How To Gauge Hiring Effectiveness
When we analyze our hiring effectiveness, all we are able to do is examine the performance of candidates we have hired; we have no means to compare the performance of candidates we hired against those we did not. In truth, we don’t actually know whether the best candidates are being hired. All we know is how the candidates who we hired are performing. Organizations must go beyond just tracking hiring efficiency using metrics such as cost-per-hire and time-to-fill. These metrics alone suggests that a fast and cheap hire is the most important measure of success, while actual job performance is irrelevant. Using this would be like imitating a factory assembly line that focused solely on the speed of output with little emphasis given to the quality of their product.
Quality-of-hire metrics, on the other hand, reveal the effectiveness of the employee selection process, as well as the effectiveness of the hiring managers. Unfortunately, it’s not something I’m seeing a lot of organizations track yet. This means most don’t really have a clue about how well they are doing when it comes to hiring high performers. The real purpose of these metrics is to trigger positive change. Absent of that knowledge, there is usually no motivation to improve hiring results. I see two common reasons for inaction. The first reason is that no one seems to know exactly how to do it. The second is that it hasn’t been made important enough to be mandated. It’s part of the big picture of the state of hiring.
For organizations that are ready to get out of the Dark Ages, I’ve created a great tutorial on how to track quality-of-hire. It’s easy, effective, and free. It includes a downloadable Excel spreadsheet with the formulas already built in and simple step-by-step instructions: