Quality of hire: How to measure and improve it?

How to improve quality of hire

Understanding and enhancing the quality of new hires is crucial for a company’s long-term success in talent acquisition and recruitment. Quality of hire serves as a recruitment metric that determines the value a new employee brings to an organisation, both in the short and long term.

Recruitment teams usually do a great job of measuring efficiency metrics like time to hire and cost to hire. Quality of hire is notoriously difficult to measure across different companies and industries, making it hard to benchmark against other companies. But you can and should measure this increasingly important metric within your company. And compare the score over time or departments to evaluate how effective your recruitment process is.

Quality of hire is by no means a new term. It is known as the Holy Grail of recruitment metrics. But we don’t think it should be something mythical, unreachable or unmeasurable.

Maybe it was so in 2015, but not anymore! In this article, we will dig deep into understanding the importance of the quality of hire metric, how to measure it, and steps to take to enhance it, so you can be confident that you are getting the highest value out of it.

What is quality of hire?

Quality of hire (QoH) is a holistic metric that gauges the value, performance, and retention rate of new employees within an organisation. Unlike other recruitment metrics, quality of hire looks beyond the initial hiring process, evaluating the overall contribution of the new employee to the company, their cultural fit, productivity, and their longevity within the company. It consists of both efficiency and quality metrics.

Why is quality of hire an important metric?

Here are 3 top reasons why you should measure quality of hire, if you’re not already:

1. Future predictions: The quality of your current hires can give you insights into the effectiveness of your recruitment process and serve as an indicator of future employee success.

2. Cost efficiency: A higher quality of hire ensures that the company maximises its ROI (Return on Investment) in recruitment. Replacing a poor fit can cost up to 50% to 250% of an employee’s annual salary.

3. Company growth: Good hires increase productivity and innovation, driving company growth and success.

How to measure quality of hire?

Measuring the quality of hire can be challenging due to its multifaceted nature. It’s tough because it encompasses a broad range of indicators, from tangible performance metrics to intangible cultural fit.

It’s easy to say: “My time-to-fill is X number of days, which is 5 days lower than before”, and enhance that number with X dollars of savings in the cost of hire. But putting a monetary number on a better cultural fit is not as straightforward.

So how do you emphasise the value of measuring QoH when there’s not even a universally accepted, cookie-cutter formula for it?

Here are three main indicators to consider when first measuring your company’s QoH.

Indicator 1: Performance metrics

Evaluate the performance of new hires against established KPIs (Key Performance Indicators) and objectives. Regular performance reviews can help in gauging this.

Indicator 2: Retention rates

A quality hire typically stays with the company for a longer duration. Compare the retention rates of new hires with company averages to determine their quality.

Indicator 3: Employee engagement

Survey or interview new employees to determine their engagement levels. Highly engaged employees are usually better cultural fits and contribute positively to team dynamics. Additionally, engaged employees can improve workplace productivity, increase profits, and contribute new ideas.

Quality of hire

What factors to consider when measuring quality of hire?

Quality of hire is a composite metric, and many factors can be used to measure it. It can take some time to tweak the formula so that you have one that suits your company’s needs. Think through what data is already available for you to use and which factors influence your quality of hire the most.

On the Teamdash Recruitment dashboard, you can get quick access to various recruitment metrics that can be used for your quality of hire formula.

We recommend scoring the factors of choice on a 100-point scale so you can conveniently plug them into your formula. Here’s an example formula:

Quality of hire = (360-Degree Feedback + Retention rate + Achievement of goals + Engagement) / Total number of indicators 

Here are several commonly used factors:

1. Job performance

  • Performance reviews: Regular evaluations of an employee’s work against set objectives or KPIs.
  • Achievement of goals: Whether or not the hire met, exceeded, or fell short of their predefined goals.
  • 360-Degree Feedback: Input from peers, subordinates, and superiors on an employee’s performance.

2. Retention and tenure

  • Length of stay: The duration for which the employee remains with the company. A shorter stay can sometimes indicate a poor hire.
  • Turnover rates: Comparing the turnover rates of new hires vs established employees can provide insights into hiring quality.

3. Cultural fit

  • Employee engagement surveys: Feedback on how well the employee feels they fit into the company culture.
  • Peer and manager feedback: Insights from coworkers about the new hire’s fit within the team dynamics.

4. Onboarding efficiency

  • Time to productivity: The duration it takes for a new hire to start performing their job at the expected level.
  • Onboarding feedback: Insights from new hires about the effectiveness and helpfulness of the onboarding process.

5. Hiring manager satisfaction

Feedback from hiring managers about whether the new employee meets or exceeds the expectations set during the recruitment process.

6. Financial indicators

  • ROI of the hire: Determining the return on investment by comparing the value added by the employee to the cost of hiring and training them.
  • Cost of replacement: If the employee leaves, how much does it cost the company in terms of recruitment, lost productivity, and onboarding a new candidate?

7. Capacity for growth and development

  • Upskilling: The ability and speed at which the employee learns new skills or tools.
  • Promotability: How quickly or often the employee gets promoted or takes on more responsibilities.

8. Customer and client feedback

Especially relevant for roles that have direct interaction with customers or clients. Their feedback can be a measure of the employee’s effectiveness and professionalism.

9. Recruitment source

Assessing which recruiting channels or methods bring in the highest quality candidates. For example, employee referrals might bring higher quality hires than general job boards.

10. Error rate

For roles where precision is essential, the frequency and severity of errors made by the employee can indicate their quality.

When collectively analysed, these factors give a comprehensive view of the quality of hire. However, the relevance and weightage of each factor might vary depending on the organisation, industry, and specific role.

How to measure quality of hire

How to improve quality of hire?

Boosting the quality of your hires can have profound effects on company performance, culture, and growth. Here’s how to do it:

Enhanced job descriptions

Clear and detailed job descriptions can attract the right candidates. Use these descriptions in your job ads as well. Ensure that it reflects the role’s expectations, required skills, and the company culture.

Structured interviews

Implement a structured interview process. This provides a consistent framework to evaluate candidates and reduces biases. Provide the people involved in the interviewing process training about different interviewing techniques, especially those who don’t conduct interviews regularly.

Continuous training and onboarding

A thorough and continuous onboarding and training process helps new hires integrate seamlessly into the company and perform at their best faster.

How to improve quality of hire


In conclusion, while the quality of hire might seem intangible and challenging to measure at first, a structured approach to evaluation and constant refinement of the recruitment process can help companies optimise this crucial metric. Remember, it’s not just about hiring the best but hiring those who fit best with your organisation.

Teamdash – The all-in-one recruitment software.

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Merilyn Uudmae


Content Marketing Manager

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