DEI Recruiting Strategy: Quality-of-Hire is the North Star

What gets measured gets managed. Quality-of-hire is a critical piece of your recruiting strategy.

Quality-of-Hire is Essential to Recruiting the Best, Diverse Teams.

Quality-of-hire either excites or terrifies people leaders.

I was on a call the other day with a Global Head of Talent Acquisition who said, "All my leadership is asking about is 'butts in seats!' We don't have time to think about if they'll stay for 6 months for 1 year. It's about how fast we can hire."

Meanwhile, Kelli Dragovich, Chief People Officer of unicorn SaaS company, shared a recent conversation with a board member. “We talked about our greatest fear, which is how do we hire 500 people this year and make sure we don't hire wrong or break our culture? How do you scale culture that rapidly?”

I bet if I sat in 10 board meetings, 9/10 would discuss this exact same question around maintaining quality while hiring fast.

At first glance, it feels that there are two camps - recruiting teams that focus on speed-of-hire and those that focus on quality-of-hire. But there doesn't have to be a trade-off between speed and quality.

You can have both!

I understand that time-strapped talent teams might not believe this. But here's why aligning on quality-of-hire also helps with speed-to-hire.

What is Quality-of-Hire?

Quality-of-hire (QoH) is defined as the value a new hire adds to your company.

Each hire at your company has an individual QoH score, and averaging the score across populations will give departments, geographies, and your whole company a QoH score.

QoH does not have a standardized calculation or formula, which is likely part of the apprehension in using this metric.

In our Actionable Recommendations below, we share Searchlight's field-tested formula for quality-of-hire.

An individual QoH score is a composite of many factors, including but not limited to:

  • Job alignment - Does the new hire feel that the job they're doing is the job they interviewed for?
  • Employee satisfaction / engagement - Does the new hire feel this job is the right fit for them
  • Retention - How long has the new hire stayed at the company? Do they think they'll stay for another 2 years? You can imagine that the value of a hire goes up over time because the upfront cost of recruiting them is now proportionally lower than their contributions to the company
  • Values alignment, culture add - Does this new hire elevate the company culture?
  • Hiring manager satisfaction - Is this new hire the right fit for the job?
  • Performance / ramp speed - Is this new hire contributing on par, better than, or less than expected

Say that you measure 5 of these factors on a scale of 1-10 for a new hire. Then the individual QoH score is equivalent to (the sum of the individual 5 scores) / 5.

So you can see that QoH is a measurement of how healthy your team is and how recruiting is impacting that health. When recruiting hires more people that are performing well, staying long, and positively contributing to the culture, QoH goes up. But if we hire folks that don't stay, or folks that are not performing, QoH goes down.

If you average out the QoH score across a department or your whole company, you can achieve the Net Hire Score, which helps you understand the overall strength of hires you are making. 

What does Quality-of-Hire provide?

What gets measured, gets managed. QoH is essential to a successful talent strategy and building winning teams.

"QoH is recruiting hygiene. If your recruiting process isn't clean," says John Foster, Chief People Officer of TrueCar, "then you're making your company dirty. Standards slip, and your company's performance regresses to the mean. If you’re not paying attention to QoH, you’re making it less likely your company can achieve its business goals."

In a nutshell, QoH ties recruiting to business outcomes so we can finally recognize the important work that recruiters do. And, by having an outcome measurement, we can tweak the recruiting inputs to improve the hiring process. LinkedIn reports that “measuring the quality-of-hire (i.e. the on-the-job performance of new hires) allows firms to determine how well interviews predict overall.”

And this has everything to do with DEI-focused recruiting.

First, knowing QoH  allows you to comparing what skills your top-performing hires have in common. This data can be used to craft future success criteria so your teams can avoid anchoring on prestige markers and familiar credentials. The learnings from QoH should be included in your company's competency taxonomy and used to create success criteria.

Secondly, QoH can help illuminate the positive impact that a more diverse workforce has on your organization and rally the team around diversity initiatives. When you set and measure progress towards your diversity targets and then measure quality-of-hire, you can provide data-backed answers to how diversity elevates the team. It's a reinforcing cycle that debunks the myth that hiring for diversity enforces quota over quality and takes longer.

