Quality of hire: what it is, why it’s important and how to measure it

Quality of hire is an important recruitment metric that measures the performance, cultural fit, and overall contribution of new hires. In this guide, we explain why measuring quality of hire is so important and look at the strategies that can improve quality of hire. 

Key takeaways

• Quality of hire measures new employees’ performance, productivity, retention rate, and team cohesion to assess whether they are a good long-term fit for a business. Calculate quality of hire by combining scores for each of these metrics and dividing the overall score by the number of metrics assessed
• Quality of hire can be measured by setting and tracking role-specific KPIs, gathering continuous, 360-degree feedback from multiple touchpoints, and by tracking key metrics in real time to identify and address underperformers promptly
• Key metrics to track to measure quality of hire include performance, new hire retention, time to productivity, manager satisfaction, and cultural fit
• Improve quality of hire with clear, optimised job descriptions, candidate assessments, structured interviews, and a robust new starter onboarding process
• Talos Perform makes it easy to monitor and measure quality of hire. Track employee performance, set KPIs for new hires, gather and record feedback, address performance gaps, and support professional development

What is quality of hire?

Quality of hire is a key hiring metric that measures a new employee’s productivity, performance, cultural fit, and long-term contribution to a business. While companies may already monitor metrics like time to fill and cost per hire, quality of hire focuses more closely on the overall value a new starter brings to a business.

Measuring quality of hire involves an analysis of pre- and post-hire data, combining performance data with less tangible metrics like team cohesion.

“Quality of hire is a more holistic metric, but it provides companies with a fuller picture of a new hire’s performance and fit,” explains Tim Clifford, Talent Insights Specialist at Talos360.

“Quality of hire shines a light on the success of the recruitment campaign, and provides hiring managers with valuable data that can be used to refine their approach in future.”

How to measure quality of hire

There are several different ways to measure quality of hire. We’ve outlined the most effective methods below:

1. Calculate quality of hire

The first step to understanding your organisation’s quality of hire score is to calculate it accurately. The quality of hire formula is as follows:

Performance rating + productivity + 12-month retention rate

divided by

number of metrics combined above

Some companies will monitor and combine different metrics to determine quality of hire, such as a cultural fit score. Focus on three to five indicators for the most accurate view.

2. Set role-specific KPIs

What quality of hire looks like may be different for every role. It’s therefore recommended to set tailored quality of hire KPIs for individual positions. For instance, set standard expectations for all management roles, exec positions, or junior roles, and calculate quality of hire accordingly.

3. Gather continuous feedback

Only collating feedback in the run-up to an appraisal doesn’t necessarily provide a full picture of an employee’s ongoing performance. Gathering continuous feedback and asking for insights from multiple touchpoints via 360 feedback is a more effective approach, giving managers a more rounded view of an individual’s day-to-day performance.

Any areas of concern can then be addressed faster than if feedback was only gathered on a six- or 12-month basis. This means skill gaps can be identified and closed, extra training can be provided, and staff can be given more opportunities to progress, benefiting their career development and overall productivity and performance.

4. Track key metrics in real time

Transform the way your organisation measures quality of hire by embracing automation and tracking performance in real time. Our performance management software makes this easy. HR and management can use the platform to set and track KPIs, record one-to-one conversations and 360-degree feedback, monitor personal development plans, and report on company-wide performance.

Key quality of hire metrics

The most important quality of hire metrics to measure the success of your recruitment strategies include:

• Job performance: measure new hire performance by monitoring how well people achieve the goals set for them in their first few days and weeks. This is why it’s important to set KPIs early on
• Time to productivity: this metric focuses on how quickly new starters complete the onboarding process and begin working at full capacity, with minimal guidance
• New hire retention rate: measure the percentage of new hires who stay with your business after six months, a year or two years to track the retention rate and assess the success of your recruitment process
• Manager satisfaction: survey line managers to find out how well new hires are settling in. Ask them about initial goal achievement, cultural fit, and their overall satisfaction levels. Conduct surveys at 30, 60 and 90 days to track progress
• Cultural fit: assess how well employees align with your company values, and how seamlessly they fit into the wider team culture. Gathering 360 degree feedback from a variety of touchpoints is an effective way to do this
• Promotion rate: looking at how many hires are promoted within their first year or two is another useful quality of hire metric to track

Why is measuring quality of hire so important?

