HR Metrics and Quality of Hire in Human Capital Market: A Case Study

Abstract

In recent years a debate has erupted over what existing QoH metrics actually measure, staffing process effectiveness or actual new hire quality. Like many HR metrics, it seems that every firm defines quality in its own unique way, and that the measures that are used to track it are equally unique. Further complicating the measure is the fact that various factions within an organization perceive the quality of a hire from different perspectives, and therefore want different aspects of new hire quality measured. Line managers what a unique scoring type measure for each candidate that serves as an accurate indicator of the performance level he or she can expect from the new hire at a predefined future point in time. Staffing organizations often want a measure that aggregates the on the job performance information for new hires into a quality index, that serves as an indication of how well the staffing system is doing at producing hires. The clear difference in these two measures is that one focuses on predicting the future, while the other measures historical performance. Both types of measures have value, but designing a methodology that’s right for your organization requires understanding what your customers expect, and what you can realistically deliver on a sustainable basis. What few staffing organizations do to measure the performance of their function lacks a lot to be desired in terms of a qualitative approach. Measures such as cost per hire, volume of hires, or even the speed of hire are at best misleading and at worst, an inaccurate measure of staffing performance. The primary (or perhaps sole) measure of hiring success should be the quality/ performance of the hire. Unfortunately many staffing professionals can’t seem to figure out how to measure the quality of a hire, and therein lies a major problem.With 70% of hiring managers stating recruiting departments need to become more data-driven to improve long-term business impact, the need for accurate recruiting metrics has never been greater. HR costs make up 28% of a company’s total operating expenses on average, according to PwC. With so much money at stake, it’s no wonder that companies are increasingly demanding their recruiting departments to calculate metrics and demonstrate their ROI.There's no better feeling than biting into a fresh, ripe apple. There's a crunch, a surge of taste and, if it's especially ripe, you might even get a little extra juice dribbling down your chin! By contrast, it's almost heart breaking when you pick the wrong apple. What appears to be a shiny, delicious treat is rotten to the core. The taste sticks in your mouth, maybe even puts you off apples for a while! For the creative among you, it might not be too much of a stretch to compare picking the wrong piece of fruit with making a bad hire. Not only do poor hiring decisions have a financial impact, each mistake can cost your organisation as much as $50,000, a bad hire can quite literally act like a rotten apple inside your organisation, destroying your culture from the inside.