The Quality-of-Hire Quandary
LinkedIn research finds talent-acquisition managers saying quality of hire is still the best gauge of the recruiting function's performance. Relatively few companies, however, report being satisfied with how they measure this important metric.
By Mark McGraw
It stands to reason that the quality of the people you hire says a lot about the job your recruiters are doing.
A recent LinkedIn survey finds companies recognizing as much. In the Mountain View, Calif.-based business networking site's poll of nearly 4,000 corporate talent-acquisition managers, 39 percent said quality of hire is the best indicator of a recruiting function's performance.
The problem, however, is that many of these same organizations seem to feel they don't have a good handle on how to measure this valuable metric.
To wit: Thirty-three percent of respondents to the same LinkedIn survey said they felt their methodologies for gauging quality of hire were strong, with just 5 percent rating their process for evaluating quality of hire as "best in class."
Quality of hire is a "business-critical measure that Â directly and significantly impacts an organization's bottom line," says Elissa Tucker, research program manager with the American Productivity and Quality Center, a Houston-based nonprofit focusing on benchmarking and best practices.
Quality of hire, however, is also "difficult to assess," says Tucker, who cites a recent APQC poll in which 92 percent of 288 organizations reported evaluating the quality of new hires as an example of the nearly universal acknowledgement of this metric's importance.
"The methods companies use [to assess quality of hire] vary, and for good reason," she says. "The definition of what constitutes a quality hire differs by organization as well, [being influenced by] a number of other factors" such as an organization's culture and business strategy, the objectives of various business units or divisions and external labor-market conditions, for instance.
It's these variables that help make quality of hire so tough to measure, says Ravin Jesuthasan, managing director at Willis Towers Watson's talent-management practice.
"There are so many factors that come into play," says Jesuthasan. "Recruiters very often define quality of hire by looking at how an individual was ranked among a slate of job candidates. To me, that's just the tip of the iceberg. All that's really proving is that this person has the potential to be a quality hire.
"Success is only evident after a period of time," he adds, "and you have to ask yourself if you have the conditions in place for a person to be successful. Does he or she have a supportive supervisor? [Do workers belong to teams] they feel they can really contribute to? Those are the types of things that go into defining quality of hire."
Establishing such a definition, of course, is a large task with many moving parts, he says.
"There isn't just one metric, and there are lots of individuals and business units involved. For example, HR and learning and development may be responsible for onboarding. And the employee's manager may be responsible for many of the other components that come into play."
Tricky as it may be, HR must partner with managers to "define what 'good' is" within the organization -- and must be careful to avoid a one-size-fits-all approach, says Paul Rubenstein, a New York-based partner and leader for talent strategy, leadership and assessment services at Aon Hewitt.
"[One of the problems] with quality of hire as a measuring stick for your recruiting function is that quality of hire is different, depending on the type of position," says Rubenstein.
For instance, he says, a quality employee in a high-turnover industry such as fast food or retail may be one "who shows up and lasts more than 90 days, while determining quality of hire for an engineer is a more complex question. There's not a universally accepted standard."
Rubenstein echoes Jesuthasan's sentiment that an employee's value is not necessarily apparent right away. He urges HR and managers to "pick a specific time frame -- maybe a year, maybe six months -- to see where employees are and help figure out where the curve is."
Indeed, the "subjective and dynamic nature" of the quality-of-hire metric makes it tougher to assess than more objective recruiting measures, such as the percentage of job offers accepted, says Tucker.
"There are, however, steps that organizations can take to alleviate some of the challenge and, more importantly, ensure greater accuracy in measuring new-hire quality," she adds.
For instance, recruiters and hiring managers should sit down at least once annually to determine how they will determine quality of hire going forward, she says.
Tucker allows that reaching a consensus may be easier said than done.
"It requires recruiters and hiring managers to be frank about their expectations for the recruiting process, which may initially seem at odds," says Tucker.
While recruiters must account for factors such as recruiting budgets, the number of recruiting staff, current labor-market conditions and total-rewards budgets, hiring managers must be mindful of "how quickly they need new hires to reach full productivity, what their budget is for onboarding and training, how long they can wait to fill open positions and [how] much time they plan to personally devote to evaluating job candidates."
From the HR leader's perspective, it's also critical to understand -- and to communicate -- that establishing quality of hire is a shared responsibility, adds Jesuthasan.
Ultimately, he says, "the business has to own this process. HR can bring in the best candidates in the world, but it's the organization's responsibility to get the maximum value from these candidates. That's where you often see things go wrong."
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