Measuring quality of hire is important for many reasons, including:

• Refine hiring strategies: the real-time talent analytics available via Talos ATS allow HR and hiring managers to see which recruitment strategies have been the most successful. Monitor data on a granular level, looking at which job boards, careers site pages, or social media posts have led to the best quality hires. Use this data to refine future hiring campaigns to increase quality of hire 
• Monitor recruitment spend ROI: keeping an eye on quality of hire as a metric can help to protect the return on investment you see on your recruitment spend. Knowing where your best quality hires come from means you can allocate spend more strategically in future. This prevents wasted spend and generates cost savings 
• Support business growth: quality of hire places a greater focus on goal alignment and wider company culture than other common hiring metrics. These metrics impact motivation and productivity, potentially benefiting overall business growth in the long term
• Protect your bottom line: analysing quality of hire metrics allows hiring managers to make better-informed decisions in the future, minimising financial losses as a result. Failing to track these metrics risks damaging productivity, team morale, and organisational culture

Best practices for measuring quality of hire

Make sure you’re measuring quality of hire as accurately and strategically as possible by following these best practices:

• Continuous performance management: monitor employee performance continuously to track ongoing progress. Talos Perform supports real-time performance tracking, so any gaps in knowledge or performance can be caught early. It may be too late to address these if performance reviews only take place annually
• Collect pre- and post-hire data: collate and combine pre-hire and post-hire performance data to review which recruitment tactics are most effective for your business. Compare candidate assessment test scores with actual job performance to identify any gaps or areas for improvement in your hiring process
• Survey new starters: ask new starters for feedback on the onboarding process and their experience with your company so far. Tailor questions by role or department to gather the most effective feedback
• Standardise performance reviews: assess every employee at the same intervals during their time with you. Everyone’s performance review should cover the same factors – e.g. goal achievement, quality of work, productivity, initiative, professional growth – to ensure a fair, objective, company-wide process for monitoring quality of hire
• Tailor metrics by role: within those wider performance review categories, it’s important to focus on role-specific metrics too. For example, people in manufacturing roles may be scored on product quality, while those in management positions may be measured on team retention rates

How to improve quality of hire

Taking steps to improve quality of hire can help businesses to save money, boost performance, and increase staff retention. Here are some of the strategies to adopt to improve quality of hire:

1. Optimise job descriptions

Improve the chances of hiring quality talent by refining your candidate sourcing strategy and by optimising your job descriptions. Review the channels where you advertise roles to make sure you’re reaching your target audience, and consider creating your own careers site, where you can showcase your employer brand and company values to find candidates who are a good cultural fit.

Job specs and descriptions should clearly outline the specific skills, qualifications and experience you’re looking for to increase the chance of a good match, preventing time, money and resources being wasted during the hiring process.

2. Use candidate assessments

Candidate assessments are an effective tool for improving quality of hire. These tests can form an integral part of a hiring strategy, assessing applicants’ skills and behaviours before they are selected for an interview. 

Candidate assessments can be managed via Talos ATS, our award-winning applicant tracking system. Hiring managers can set standardised criteria for passing these tests, removing unconscious bias from the candidate selection process, benefiting quality of hire as a result. 

3. Use structured interviews

Adopt a structured interview format across all roles to make sure all candidates are questioned on their skills, competencies, and behaviours to ensure the right fit. Questions should be tailored to roles, but cover each of these categories to help improve quality of hire. Train hiring managers on best practice interview techniques and your company’s preferred process to ensure organisation-wide consistency.

Read more: Interview checklist for interviewers

4. Improve new starter onboarding

Onboarding is the first touchpoint that quality of hire can be at least partially assessed. The onboarding process needs to be welcoming, supportive, and goal-oriented to provide new starters with structure in their first few days and weeks. As an employer, you need to give new hires the tools and frameworks they will need to showcase their skills and demonstrate they are a quality hire; without this support, high turnover is likely. 

5. Monitor talent analytics

Tracking quality of hire metrics from the moment a contract is signed means you’ll have a lot of valuable data to analyse to identify which hires are the best fit, and if any are underperforming. Leverage talent analytics to identify and address areas for improvement to refine your company’s processes and improve quality of hire over time.

Measure quality of hire with Talos360 

Monitor and improve quality of hire by bridging the gap between recruitment and on-the-job performance with Talos Perform, which supports the continuous monitoring of new hires. Managers can use the platform to:

• Automate HR workflows
• Set initial KPIs for new hires
• Manage 30, 60, and 90 day check-ins
• Record 360 feedback
• Recognise good performance
• Identify and address performance gaps
• Track onboarding and probation reviews
• Support ongoing professional development
• Create company-wide performance reports
• Evaluate key quality of hire metrics to improve future campaigns

Improve the way you measure quality of hire with Talos Perform. Request a demo today.