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Quality of hire

Why is Quality of hire an important metric in recruitment?

April 7, 2023

By Team tawgl

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The Most Important Recruiting Metric Right Now: Quality of Hire

While recruiting, it's not enough to just hire a candidate; what matters is hiring the right candidate. That's where the quality of hire comes in.

What is Quality of Hire?

Quality of hire is a metric used by recruiters to evaluate the effectiveness of their recruitment processes. It measures the overall success of a new hire in meeting the job requirements and fitting into the company culture. A high-quality hire meets or exceeds expectations in terms of productivity, engagement, and retention.

What is the importance of Quality Hiring?

The success of an organization depends heavily on the quality of its workforce, and this can only be achieved through careful and strategic hiring practices.

Here are some key reasons why quality hiring is important 

  1. Cost of bad hires - Hiring the wrong candidates comes with costs such as lost productivity, training costs, and potential legal fees if the hire results in a lawsuit.

  1. Employee turnover -  By hiring candidates who are a good fit for the role and the company culture, you can reduce the likelihood of turnover. This helps save on recruiting and training costs. 

  1. Employee performance - A wrong hire may struggle to meet the job requirements or work well with their colleagues. This can lead to decreased productivity and even conflict in the workplace.

  1. Customer satisfaction - Employees who are not a good fit for the job or the company culture, may not provide the level of service that your customers expect.

Also Read: What are the best practices to hiring Gen Z for your Organization ?

How is quality of hire measured?

Measuring the quality of hire is crucial for organizations to make data-driven decisions about their recruitment strategies and improve the overall success of their recruitment efforts. 

As per us, Quality of hire is a sum of the following parameters. 

  1. On-the-job performance - For example what percentage of sales quote has been achieved by someone who has joined the company in 30/60/90 days and then revisit the number in 6 months and 1 year. Over some time, one can understand the baseline and adjust from there.

  1. Hiring manager satisfaction - For example - a part of the evaluation can be to set up an HMS (hiring manager satisfaction index) in which managers rate new hires and comment on improvement areas, that are taken back to be built into hiring for that role in all future conversations. 

  1. Ramp-up Time - This metric would calculate the time that it takes for a new hire to start getting fully productive compared to an average time. If this is going up, the quality of hiring is improving. 

  1. Bonus payout percentage - Some companies use this to understand the improvement in the quality of hire. The logic is - the more the payout the better the hiring as it signals better revenue for the company. As a stand-alone metric, we think that this may not be the best way to judge, but in combination with others, can indicate the QoH health with good accuracy. 

  1. Retention - An employee can only be productive if they continue to stay in the company for a certain period. Only after that, do they start adding value. So if your attrition rate of new hires is high, there is something that matters with hiring, that should be fixed. 

While quality of hire metrics change across industries, it is quite important to have a system in place that gives data around this metric. Measuring and rallying the team behind a key metric like the quality of hire is bound to improve a lot of other things in the company.  

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