It can seem like recruiting metrics are a dime a dozen. People and HR leaders can measure and track performance against at least 20 recruiting metrics. With so many numbers and calculations, some metrics will inevitably be positive and some negative. But how can leaders cut through the noise and measure the right things to manage and improve the recruiting process?
Introducing the “Holy Grail of Recruiting” – Quality of Hire (QoH). QoH is a single metric that quantifies the effectiveness of your company’s hiring process. We often hear from recruiting and HR leaders that QoH is elusive and hard to quantify. Thankfully, the world of academia – where professors with training in organizational psychology conduct research – knows a lot about this metric.
Here’s a review of the latest and greatest academic research on QoH, which shows that it’s a vetted metric that can be relied on to assess recruiting effectiveness.
What is Quality of Hire?
QoH is defined as a new hire’s overall impact on the organization. Recent research by Cornell University published in a top academic journal shows that new hires have to perform effectively and stay in the organization to have a positive impact on the organization.
To see this logic, let’s consider a new hire who performs effectively but leaves after six months. The high attrition results in severe costs to the organization — ranging from separation costs (e.g., HR staff time, manager’s time) to replacement costs (e.g., new employee orientation and training) — resulting in a net negative impact of the new hire. We can also consider the opposite, a situation in which a new hire stays indefinitely in the organization but fails to meet performance expectations. This situation causes the loss of potential productivity and can de-motivate colleagues, also resulting in a net negative impact.
Thus, both performance and retention are critical inputs to a new hire’s quality. High performance without retention is problematic, but retention with high performance is also problematic.
How to Improve Quality of Hire?
There are countless ways that People and HR leaders can improve QoH, but which are the most effective? We did a review of the academic literature. Here are research-backed techniques to improve this metric at your organization.
- Source qualified candidates for a job opening. Research conducted at a large health services firm has found that sourcing job candidates (e.g., proactively identifying, contacting, and engaging qualified candidates) increases QoH because it strengthens the credentials of the applicant pool, which ultimately positively affects the quality of new hires.
- Structure your onboarding experience with specific goals in mind. Researchers have analyzed 70 distinct employee datasets across industries and organizations and found three distinct drivers to an effective onboarding experience. New hires need to: (a) learn the tasks of the new job and gain confidence in the role (self-efficacy and enablement); (b) feel liked and accepted by colleagues (social acceptance and belonging); and, (c) understand task and role priorities with time expectations (role clarity and alignment).
- Connect the new hire’s identity to the organization. Researchers at Harvard Business School and London Business School found that enabling new hires to see how the organization allows employees to express themselves resulted in a higher QoH. For instance, this research found that encouraging employees to share answers to personalized questions (e.g., “What is unique about you that leads to your best performance and happiest times at work?”) enabled new hires to connect their authentic strengths to the organization, enhancing QoH.
How is Quality of Hire Measured with Searchlight?
At Searchlight, we lean into the research and measure QoH using a standardized assessment. Specifically, we ask the new hire and their direct manager to assess the new hire’s performance (relative to expectations) and the likelihood of remaining in the organization (assessed with indirect proxies to get an accurate estimate of future retention). To get a quick pulse on QoH, Searchlight automates a survey to the new hire and their manager.
With Searchlight’s QoH measurement, we find that People and HR leaders feel empowered to:
- Pinpoint the attributes (such as soft skills) of high-performing hires and use this knowledge to more effectively recruit candidates that have a similar behavioral profile.
- Identify struggling new hires early during their onboarding process and use this information to provide interventions (e.g., coaching) to get the new hire back on track and prevent attrition.
- Determine the roles and departments that have the best and worst quality new hires, enabling recruiters to apply extra quality checks for roles, job levels, and departments that require it.
Our survey assessment has been vetted to be psychometrically sound (valid and reliable). For instance, we worked with a partner organization (high-tech, 500 employees) to validate our measurement of QoH. We found QoH was significantly correlated with the company’s internal job performance reviews, providing evidence that our QoH measurement is tracking new hire effectiveness.
Since we assess the likelihood of retention (instead of actual retention), Searchlight can measure QoH throughout the employee onboarding experience at 45, 90, 120, and 180 days. Our clients find that measuring QoH earlier and frequently in the employee journey is useful because it leads recommendations to be actioned faster and be more accurate. Waiting until the new hire has been employed for over one year to measure QoH makes it difficult for hiring managers, recruiters, and new hires themselves to remember the circumstances around the hiring. This delay in the feedback loop reduces the actionability and accuracy of the insights gained from measuring QoH.
Want to learn more about Quality of Hire? Read our guide.