We focus too much on hiring volume, cost, and speed. It's time to focus on hiring quality.
There is a lot of emphasis on measuring the efficiency of the Talent Acquisition (TA) function. Of course, it is logical to measure efficiency, particularly as People organizations have to continually demonstrate cost effectiveness. However, the focus on traditional TA metrics can create incentives that degrade the quality of the worker being hired:
| Common Metric | How It Can Degrade Quality |
| Time to Fill | Creates focus on requisition closure, rather than best hire. Can encourage managers and TA to "settle" rather than source new candidates |
| Cost per Hire | Encourages usage of "cheaper" sources of talent. Can lead to attracting more available talent rather than tougher-to-reach talent |
| Reqs per Recruiter | Decreases time available for sourcing/screening per requisition, and encourages faster filling of roles to maintain workload balance |
These metrics are importsant and should be measured, but cannot be taken out of context of ensuring hires are of sufficient quality. So why don’t more organizations measure it?
To be fair, many organizations have a proxy for hire quality by gathering hiring manager feedback. However, this approach really is measuring the quality of the hiring experience, not of the hire itself. These are two different things, which whould not be confused. Measuring the quality of the hire is less common because it is more difficult to measure, in part because it takes time to know if a hire is really "quality."
Ultimately, a great hire can be simplified into two dimensions:
- They contribute to the company at or beyond expectations
- They stick around for at least a while.
As such, here is a proposal for measuring Hire Quality, using two metrics:
New Hire Retention Rate: Percent of new hires who make it to their 24-month anniversary. You can substitute 24 months for another benchmark for your company or industry. By definition this is a percentage from 0 to 100.
New Hire Performance Rate: Percent of new hires who achieve a certain performance rating/measure/level in their second year in the role. We recommend the second year since first year performance is really all relative to expectations and likely measures the onboarding experience more than the quality/fit of talent. By definition this is a percentage from 0 to 100. The denominator is the number of original hires, not just those who survive. You can deliberately define “performance” as needed, given your context.
There is value in calculating Retention Rate separately from Performance Rate, even though Performance Rate has the attrition built in (since you divide by those who started, not just those who survived). Using a separate measure lets you judge when the primary issue is retention rather than performance, which is helpful in diagnosing change needs.
It is important to note that Hire Quality is not the same thing as measuring recruiter performance. Of course recruiters need to focus on hiring with quality, but it is a mistake to assume that Hire Quality is theirs to own. Just like classic “time to fill” metrics can be misleading as recruiter performance indicators, so can hire quality.
