By Jim Buchanan
Quality of hire is hardly a new concept, and a quick dig through the internet archives returns dozens of articles on the topic dating back more than a decade. A trip to the library might uncover more via microfiche or microfilm, but few among us are apt to bother with anything analog nowadays.
Still, to optimize quality of hire, it is necessary to understand both the history of the metric and current context because definitions and calculations vary by organization, and so do results.
How’s It Defined
Way back in 2010, Lou Adler, founder and CEO of Performance-based Hiring, wrote an article for ERE that included “Adler’s Proposed Definition of Quality of Hire.” His definition was “the measure of how well a new person meets the performance needs of the job.” Adler went on to explain why he liked this definition and how to approach it, but at no point did he say this was an easily quantifiable measurement based on math and science. Quite the opposite, in fact. Adler broke down all the reasons why quality of hire included everything that happened before, during and after and required a detailed scorecard to determine.
Around the same time, Stephen Lowisz, CEO of Qualigence International, published a piece that included a formula for evaluating quality of hire that looked like this: (PR + HP + HR) / N = QOH. Reminiscent of advanced algebra, Lowisz’s approach suggested the sum of average job performance rating of new hires plus percent of new hires reaching acceptable productivity within acceptable time frame plus percent of new hires retained after one year divided by the number of indicators would indicate quality of hire.
Of course, not everyone has the skills or technology to figure that out readily, and over the years, it has been Adler’s definition that remained tightly associated with the metric, even as the thinking around it has advanced.
Hopping from 2010 to 2015, the quality of hire debate continued, with Adler’s original vision moving from before, during and after to pre-hire and post-hire. At the time, SHRM explained that the process of measuring quality was evolving, with industrial-organizational psychologist Ji-A Min commenting, “Generally, there is no one-size-fits-all metric for quality of hire because it depends on what your priority is. Common quality-of-hire metrics include turnover rates, job performance, employee engagement and cultural fit measured by 360 ratings.” Here, Min speaks to both the ongoing confusion and differing methodologies companies experience when looking to use quality as part of overall hiring efforts.
Fast forward to today, and quality of hire is still hotly contested. Most agree on its importance, particularly from a business perspective, with CEOs and CFOs keen to see the return on talent investment clearly laid out in board reports. But how it gets measured varies across companies and industries the same way it did twelve years ago, with seemingly fewer new ideas entering the narrative. In turn, quality of hire stays subjective and up to the hiring team – and that is where the situation can get even more complicated.
What to Know Now
Acknowledging that there is no “gold standard” or “best practice,” hiring teams must decide for themselves what determines the quality of hire in their organization. More often than not, however, the hiring team involves stakeholders who sit in different departments with different responsibilities and priorities. The potential silo between talent acquisition and human resources means that, in theory, recruiters would handle the pre-hire measurements, and HR would manage post-hire. But who is in charge of the results? Who will report this to leadership? And who gets the credit (or conversely, the blame) for the outcomes?
By starting with who owns quality of hire, companies can begin to understand their own intentions. For some, quality might equate directly to value in a monetary sense, meaning the salesperson with the highest revenue is automatically the most valuable. For other positions, quality might be less overt or harder to tie to a tangible value. In this instance, developing a formula like Lowisz’s might come in handy, underpinned by a technology to eliminate the guesswork (and complicated calculations). Either way, it requires additional thought and resources on the part of the organization. And while trends come and go in the HR tech space, quality of hire appears to have staying power. Based on the journey so far, it might still be relatively nascent.
As long as there is a business need-to-know, there will be a demand for metrics that provide answers – and when it comes to quality of hire, the best way to enhance outcomes might be to start with the end goal first and then build the strategy and process to support it.
Jim Buchanan has spent the past 15 years in executive management roles in the talent acquisition industry. Before CadientTalent, Jim co-founded Merlin Technologies, the parent company of Assess Systems, a human capital management company specializing in assessment software and solutions. Under his leadership, the company experienced significant growth and was acquired by a private equity firm in 2015. Before Merlin, Jim was the CFO of Peopleclick, one of the first companies to offer an applicant tracking system serving a blue-chip customer base – including 49 of the Fortune 100 and more than a third of the Fortune 500. Jim earned his bachelor’s degree at Indiana State University and his MBA at Indiana University.