What Does Quality of Hire Mean for Business Success?

When bringing in new personnel to any business venture, keeping an eye on quality of hire is critical at every stage of the hiring process. Bringing in new talent who can not only do the work, while meshing with their coworkers and even elevating the entire team to a higher standard can be crucial to ongoing business success.

How does “quality of hire” impact business success? How does screening job applicants contribute to employee quality? What does new hire quality even mean for a business?

Let’s start by defining quality of hire.

What Does Quality of Hire Mean?

Quality of hire can be defined as a measure of how well an employee can:

Perform the responsibilities of the job;
Be an engaged member of the team/organization;
Add value to the team/organization;
Remain at the organization for a substantial period of time; and
Not engage in misconduct at work that may negatively impact the organization.

Some organizations simplify the definition of quality of hire to focus on just the third bullet, limiting the term to mean “the value new hires bring to a company.”

We expand our definition of quality of hire to also include job performance, engagement, employee retention, and employee misconduct. The primary reason is that the meaning of the term “value” can vary from one organization to another. This makes it inherently less useful as a standalone metric to be applied to multiple organizations operating across different industries.

By specifying job performance capabilities, engagement, retention, and conduct as part of its definition, the “quality of hire” term can be better standardized for ease of comprehension by both talent acquisition and HR professionals across differing organizations with their own estimations of “value.”

How Do I Track Quality of Hire?

Measuring quality of hire can be difficult. While many of the recruiting software solutions report on things like time to hire and candidates in the pipeline, a quality of hire metric is less common. Often, companies that do report on these metrics may create their own formula using a combination of hiring and performance data. Companies that do that typically include:

Job Performance. General adherence to job performance metrics serves as a good baseline for measuring quality of hire over time.
Employee Retention/Turnover. While it does not directly indicate a specific employee’s general quality, overall employee retention and turnover can serve as an early warning sign of systematic issues with quality of hire in the organization.
Team Feedback about the Employee. What does the new hire’s coworkers have to say about them? While these evaluations are subjective and should be interpreted alongside other data to corroborate other quality of hire indicators, an evaluation on a scale going from 1 to 10 from team members across teams and departments can help make this assessment more consistent and reliable.
Customer Feedback about the Employee. For employees in roles that interact with them, it can also help to get customer feedback about a specific employee’s actions. Net Promoter Score surveys or quality surveys following an interaction can help employers identify employees who consistently exhibit good conduct and achieve success in customer interactions.

The Impact of Quality of Hire on Workplace Success

Candidate quality can have different impacts on workplace success depending on the nature of the organization and the role of the employee.

Generally speaking, a “good quality” hire will demonstrate the following attributes at work:

Be good at their job role according to the metrics of success set forth by the organization.
Work with integrity to complete job responsibilities in a timely, efficient, ethical, and standards-compliant manner.
Contribute significant value to their team, department, and the company at large.

These attributes all contribute to two frequently-held goals for organizations: maximizing productivity and improving employee retention. This helps the larger organization consistently meet its goals, retain critical internal knowledge, and achieve long-term success.

But what happens when an employee isn’t a good quality hire?

Some of the potential impacts on a workplace from poor hire quality include:

