Any HR manager knows that the hiring process takes a lot of time. It’s time-consuming to read through so many resumes and cover letters, check references, and coordinate interviews. And once the candidate is hired, yet more time is spent on orientations and training the new person on the company, its policies, management, and his or her role.
After spending so much time hiring someone, you’d expect all of your effort to pay off and that the candidate would prove to be a profitable addition to the company. But that’s not always the case, and what’s worse, most companies don’t even know when they are the victims of poor hiring, because the outcome of a given hiring decision can be so hard to quantify. Establishing quality-of-hire metrics can help provide the data companies need to hire smarter and find the candidates who will boost the company’s profile and earnings.
Quality of hire can be determined by combining several relevant metrics. Different companies and industries measure the quality of hire differently—there isn’t one specific formula that works for all. The important thing is to take the metrics for what they are: pieces of a puzzle that, when put together, can help your company hire the right people in the right positions to improve operations, increase customer satisfaction, and boost profits.
Some quality of hire metrics measure the following:
It’s important to remember that these metrics alone can’t measure quality of hire, and that they’re not the only ways you can assess an employee’s value. Whatever metrics you use, take care to apply them in a way that makes sense for your company’s business model.
This is where putting some effort into figuring out how to measure quality of hire in a way that makes sense for your company becomes crucially important. The measuring needs to take place after the candidate has been hired, to determine whether and how much the new employee has affected the company’s productivity and profit.
When you hire the wrong candidate, your company stands to lose money. This could be due to the cost of the hiring process, or, even worse, it could be that a new employee is making mistakes that are costing money, like shipping the wrong orders or mishandling and losing clients. On the other hand, the right candidate can make the company money—let’s say by increasing revenue through sales or acquiring new clients.
Since measuring quality of hire is directly related to the company’s financial information, any effort to measure it must be done in conjunction with the company’s CFO and the finance department. That’s the starting point. From there, the HR and finance departments can determine together which metrics should be used so that you can begin to gather the data that will make the case for better hiring practices to improve the company’s bottom line.