Engineering- and technology-based organizations have, in large part, become talent management organizations. It might seem unnatural to think about aerospace or biotechnology companies as talent management organizations—we’re not in Hollywood after all. However, we all know that acquiring and retaining the right skills, experience, and expertise is instrumental to engineering- and technology-driven organizations’ success.
Engineering and technology organizations rightfully like to measure and analyze important things. While there is always room for improvement, we’ve gotten pretty good at analyzing talent acquisition metrics. Even though it is not so simple to improve, talent acquisition metrics like time to fill, cost of hire, application completion rates, offer acceptance rate, and other metrics of this nature are reasonably easy to measure.
But what about the quality of your hiring decisions and the quality of your overall hiring process? Yes, the talent metric of all talent metrics—quality of hire.
What is Quality of Hire?
Quality of hire strives to measure the value an employee brings to your organization and ultimately seeks to assess your hiring process’s effectiveness. In short, how good is your organization at hiring the right talent for the right positions?
The challenge is that this is a tough metric to standardize. Every company has a different idea of the characteristics of a good employee. Sometimes, the vision of what makes a good employee is not consistent even within a company.
Additionally, many factors like “good team player” or “advances company culture,” are quite difficult to measure objectively. Perhaps most important, success metrics vary considerably from position to position. How you measure a successful software engineer hire will not be the same as measuring a salesperson or a project manager’s success.
We like Google’s quality of hire formula:
([Factor 1 + Factor 2…] / Total Number of Factors) * 100 = Quality of Hire
Which factors should be included to generate your quality of hire metric? The factors used need to be customized to both your organization and the position in question. Sample factors include:
- Employee engagement and cultural fit measured by 360 reviews
- Quantifiable job performance metrics (e.g., sales revenue, cost reduction, efficiency improvement)
- Ramp-up time for new hires
- Goal completion
- Customer satisfaction score
- Partner satisfaction score
- Error rate
- Turnover rate
Applied, Google’s quality of hire formula might look something like this:
([90 360 review + 95 goal completion + 88 ramp-up time + 97 partner satisfaction . . . ] / 4 ) * 100 = 92.5% quality of hire
Past Successes Are Good Indicators of Future Success
Many organizations struggle to decide which factors should be used to calculate quality of hire. By profiling the performance levels and characteristics of successful past hires for a given position, you will be able to more reliability determine the factors that are predictive of successful future hires. By profiling successful past hires, you can also determine which backgrounds and experiences led to the most successful hires.
Additionally, just as the past can predict success, the past can also predict failure. A study by Mark Murphy, CEO of Leadership IQ, researched 20,000 hires over three years. He found that 46 percent of hires failed in the first eighteen months. Failure typically resulted from a lack of attitude that aligned with the organization’s values. By thoroughly profiling what the failure attitude looked like as precisely as possible, you have a better chance of avoiding these missteps in the future.
What Quality of Hire is and What it is Not
As mentioned, the quality of hire metric is designed to determine your hiring process’s quality, not to evaluate specific employees.
Talent Acquisition Quality Management System metrics are designed to measure your hiring process’s efficiency by incorporating factors like time to fill and submission to hire. Quality of hire is designed to determine how good your hiring decisions are; for example, are you matching the right people with the right positions? Are you selecting people who are valuable fits for your organization?
Additionally, quality of hire should reflect your onboarding process. For example, if ramp-up timelines are longer than you would like, maybe you are not hiring people with the right knowledge and experience, or perhaps your onboarding process is ineffective.
If you need help improving your hiring or talent acquisition process, 180 Engineering is here. Please don’t hesitate to contact us.