How to use the Quality of Hire (QoH) concept to improve the way you recruit
This brief guide will help you improve your recruitment results continuously with a simple data-driven approach.
This iterative 5-step approach will get you started evaluating KPIs and making decisions to improve your talent acquisition:
Choose your metric(s).
Find a formula that fits your strategy.
Measure and review results.
Design & implement improvements.
Repeat from step 1.
Step 1 – Choose your metric(s)
There is no silver bullet to measure the quality of your recruitment function. As such, you first need to select the metric(s) you want to focus on, among the ones you can measure.
For an effective, still easy start, we recommend using two metrics related to the new hires: one that reflects your turnover and another one that reflects satisfaction or productivity. For example, take the 6-month retention ratio and a performance indicator that is already implemented (e.g. the performance review scoring). If you don’t have a performance indicator, we recommend using a simple Net Hiring Score - you can listen to Sarah (Anderson) Wilson explaining why and how they used this indicator at SmartRecruiters.
ℹ️ Timing: metric(s) should be measured after a warm-up period from the date of hire. If the onboarding requires 3 months, measuring productivity or turnover 1 month after the start date makes little sense. However, if you wait too long to check, other factors that are not connected to hiring will influence the results. Taking multiple measurements (e.g. at 3, 6 and 9 months in) reduces the noise (like someone having a bad day,) but makes the process more complex and expensive. If in doubt, take something standard like 6 months, and iterate from there. Step 2 – Find a formula that fits your strategy
There is no single way of calculating your Quality of Hire (QoH). Organisations should find a formula that combines the metrics chosen in Step 1, in a way that suits their strategy. The simplest option is to average your metrics, but it’s not always ideal: you may want to try weighted averages, multiplying factors, etc.
“There’s no one-size-fits-all way to measure the quality of hire. Instead, you’ll want to see which recruiting metrics are most important to your team or organization and learn to prioritize those as part of improving the quality of your hires.” Juste Semetaite at Toggl
Searchlight’s multiplication of the retention ratio times the other indicators makes a lot of sense: if hires are bad, QoH should be near zero even if all of them stay; likewise, there’s little value in new members if they leave too soon. By the way, the company’s Definitive Guide to QoH is also one of the best documents we’ve read on the topic.
Step 3 – Measure and review results
Now that you’re done with the thinking, get hands on! Align with the team to ensure that metrics are measured and that the right people get together to evaluate results, monthly, quarterly, or annually. Only you can decide how often you should (and can) measure and review, considering factors like the size of the organisation, the volume of recruitment, and the people that can help with these tasks.
ℹ️ Self benchmarking: as QoH metrics are not standardised, analysing them is not as simple as comparing them against some sort of table or with your competitor’s results. However, you can extract actionable conclusions by setting your own benchmark: monitor how your QoH changes over time or across different parts of the organisation. Depending on the metrics you’ve chosen, you may even be able to use past data (e.g., calculating historic turnover ratios with the records that you have been probably generating for years anyway). Step 4 – Design & implement improvements
This is the trickiest step. Because talent acquisition is a very complex process, understanding what you need to change to improve the results is not precisely easy. However, if you need serious help, there are amazing recruitment process consultants out there – of course, we will post about some of the key methodologies and tools, and we’re happy to help too!
Step 5 – Repeat
Your QoH will slowly evolve with the improvements you introduce and, based on that, you will be able to repeat the entire process and iterate, not only on your hiring process, but also on your definition of QoH. In the same way that a runner gets progressively better at measuring his own performance or a high-end chef gets more demanding with their own creations, you’ll adjust the way you define and measure your recruitment success.
No excuses - start measuring!
“It’s impossible to get better at hiring if you can’t tell whether the candidates you select become good employees. If you don’t know where you’re going, any road will take you there. (...) Surveyed employers say the main reason they don’t examine whether their practices lead to better hires is that measuring employee performance is difficult. Surely this is a prime example of making the perfect the enemy of the good.” Peter Cappelli, Your Approach to Hiring Is All Wrong
Our final recommendation is simple: make no excuses and get improving your talent acquisition! Please stay tuned following us here on LinkedIn or subscribing to our newsletter. Feedback, ideas or requests? please subscribe and stay tuned! Feedback, ideas or requests? Please get in touch! We’re here to help if you need a hand.