The process of recruitment has changed dramatically over last few years where metrics directly impact IT hiring. The systems in place weren’t perfect and as a result time and resources got wasted. But as data analytics got more advanced and embedded in HR practices, quality of hire has increasingly come to the forefront as the all-encompassing metric rather than a simple recruitment tool.
It has grown to become much more than just a metric as Quality of Hire is now an essential part of candidate sourcing, enhancement of organizational processes, and performance management. But this doesn’t mean that it’s a one-size-fits-all type of approach. It’s rather a combination of measuring pre-hire quality and post-hire quality.
It’s now the most valuable tool for companies to track the value of their recruitment function. This means that it measures the value of the new employees that are brought into the company. It’s a mechanism to check if the most suitable individual was recruited for the job (including a cultural fit).
According to a study conducted by LinkedIn, four in ten or 39% of 4,000 corporate hiring managers (in 40 countries) found that Quality of Hire was the most valuable metric to measure performance.
Further, the study also found that companies continued to invest in employer branding (59%) and employee referral programs (26%) with employee retention (32%) emerging as the number one priority. Internal mobility, however, has been overlooked for the time being.
If you look at leading enterprises today, they are measuring Quality of Hire with methodology feedback like the following:
So what are the key metrics that need to be measured to improve the quality of hiring?
Pre-Hire Quality Metrics
1. Applicant to Hire Ratio
This metric represents the number of applications for a particular position versus the actual number that’s hired. It’s important to keep track of this ratio as it will enable recruiters to prepare for the challenge of filling a particular position in the future.
This also goes along with the candidates per hire ratio as ideally the hiring manager shouldn’t need to interview more than a handful of candidates before making a final decision.
2. Referrals Per Call Rate
As employee referral tend to be more effective than other recruitment channels, it increases the chances of filling the vacancy successfully from 2.6 to 6.6%.
3. Email Conversion Rate
Potential hires these days are trying to find meaning in their careers, so it’s important to approach them in a personalized manner. Getting this right can significantly impact your conversion rate.
4. Passive Candidate Call Back Rate
Passive candidates tend to be the highest quality candidates with the most referrals, so it’s important for recruiters to network with them and try to maintain a high callback rate of at least 75%.
5. Passive Candidate Conversion Rates
The conversion rate, however, is made up of several smaller metrics that track a passive candidate from the prospect’s response to the first contact. A good recruiter needs to be able to convert most of these candidates.
6. Job Posting Effectiveness
The content and design of your job posting will have a direct impact on the number of applications you receive. The effectiveness of each posting can be easily calculated by the rate of applications.
7. Offer Acceptance Rate
The acceptance rate can be the number of candidates who accepted your offer. If your acceptance is below the industry standard, that means something is not working well with your hiring process.
8. Cost Per Hire
This is the average cost that was invested in hiring the right candidate. This may be a payment for the recruiter who handled the task, advertising, vetting process, cost of the interviewer, and any support staff that assisted in the process.
There might also be other overheads like the following:
Post-Hire Quality Metrics
9. 360 Degree Feedback
Getting feedback from more staff than just the employee that’s being reviewed is vital as it can enhance communication and help the employee get more productive. This data can also help during the recruitment process through comparisons to see who closely matches the job criteria.
10. Survey of the Hiring Manager on New Hire Performance
In 6 to 12 months, the hiring manager needs to be surveyed to ascertain if the new recruits were performing as expected.
11. Culture-Fit Surveys
Organizations need to conduct this survey to figure out how their employees feel about the company, the culture, and institutional values. By determining the company’s strengths and weaknesses, you can enhance your management, recruitment, and training processes.
12. Revenue Per Employee
The revenue per employee metric is the best way to measure individual productivity and as a result, the revenue generated by the employee. By engaging in this activity, you can keep track of revenue that’s created or lost in proportion to the number of people employed in the company.
This information can also be used to figure out the cost to hire and turnover expenses.
Challenges of Utilizing the Quality of Hire Metric
One thing important to note is that a lot of the data that’s calculated is subjective. Metrics like cultural fit and engagement are extremely difficult to translate into numeric terms. But at the same time, standardizing measurements of quality can do a lot to calculate the value of each new hire than traditional recruitment metrics.
Metrics such as time to fill, cost per hire, and volume of hires doesn’t really measure the overall employee performance. It’s basically a tool to focus on the efficiency of the talent acquisition process and not the impact of the company’s business objectives.
So you shouldn’t overly rely on these numbers as it can lead to inaccurate measurements when it comes to the quality of an employee or the recruiter.
For this philosophy to work successfully, there needs to be cohesive coordination between senior department leaders (across all departments) and HR leaders. Further, realistic ramp-up time and productivity expectations are crucial for this to work.
