How to Use Quality of Hire to Drive Better Business Outcomes

Quality of Hire (QoH) is far more than an important hiring metric. If you believe that your company is only as good as its people, QoH becomes an important business metric that everyone should care about if they want a healthy, thriving business.

It’s time to go beyond its definition and understand this important metric.

• How effective is the recruiting process and hiring team at identifying and selecting the right talent? 
• What key characteristics and skills uncovered in the pre-hire process are most highly correlated with top performance?
• What was the quantitative impact of a hiring process change or new onboarding structure on new hires' time to ramp? 

The Critical Components of Quality of Hire

Quality of Hire is a measurement of how valuable an employee is to your organization.

It’s a metric that can be used to individually measure a new hire’s value to a company, but it can also be used to derive a collective score from all employees to measure the overall value of your workforce.

QoH can be determined using a variety of key performance indicators, but the most common are as follows:

• Hiring manager satisfaction
• The time it took for a new hire to ramp up
• Employee satisfaction with their new role and responsibilities
• Productivity - can be measured by tasks accomplished or by sales figures
• Team fit & feedback from peers 
• Culture fit - with emphasis on value fit

We recommend that you score these factors individually on a scale from one to ten. Then Calculating your Quality of Hire scores can be done in four easy steps. Add up your score, divided by six, and multiplied by ten to arrive at a QoH score. You will end up with a score out of a 100. 

Quality of Hire Benchmarks: How Do You Stack Up? 

Quality of Hire will vary from organization to organization, but should always be expressed as a score. Scores for all employees can be added and divided by the number of employees to arrive at a companywide benchmark. Scores can also be calculated by department, hiring cohort, diversity metrics, etc. Read on for the full list of factors to consider. 

QoH scores can be broadly placed into four buckets

• Excellent: 90-100
• Good: 80-89
• Average: 70-79
• Below Average: below 70

Without QoH, all recruitment efforts will have reduced ROI. QoH can be improved by:

• Using analytics and employee surveys to follow employees through their new hire period, tracking progress and continually updating Quality of Hire scores. 
• Comparing employees with high scores and identifying attributes that contribute to Quality of Hire.
• Using these attributes to build candidate profiles to surface high-performers during the recruitment process.

The Impact of QoH on Business Outcomes

Employees who have a high Quality of Hire score tend to bring exceptional value to organizations that hire them. A good hire can significantly impact your company by directly affecting factors that drive positive business outcomes. These workers:

• Show 400% more productivity than a low performing employee
• Stay with an organization longer, thanks to good job fit and positive company culture 
• Reduce cost of hire by limiting employee turnover
• Improve the company’s bottom line through productivity and increased team morale

Attracting candidates with high QoH potential requires a recruitment process that strips away unconscious bias and helps match qualified candidates with open positions with an eye to long-term retention and both employer and employee satisfaction.

Employees with low Quality of Hire scores may seem to be fitting in on the surface, but on closer examination they are bringing the entire organization down when it comes to innovation, productivity, and team morale. This can negatively affect desired business outcomes. Look out for employees who:

• Fail to meet projected timelines for ramping up, productivity, or sales figures
• Don’t work well with their assigned team members or peers in their department
• Show dissatisfaction with their role or responsibilities post-hire (high-risk for churn)
• Receive poor commentary from the hiring manager on review

New hires who don’t swiftly match or exceed Quality of Hire scores of existing employees may not be bringing adequate value to your company, and may even be dragging your company down. Whether they stay, reducing productivity, or leave, increasing the cost of recruitment as the gap they leave must be filled, these kinds of workers are bad news for the bottom line.

How Can Quality of Hire Improve Business Outcomes? 

Looking at overall Quality of Hire scores is interesting, but in order for them to be actionable and help you make better business decisions, there are a few ways you should segment your QoH data. 

Why is it important to segment the data? To illustrate the point, let’s look at an example of segmenting QoH data by source. Not all candidate sources are created equal, and if you’re not using data to determine the quality of your hires, you could be hiring bad employees. For example, internal referrals are generally viewed positively because time to hire and cost per hire are lower than other sources. However, in our inaugural Q Report, after analyzing 24+ million hiring decisions, the Crosschq Data Labs team discovered that internal referrals have a Quality of Hire score 26% below the industry average. 

Another reason to segment your QoH data by source is to see the true ROI you’re getting from each source. For example, upon initial evaluation, the data might show that you’re paying $500/hire through job boards but $15,000/hire through agencies. This might lead you to move all your budget to job boards. But if you look at the QoH data, you might find that employees hired through job boards have a QoH score in the 40s and end up leaving after 8 months on average, but your candidates hired through agencies have a QoH score in the 80s, stay with you for 5 years, then it’s a whole different story. 

Different ways you should be segmenting your data: 

• Quality of Hire by Source: Identify which sources give you the best quality candidates. 
• Quality of Hire by Recruiter: Discover which recruiters are good at finding and hiring quality candidates. 
• Quality of Hire by Department: Uncover which departments have good hiring, onboarding and retention practices. 
• New Hire QoH Trend: Understanding which inputs might be influencing changes to QoH scores. 
• New Hire Quality of Hire Trend by Diversity Group: Surface which groups of people who are potentially not treated equitably and fairly in the workplace. 

By segmenting your QoH data in these different ways, you can begin to determine what’s working and what’s not in your employee hiring, onboarding and management processes. 

Note that the measurement of quality can depend on the stage of an employee’s lifecycle. What matters initially (new-hire retention) may be outweighed by other factors at the end of years one, two or three (productivity). Define what matters most to your organization, and weight your calculations accordingly. 

Indexing (or weighting) your calculations, or breaking them down by department, hiring class or diversity group, can become complex quickly. Crosschq’s Data Science team and the Analytics solution help clients define, customize and track their Quality of Hire calculations correctly.