Go ahead, be a picky recruiter. It’s a buyer’s market for most jobs these days so your company can afford to bide its time and hire the right person. But here’s the rub: It’s unlikely that, once you’ve made your new hires, you’ll honestly be able to tell how good they are.
That’s because most companies do not measure quality of hire to any great extent. They may have six sigma programs that reduce defects to 3.4 parts per million but when it comes to their hiring, they’re often flying blind.
The performance gap here is huge. Our recent study on Talent Management Measurement found that a paltry 16% of respondents said their organizations measure quality of hire to a high or very high extent. But that’s not because these professionals don’t know any better - fully three quarters believe that their organizations should be measuring quality of hire to a high or very high extent.
So, why is there an enormous disparity between what organizations know they should do versus what's actually being done?
As part of a larger initiative, i4cp’s Talent Management Accelerator, a research working group made up of 15 member companies, has looked into this challenge and found seven major barriers that frustrate organizational efforts to measure quality of hire.
Metrics vary by position
i4cp research shows that quality of hire differs based on the nature of the position. For some roles, quality may be about longevity in the role, while in others it's about the time it takes to come up the learning curve or productivity output levels. It's rare that one quality metric is universal across an organization.
Quality is subjective
Different functions view quality differently, even if it’s for the same position. Those who focus on leadership development will see quality of hire as being all about long-term promotability, while first-line managers will care more about the ability to learn and produce quickly. Meanwhile, operations or finance may value longevity in the role to increase the return on investment for the hire. In short, quality is not an absolute concept.
Hiring philosophy and strategy affects the metric
Philosophy and strategy will affect quality metric outcomes. An organization that succeeds by being a low-cost competitor, for example, will focus on keeping labor costs down, productivity up, learning curves short and efficiency fine-tuned. An organization that competes based on design and innovation will likely focus more on qualities such as creativity, teamwork and customer relationships.
There are no clear external quality-of-hire benchmarks
When it comes to product components and manufacturing processes, there are often industry-wide specifications and quality metrics. When it comes to people, however, there are few benchmarks and standards. Companies might have an idea of compensation ranges and educational prerequisites for certain positions, but qualifications say little about quality of hire. Therefore, it’s hard for Company A to know how much it's gaining (or suffering) in comparison with Company B in this critical area.
Quality of hire is a viewed solely as a staffing metric
As yet unpublished i4cp research on the integration of talent management components clearly shows that the recruitment and selection function is typically the odd man out. That is, it's the least likely to be seen as integrated with other primary components of talent management. This is a huge problem when it comes to quality of hire because the ultimate success or failure of a recruit is dependent on many other organizational factors, including leadership, training and development, and performance management. The whole talent management system bears responsibility for ensuring quality of hire.
The measure requires additional data collection
When measuring widgets, organizations have full quality assurance programs and protocols that include additional inspections to ensure quality. When it comes to new hires, organizations resist additional data collection processes, which may include surveys of managers and employees to gather real-time feedback. Additional data collection is often met with resistance because the organization doesn't understand the value. Yet without this valuable, real-time information, there are limits to the robustness of a quality-of-hire measure.
Jay Jamrog, i4cp’s Senior VP of Research, notes that other metrics can help support quality of hire. For example, data such as promotion rates, internal placement rates, regrettable termination rates and time to full productivity may all play a role in determining quality of hire. But tracking and integrating such data in a useful way can be difficult unless the proper systems and organizational values are in place.
Unclear purpose or rationale
Measuring quality of hire is not a goal for its own sake and it has various purposes that should be made clear. Of course, organizations want to make sure their staffing processes are efficient (keeping down costs per hire) and effective (ensuring new hires are the right ones) but this is not solely the responsibility of recruiting professionals. Often, the recruitment function resists quality-of-hire measures because it seems to unfairly place the burden of good selection, on-boarding and training on their shoulders. Quality of hire can be diagnostic in nature in order to create accountability, improve performance or evaluate the validity or effectiveness of a process or tool. The larger goal, however, is to ensure that the organization has the most talented and productive workforce in the industry, one that leads to top performance.
i4cp’s 4-part recommendation:
1. Identify critical roles – Start by focusing quality-of-hire efforts on critical positions. Critical positions should be defined as roles that will drive growth and the strategic plan over the next 3-5 years or as roles where the organization is currently suffering pain, such as ones where there is a high first-year termination rate.
2. Create a measurement strategy – Once critical roles are identified, create a measurement strategy and project plan to address the needs of the organization. The strategy should clearly articulate why the role is being measured, the issues to be addressed, the measurement criteria and a detailed timetable. The timetable should include the data collection period, data analysis intervals and management review timing. This strategy will become the basis of a communication effort.
3. Secure buy-in from management and HR constituents – Based on the goals of the measurement strategy, identify and communicate with relevant stakeholders. Stakeholders need to understand the benefits of measurement, the effort and resources required, and the timing of the initiative. Ideally, the stakeholders will define the success criteria. If management or HR does not buy into the strategy, then the strategy should be postponed until the organization is ready. Organizations have done more harm than good when proceeding with a workforce measurement strategy the stakeholders do not believe is necessary.
4. Enlist support of all employees – Management and the staffing function are not the only parties responsible for the successful recruiting, selection and on-boarding of new staff. Provide employees with the opportunity (and reward) for referring former colleagues and friends. Often this is the best source for quality hires. Use broad-based teams to interview and weigh in on selection decisions. Whole Foods Markets, for example, relies on team members to select new associates. Evaluate hiring and non-hiring managers’ recommendations in order to determine which employees have a knack for identifying talented employees who can be successful in the organization.
For many more i4cp insights on implementing quality-of-hire metrics, look to our Measuring Human Capital and Recruitment and Selection Knowledge Centers.
