By Jan Niehaus
Hiring managers and HR leaders who were surveyed by IBM in 2014 regretted, on average, 39% of their recent hiring decisions and would not rehire the individuals if given the chance to do it over.
When new hires are regrettable choices for whatever reasons, there are lots of opportunities for—and actual occurrences of—finger-pointing. The hiring manager can blame HR for not presenting good candidates, creating a lame ad, or conducting inadequate onboarding. HR can fault the hiring manager for providing inaccurate job descriptions, conducting ineffective interviews, or failing to properly introduce the new hire to the job or department.
All of these can cause or contribute to new hires leaving or performing poorly. Twenty percent of turnover occurs within first 45 days, frequently during the onboarding process.
How do companies measure quality of hire (QoH)? Aside from the obvious metric of turnover, what measurements exist to assess QoH? The most frequently cited metrics are cost-per-hire, time-to-fill, the number of candidates, and promotion rate—despite the fact that these measures (with the possible exception of promotion rate) evaluate the efficiency of the recruiting process, not the quality of hire. IBM researchers found that managers in companies that rely on these particular misguided metrics would not rehire 50% of their recent hires, compared to the overall average of 39%. The take-away: Using these measures, which encourage speed and economy in recruiting, actually bring down the quality of new hires.
So, what are the most effective metrics to evaluate QoH? The most commonly used QoH metrics cited by participants in IBM’s survey are:
- Employee performance appraisal ratings (60%)
- Employee fit with the organization (52%)
- Feedback from peers and coworkers (50%)
- Hiring manager feedback (45%)
- Leadership potential (40%)
- Objective employee productivity measures (38%)
- Retention (36%)
- Time until maximum productivity (29%)
- Promotion speed (25%)
The majority (87%) of the companies use, on average, three of these measures in combination to determine QoH.
The most effective and most popular metrics are highly subjective: appraisal ratings, employee fit, feedback from peers and management, and leadership potential. There is no precise formula for evaluating QoH. It’s a slippery concept. Imprecise though the metrics are, using them to measure QoH is worth the effort: According to IBM’s calculations, the percentage of managers who would rehire their new employees if given the opportunity would jump from 61% (the overall average) to 79% if they assessed quality of hire using the top metrics listed above.
Most hiring managers in electrical distributorships would probably agree that evaluating the quality of an employee is difficult, subjective, and probably inconsistent. Also, the metrics (with the possible exception of cultural fit) will vary from one position to another. A new sales representative’s productivity may be measured by sales volume, the number and size of new accounts acquired, growth within existing accounts, etc. A warehouse worker might be evaluated based on how quickly he pulls products from shelves, how securely he packages items for delivery, and the accuracy of the orders he fills. Empirical measures of a payroll clerk’s performance might be speed and accuracy.
It’s not likely that many distributors—or companies in any industry—have baseline metrics for each position (with the possible exception of inside and outside sales). However, if assessing quality of hire is to be a meaningful process, leadership needs to define targets and milestones, for example:
- What level of performance signifies that a new hire has achieved competency in a given position?
- What performance level defines “average” performance in the position?
- How long does it take, on average, for a new hire to reach “competency” and then “average” performance in the position?
Experts recommend that evaluations—both the subjective and objective ones—be conducted at a minimum at the end of the new hire’s first week on the job, at the conclusion of the first month, and then at three, six, and 12 months. The quality of hire will be elevated if training, coaching, and perhaps a buddy program continue throughout the first year—certainly through the crucial first 45 days. Sometime between the sixth month and one-year mark, a discussion of long-term career development should begin. The 360° evaluations would also, ideally, occur during this six-month window.
Given the prevalence and importance of employee performance appraisal ratings (60% of companies use them to assess QoH), managers’ appraisals need to be accurate, consistent, and unbiased. Skills training on performance evaluation, interviewing, and diversity and inclusion will go a long way toward elevating the quality of a company’s new hires.
Niehaus, president of Communication by Design (communicationbydesign.net), serves the electrical industry by creating marketing communications and custom training programs, often applying her extensive knowledge of sustainability. Jan writes regularly for tED and designed and scripted NAED’s “Selling Green 101” curriculum. She can be reached at 314-644-4135 or Jan@CommunicationByDesign.net.
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