Quality of hire

What it is

Quality of hire is a measure of how much value new employees bring to a company after they join. It tries to answer a simple question: did we hire the right people?

There is no single official formula. Most companies build their own score from a few signals, such as how well new hires perform, how long they stay and how happy their managers are with them.

Why it matters

Speed and cost metrics like time to hire and cost per hire tell you how efficient recruiting is. They do not tell you whether the people you hired were any good. Quality of hire fills that gap.

Tracking it helps you see which sources, interview steps and recruiters bring in people who do well. It also shows when a fast, cheap hiring process is producing weak results.

How it works

Pick a few indicators you can measure for every new hire, score each one on the same scale, and average them. Common indicators include:

• Performance rating at the first review, often after 6 or 12 months.
• Hiring manager satisfaction, from a short survey.
• Retention, such as whether the person is still there after one year.
• Time to productivity, compared with the target for the role.
• Whether the person passed their probation period.

A simple version of the formula is:

• Quality of hire = (performance score + manager satisfaction score + retention score) / 3

Example: this is a hypothetical case. A company hires 10 sales reps in one quarter. After 12 months, their average performance score is 80 out of 100, and hiring managers rate them 70 out of 100 on average. Eight of the 10 are still there, so the retention score is 80. Quality of hire for that group is (80 + 70 + 80) / 3 = 76.7. The team can now compare this cohort with the next one, or compare hires from referrals with hires from job boards.

Best practices

• Agree on the indicators and the scoring scale before you start, then keep them steady.
• Measure at fixed points, such as 90 days and 12 months after the start date.
• Break results down by source, role and recruiter to see what works.
• Collect manager and new hire feedback with short surveys and track them in one place, for example with HR analytics.
• Look at the onboarding experience too, since a weak start can drag down a good hire.

Common mistakes

• Relying on one indicator, such as manager opinion alone.
• Measuring too early, before people have had time to settle in.
• Blaming recruiting for problems that come from poor onboarding or management.
• Changing the formula every quarter, so results cannot be compared.

FAQ

How do you measure quality of hire?

Choose two to four indicators, such as performance, manager satisfaction and retention, score each from 0 to 100 and take the average. Use the same method for every hiring group.

When should you measure quality of hire?

Many teams take a first reading around 90 days and a fuller one at 12 months, once performance reviews and retention data are available.

What is the link between quality of hire and early turnover?

They are closely related. High early turnover usually pulls quality of hire down, because people who leave in their first months rarely deliver the value the role needs.