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What Is Quality of Hire?

Quality of hire is an assessment of value that new hires bring to the workplace and used to evaluate the talent acquisition process.

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What is quality of hire?

Quality of hire is an assessment of the value that new hires bring to the workplace and a metric that can be used to evaluate and improve the talent acquisition process. When talent acquisition data is used well it can help to increase employee retention—an especially important consideration in this era of the Great Resignation.

The importance of quality of hire

Hiring new employees can be a stressful proposition. There are no guarantees that the person hired will be a good fit either technically or from a culture standpoint. That can have impacts on productivity, quality of work, interpersonal relationships, and turnover. 

SHRM data indicates that the average cost per hire is about $4700, but also indicates that “many employers estimate the total cost to hire a new employee can be three to four times the position’s salary.” That’s significant for companies of all sizes. It’s important, therefore, to stay on top of metrics that can help you monitor, manage, and improve cost of hire.

How to measure quality of hire

There are three key factors that companies can monitor to help them determine quality of hire:

  • How long the hire stayed with the organization

  • Performance of the new hire

  • Whether the employee eventually moved into higher-level roles (and how long it took them to make those moves) 

Length of stay is a very straightforward metric to measure, as is length of time before moving into higher-level roles. Measuring the performance of the new hire can be a bit more challenging and subject to subjective considerations.

Performance is, of course, varied, and not something that can be effectively, or validly, determined at a given point in time. Instead, it’s an outcome that must be measured over time at regular intervals. For some organizations this means conducting multiple assessments of performance during the employee’s first year on the job and using those assessments as an input into determination of quality of hire. 

How to improve the quality of hire

There are some things organizations can do to optimize the recruitment process and employee success and longevity with the organization. Here are three key steps to take:

  • Use workforce data to identify the attributes of your top performers and then use those attributes as the basis of your job description, interview questions and hiring assessment tools.

  • Review pre- and post-hire data regularly to identify and monitor trends in performance for both individuals and teams.

  • Leverage your metrics for quality of hire to forecast length of time projected to hire top performers. Apply these timeframes to various hiring scenarios to help avoid surprises.

For example, a financial institution with 5000 employees analyzed its data on individual hiring managers’ time-to-hire rates and was able to determine that new hire retention was directly correlated with the candidate experience. Based on these findings the institution standardized a hiring process based on the success of their most efficient hiring managers and improved new hire retention by 14%.

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