Quality of Hire: What It Means for the Business

What does quality of hire mean? 
What does hiring with quality in mind look like?
How can you effectively measure quality of hire?
Why is it important to your business?

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What Is Quality of Hire?

Quality of hire is a metric that measures the value that new employees bring to the company. Building a team with high quality of hire often means that, in dollars, the employees bring in more value than they cost.

Despite businesses clearly desiring quality hires, all too often, it’s not a standard KPI. In fact, HR Dive reported: “Survey results showed that while 64% of respondents said they measure quality of hire, more than a third said they don’t track it at all.”

What does hiring with quality in mind look like?

If you’re looking to make quality of hire a KPI, recruiting teams need to be able to prioritize it from the start.

What equates to a good hire varies from company to company. Defining what quality means to you and your team is the first step that organizations must take in order to prioritize it. In order to define what it means, ask yourself one very important question:

What is valuable in this role? 

Are you looking for someone who can help the company save money? Are you focused on someone who can proficiently manage a team of others and hit new milestones? Is your quality candidate someone who is proactive about starting projects with no oversight?

When you define these parameters, share them with recruiters to make sure that they can implement particular questions in the sourcing process. There’s no such thing as giving too much information to recruiters here! The more clear you are with the position’s needs, the more likely your recruiters can effectively find the right candidates.

It’s likely that there are a plethora of qualified candidates already sitting in your internal data. In order to unlock that data for your recruiters, you need the right tools. We can show you how HiringSolved can help you effectively search your internal data and increase your recruiting team’s search capabilities. Let automation take care of finding those candidates with a high quality of hire ranking!

How Can You Effectively Measure Quality of Hire?

The most common formula is:

Score for each of your indicators out of 100. For example, if your indicators are:

Employee Satisfaction
Customer Satisfaction

And the employee has received 90, 70, 85, and 95 in those indicators. You would fill in the formula as:

(90 + 70 + 85 + 95) / 4 = 85

Again, it’s up to you to decode what final number qualifies as successful. But a common gauge is to look at the overall average of your employees to decode what is good and where improvement can be done.

How Can Quality of Hire Change Your Business?

ThriveMap created a calculator to estimate the costs of a bad hire. They found that “a company in the hospitality industry with 500 employees, an annual 5% increase in headcount and a 15% turnover rate” could see the bad hire costs add up to “more than $500,000.

The reality of the situation is that businesses simply can’t afford to make bad recruiting moves. By tracking quality of hire organizations are better able to implement strategic recruiting plans and avoid those recruiting mistakes.

So many recruiting metrics focus solely on the tactical recruiting process, but we need to remember that recruited candidates become employees. Their journey doesn’t end when the recruiter is no longer actively involved! If organizations track quality of hire, then recruiters can better understand the value they’re bringing to the company (likely increasing recruiter engagement and company loyalty) and pivot their strategies as needed to continue to bring that value.

Want to talk more about quality of hire and how to implement new and useful metrics in your recruiting strategy? Get in touch!

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