It's no surprise that 40% of talent acquisition leaders believe QoH to be their top priority.

So why is Quality-of-Hire a sore topic?

While recruiting leaders want to own the QoH metric, there are a few commonly cited barriers to measuring QoH:

  1. It takes 6 months to 1 year to see if a new hire becomes a top performer. 
  2. It takes a lot of manual work to calculate the individual factors that make up QoH.
  3. Most recruiting teams don’t have software to help calculate QoH.
  4. Measuring QoH requires surveying the new hire and their manager post-hire, but the post-hire employee experience is traditionally owned by HR. Recruiters don't feel that they have the organization's support to poll the candidates on their employee experience once they join the company.

It boils down to the fact that recruiting teams are not empowered with the right tools to measure QoH quickly and easily.

Actionable Recommendations:

Empower your recruiters to own Quality of Hire

“Sometimes recruiting is silo-ed from the rest of HR, but that’s the craziest thing ever,” says Jeff Diana, Chief People Officer of Calendly and former recruiting leader at Atlassian during hyper-growth. “In order to successfully identify the profiles of your top candidates, you have to cross over to HR and understand which people are actually successful. If recruiting doesn’t measure Quality of Hire, you don’t know what great looks like.”

Shauna Geraghty, Psy. D is the Senior Vice President of People and Operations at Talkdesk, a $10B SaaS company. Shauna also believes QoH is core to recruiting success, and includes the first-year retention metric as a recruiting KPI. As a benchmark, Shauna shares that they target only 1 first-year employee churn per recruiter per quarter.

Invest in software to continually measure QoH

Searchlight automatically computes both the individual QoH score and the Net Hiring Score.

To get a quick pulse on QoH, Searchlight automates a survey to the new hire and their manager at the 60-day mark. Here are some sample questions:

New Hire Questions

  • New Hire Alignment How does your work match the job you interviewed for?
  • New Hire Satisfaction Is this job the right fit for you?
  • New Hire Promoter I would recommend this company as a great place to work.
  • New Hire Engagement I can see myself working here in 2 years time.

Manager Questions

  • Ramp Speed How does the contributions of this employee compare with a fully-ramped member of their team?
  • Manager Satisfaction Is this person the right fit for the job?
  • New Hire Performance How confident are you that this new hire is going to be a top performer six months from now?

The formula that Searchlight uses for QoH has been field-tested by companies like Zapier and Human Interest. We've found this formula to be a strong balance of readily-available data and accuracy:

((New Hire Alignment) + (New Hire Satisfaction) + (New Hire Promoter) + (New Hire Engagement) + (Ramp Speed) + (Manager Satisfaction) + (New Hire Performance)) / 7

What's particularly elegant is how extendable this formula is when our partners want to add their own data, like quota attainment pulled from Salesforce. We simply add another factor to the formula like so:

((New Hire Alignment) + (New Hire Satisfaction) + (New Hire Promoter) + (New Hire Engagement) + (Ramp Speed) + (Manager Satisfaction) + (New Hire Performance) + (Quote Attainment)) / 8

Along with QoH, Searchlight keeps the pulse on employee engagement, employee satisfaction, hiring manager satisfaction, role alignment, and performance. With these dynamic talent analytics, executives and leaders can view both the overall QoH score and the inputs to diagnose potential problems in the recruiting process and intervene swiftly. Over time, companies learn their unique talent profiles to optimize their recruiting outreach, marketing, and overall strategy.

Having access to the Quality-of-Hire metric is absolutely indispensable for companies ready to play offense on their hiring quality and reach their diversity targets.

This is Step 5 of Searchlight's Playbook for DEI-driven Recruiting.

  1. Be Data-Driven and Set Targets
  2. Define success criteria based on competencies and capabilities
  3. Evaluate your candidates fairly and consistently
  4. Active source from diverse communities, don’t rely on inbound
  5. Treat Quality of Hire as the North Star to continually improve your recruiting process

Is your team ready to transform your recruiting process? Schedule a call today with our product specialists

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