Increased Employee Turnover. A low-quality hire is more likely to leave the organization sooner rather than later or, worse, cause others to leave the organization prematurely. Research from Aspect43 reveals that one of the top hiring challenges companies face is around employee turnover within the onboarding period. Specifically, their Insights at Work survey found “1 in 5 companies are seeing large numbers of new hires leave within the first 60 days.” Companies with these retention issues may not be properly defining what “quality of hire” means—leaving them looking for (and hiring) the wrong people for different roles. Alternatively, new hires might be coming on board and realizing that the people they’re working with aren’t a good fit for them. So, they leave quickly.
Reduced Employee Productivity/Missed Goals. Another consequence of low-quality hires is missed production goals. Research shows that one person on a team of 20 engaging in misconduct can reduce productivity of the team by up to 40%. This puts the organization at a disadvantage against competitors who are able to more consistently add high-quality employees while avoiding low-quality ones engaging in misconduct.
Direct and Indirect Monetary Costs. According to Zippia, the “average cost of a bad hire is 30% of that hire’s annual salary” and that “for some companies the cost of a bad hire can be as high as $240,000.” This can be caused by a multitude of factors, such as reduced productivity impacting profit, misconduct causing disruptions in the workplace (or even causing lawsuits), actual malfeasance (such as embezzlement), and the cost of continuing talent acquisition efforts to replace employees who leave too quickly—as it generally takes months for a new hire to produce enough value for an organization for it to “break even” on the cost of that employee.
Public Relations Issues/Scandals. In cases where a low-quality employee (or worse, manager or higher-level leader) exhibits extreme workplace misconduct (sexual misconduct, harassment, violence, fraud, etc.) that violates U.S. Equal Employment Opportunity Commission (EEOC) guidance on workplace harassment, their actions can have a negative impact on the organization’s public image. This, in turn, can impact the organization’s ability to attract new talent and customers or may even spark investigations into workplace misconduct by the authorities. For example, the U.S. Securities and Exchange Commission (SEC) investigated allegations of workplace misconduct at Activision Blizzard—leading to a $35 million settlement in February of 2023.

These impacts can all severely affect a business’ overall success by draining resources and time for constant talent replenishment, legal battles, and PR damage control.

How to Improve Quality of Hire to Prevent Workplace Misconduct

One of the biggest risks of a low-quality hire is the chance for gross workplace misconduct. What’s the link between quality of hire and workplace misconduct? Simply put, low-quality hires are more likely to commit misconduct such as fraud, harassment, violence, and otherwise violate the organization’s established rules of conduct.

How can you improve quality of hire to prevent workplace misconduct? Some basic measures include:

Standardizing Intake Procedures. One challenge in achieving consistent hire quality is that different hiring managers or others may apply different practices to talent acquisition procedures. Ensuring that everyone involved in the hiring process has the same understanding of the hiring process, what’s involved, who is making what decisions, what the role should look like, and what success in the role looks like is important, as is ensuring the hiring team is following the same procedures. Standardizing the intake procedure can improve consistency in process as well as the outcomes when hiring new employees.
Include a Panel of Decision Makers and Influencers in the Hiring Process. When a diverse group of trusted employees interviews, evaluates, and selects the applicant that should receive an offer, the organization sees several benefits. It gives the organization multiple perspectives on how the candidates treat different people across the organization. Having multiple decision influencers and decision makers also reduces the chance of favoritism and bias—conscious or not—in the process. Even more, it also helps identify candidates for roles in other parts of the organization. For example, an influencer might need to hire someone for their own team and may choose to offer one of the candidates who were a good fit but didn’t make the final cut a place in their own team if they aren’t hired in the role they originally applied for.
Using Structured Interviews. Having structured interview processes helps to ensure the hiring has an even playing field for fairly and effectively evaluating candidates. Including a diverse group of interviewers in the interview process further reduces the risk of bias in the hiring process by allowing interview responses to be interpreted by a group of individuals with different perspectives. Also, it makes it easier to identify intolerant attitudes that candidates may hold based on how they reply to similar questions coming from different interviewers.
Performing Online Screening of Candidates Prior to Hiring. A key skill for any job applicant is giving a good interview—there are countless articles on how to pass interviews and give a good first impression. Few potential hires will go out of their way to reveal biases and attitudes that they know don’t align with the employer’s stated values. However, that doesn’t mean that they aren’t engaging in misconduct or will be able to suppress these harmful actions sufficiently once hired. One way to identify candidates with a high risk for misconduct or other issues that contribute to a low overall quality of hire is to conduct online and social media screening of their short list of candidates. This can help to identify high-risk hires who are likely to negatively impact the organization.

Social media screening is subject to a variety of legal restrictions. This is why many businesses search for external online and social media screening services to provide legally-compliant results data that keeps protected information protected so it cannot even be accidentally considered.

Screen for Quality of Hire Now

Are you looking for tools and resources to help you screen new hire candidates for a better quality of hire for your workplace and screen out poor-fit hires who pose a risk to your business? Reach out to Fama to request a demo of our quality of hire screening services.

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