position is successfully filled.
While a shorter time-to-fill doesn't directly indicate quality, it can provide insights into the efficiency of your hiring process. If a position remains vacant for an extended period, it may indicate difficulties in finding the right candidate or a struggle with managing stakeholder needs within the hiring team.
This can be measured by counting the number of days between approving a job requisition and the candidate accepting your offer.
#7. Reduce Misconduct
While often overlooked in the hiring process, workplace misconduct plays a significant role in quality of hire. If your new hire joins the company and starts being violent with other employees, threatening customers, stealing from the company, or harassing their teammates, no matter how well they perform the tasks of their job, they will never be a great employee.
Companies can prevent these misconduct issues by screening for misconduct with the help of technology like Online Screening solutions during the shortlisting or background checking processes. This will ensure the candidates you are about to hire aren’t engaging in problematic misconduct that will cost your company a lot of headlines, lawsuits, and money.
This can be measured by using a third party online screening provider to determine first if a candidate has misconduct and second how many misconduct issues a candidate may have.
Quality of hire is important to understand and measure. By tracking these 7 quality of hire metrics, employers are able to be more effective in identifying not just qualified candidates but QUALITY candidates. Employers who find ways to effectively track quality win in the long game of retaining talent and reducing churn. Companies that hire good-quality candidates also see higher engagement rates, are more productive, and financially outperform their competitors. For companies looking to improve quality of hire, this recent webinar from ERE on Improving Quality of Hire by Evaluating Candidate Behavior can help.