Main image of article How to Measure the Elusive in Tech Hiring: Quality of Hire

In the world of recruiting, one success metric seems to rise above them all: Quality of Hire (QoH). QoH is considered to be the Holy Grail of recruiting success in engineering organizations. Why? Because while it’s critical to measure the quantity of candidates in a hiring funnel, it’s equally important to measure the quality of those hires – which includes their value to the company once onboarded.

That value has a significant impact on the financial success and productivity of the organization. The average cost of hiring the wrong employee is $17,000, according to research by CareerBuilder, and Harvard Business Review reports that a high performer is up to 400% more productive than a low performing counterpart.

While using quality assessment platforms can increase the likelihood of making quality hires that are well-aligned to your organization, leaders need to go a bit further to define and measure what QoH means for them. Stepping away from subjective measures and identifying the methods of measurement that fairly assess a candidate's performance after they have been integrated into the company is where the real value comes. It is only then that you can reflect on your recruiting and hiring process and methods to identify ways to improve your quality of hire.

But here’s the conundrum: Today, 2/3rds of recruiting leaders surveyed admit they currently have no metrics in place to measure QoH. Most likely because there is no broadly accepted measurement method.

What I’ve found in my experience, in a complex and diverse field such as software engineering, is that typical methods of measurement. such as a supervisor’s “rehire” or performance ratings, are insufficient and potentially misleading. Also, once decided, business contexts can change, making QoH a dynamic and elusive idea to pin down.

Given that existing methods leave room for both error and improvement, what can Talent Acquisition (TA) and engineering leaders do to better identify and implement meaningful QoH metrics?

Here are three guiding principles to ensure your QoH metrics offer a clear definition of success for your hiring efforts.

Use metrics that are aligned with your business strategy. What should your QoH metrics represent? What does ‘quality’ talent look like for your business at this moment in time? It’s best to think of quality as not a universal or objective definition, but as an idea that captures talent’s contribution to business goals, mission and values.

For example, let’s say the business strategy is to quickly grow the business and capture more market share or additional product users. These objectives would prioritize recruitment efficiency metrics such as time to fill, cost per placement, and certain effectiveness metrics such as new hire attrition/turnover rates. Or, if the business strategy calls for building a new product line, QoH should prioritize acquiring needed skills and measuring on-the-job performance post-hire.

Simply put, there is no one size fits all QoH metric. Often, QoH is an alloy of individual recruitment efficiency and effectiveness metrics that are tied back to business necessity.

Develop a blended metric on a standardized scale. Blending metrics may make up for the inherent limitations in any one metric. For example, using a multifaceted performance evaluation that combines task performance such as an engineer’s ability to write quality code, along with teamwork behaviors, and other cultural or collaborative competencies.

Along with a robust performance evaluation, recruitment efficiency metrics, retention rates, peer ratings, and engagement surveys could also be combined to provide a more holistic picture of post-hire effectiveness and contribution. Still, when combining metrics consider the issues of missing data, whether an individual has control over what’s chosen, and putting these metrics on the same scale. It’s also important to consider and account for any bias that may show up in more qualitative measurement sources, like peer ratings.

Use pre-hire data as a predictive measure. Using assessment data on job-relevant predictors, either compared to your own industry or within your own organization, can be a helpful predictor of post-hire QoH. This is possible when standardized, job-related skills evaluations are available during the hiring process.

Pre-hire assessment data can help guide sourcing channels, job family choices, and recruiting team efforts. It can also help make the candidate pipelines more diverse and inclusive, potentially leading to a more diverse employee population.

As part of the hiring process, it’s also important to evaluate “softer” skills like cultural fit and alignment with organizational values, both of which are essential elements of job satisfaction and will support QoH and a thriving organizational culture.

While QoH is a simple idea – a measure of the value that an employee brings to an organization – developing a practical metric for it is much more layered and complex. However, if you succeed at selecting and combining individual metrics that have meaning to your business context, you’ll have much more confidence that your recruiting processes are effective and directly impacting the bottom line. This is how you create a mutually beneficial, long-term relationship with talent.

Neil Morelli is Chief I-O Psychologist at Codility.