GUIDE TO QUALITY OF HIRE

RPO TOTAL TALENT CONSULTING SEARCH

Research from Cielo and others shows that
companies place tremendous value on the ability
to predict who will become a quality employee.
The trouble is that few have been able to
successfully define what quality means for their
business. Part of the challenge stems from the
disconnect that exists between talent acquisition
and hiring managers, as well as a reliance on
subjective, often anecdotal, feedback that is not
useful for objectively improving quality.

The good news is, you can change that for your
company and help it rise above. Starting now.

90%
of business leaders
agree that consistently
delivering quality hires
should be the top priority
for talent acquisition
WHAT IS QUALITY OF HIRE?

Quality of Hire is a group of meaningful measurements – unique to each

company and role – that define success in hiring and retaining the right
talent to fuel the business. When you break that down, you get:

Meaningful Measurements Define Success in Hiring and Retaining

You want to measure elements that
actually contribute to the organization’s
success. These may include metrics such
as retention rate, time to productivity.
What makes them meaningful is your
ability to count them objectively rather
than subjectively.
Talent
The data you measure should point to your
definition of a successful hire. Think of
these as key performance indicators on an
individual level. Ask yourself what a person
in this role should be achieving to add
value to the organization.

Unique to Each Company and Role Fuel the Business

No single company or role can define Through Quality of Hire measurements,

success for another. The quality
measurements for your organization’s
graphic designers, for instance, will be
different than the measurements for your
sales team.
you should not only understand how
your organization defines success, but
how each individual in the organization
contributes to that. Starting at the
business level, then drilling down to HR
and the recruiting process, you will be able
to determine the types of individuals who
will add value to your business.

It does not matter how others define quality if those characteristics are
not true for your organization or the roles you are evaluating.

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WHY MEASURE QUALITY OF HIRE?

To turn data into a useful tool to measure Quality of Hire, start with this
simple question: “How does our organization define success?”

This is the lens through which you must choose what data to measure – as well as how
to measure it. Then you need to prove that measuring Quality of Hire will be worth the
time and effort.

ERE reports that only 58% of recruiting departments say they measure Quality of Hire,
so this leaves a tremendous opportunity for your organization to start measuring it
and stand out.

Fortunately, executives across the globe are finally acknowledging how important
talent is to their success, so momentum is building for putting more Quality of Hire
measurements in place. This is vital as the increasing demand for top talent has made
quality candidates harder to find than ever before.

“If you’re not measuring Quality of Hire,

you’re not hiring the best people”
- Lou Adler, The Adler Group

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Annual Financial Impact of High Performers
Creating a base of metrics to benchmark from will help you predict who will make a
quality employee in the future. This should make it clear that measuring Quality of Hire is
essential to an organization’s continued success.

+40% +49% +67%

Productivity in Profit in General Revenue in
Operations Roles Management Roles Sales Roles

The impact of pivotal employees is important to keep in mind as you develop a plan to
measure quality. You may find that it is more beneficial to focus on key roles first, and
then expand your measurements later to other groups of employees. After analyzing
the HR data of more than 1,000 companies and 20 million employees, Hewitt Associates
found that with a mere 10-point increase in quality, a Fortune 500 company can increase
its bottom line by between $70 million to $160 million over three years.

Uncovering the financial impact of Quality of Hire on the bottom line is not always simple,
but there is no need for you to tackle this on your own. Your accounting and finance
colleagues are valuable allies who can help you determine more precise dollar amounts.
Be sure to bring them on board during this process.

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Cielo’s Quality of Hire Measurement Continuum is a
scale of the ways organizations measure their Quality
of Hire from “Most” to “Rare” based on the proportion
of organizations that use each measurement.

Organizations most often self-identify with the “Most”

category, basing Quality of Hire on whether the hiring
manager is pleased with the recruiter’s performance.
Others fall in the “Many” category, feeling that their
chosen method is retention – particularly 90-day and
one-year. A passionate but smaller minority choose
“Some,” as they feel that Quality of Hire should be
based on a new hire’s business contributions specific
to their role over their first two years.

star Hiring Manager Satisfaction

MOST

� Reduced Attrition
MANY

mind On-the-Job
Competency
SOME

� Personal
Achievements
FEW

� Business Outcomes
RARE

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 Hiring Manager Satisfaction (Most)

More than anything, hiring managers want consistent quality hires

from their talent acquisition teams. So, tracking their satisfaction
is a good way to determine just how well recruiters are aligning
with those needs and expectations. Cases where there is
immediate concern, such as with onboarding and short-term
attrition, will become apparent. Over time this will lead to trends
being identified that could show whether there are differences
in satisfaction based on factors such as physical location,
department or job types.

It is important to keep in mind, however, that satisfaction is a

subjective measurement dependent upon the opinion – and
response rate – of individual hiring managers. While it is possible
to sometimes get a hint at larger trends or problems, mostly it is
surface concerns that are identified.

Reduced Attrition (Many)

Reduced attrition is a great example of a quantifiable metric

with clear, objective results. While employees who are not a
good fit do not benefit the company by sticking around, keeping
strong employees longer saves you money. If a high-performing
employee leaves within the first 6 to 12 months (or worse, weeks),
you lose the time and money you have invested in them, a
percentage of their salary (typically somewhere in the range of
20%), plus the costs of the vacancy and to refill the role.

Tracking this also has the added benefit of improving your

Employee Value Proposition (EVP) as you look to attract more
workers. They will see that this is a place where people can stay
and succeed.

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 On-the-Job Competency (Some)

Say a web developer at your organization typically reaches full

productivity within three weeks of starting a job. However, there
is one new web developer who takes seven weeks to reach
that same level. Compiling data about your average time-to-
productivity makes this an easy red flag and provides you with a
baseline from which you can gauge subsequent improvements.

Error rates can say a lot about the quality of a new hire. While
high error rates do not necessarily mean the employee is unskilled,
it may indicate that they are not a good fit in the role for which
they were hired. This may be especially useful for individuals in
financial roles, where there is little room for error. Instituting skills
assessments and/or work simulations based on the success of
high performers is a good way to ensure the individuals being
hired are capable of performing their duties.

Tracking this data does require a certain level of sophistication

and consistency in an organization’s recruitment process, so it will
not work for everyone. Getting true results requires patience and
an ongoing effort.

Personal Achievements (Few)

This measure also requires an investment of time and a

recognition that some roles are too fluid for useful measurement.
But if it is done well, the results are definitive. Employees who
are highly satisfied in their role and at their company are more
engaged and effective. They challenge themselves to hit stretch
goals, get more involved in their work community and push for
better business results.

You will see trends emerge and be able to identify high-

performing employees. There is also the opportunity to correlate
sourcing methods with levels of performance. Do employees who
responded to a certain job advertisement end up performing
better than employees who were referred? Tracking this data
opens up the possibility of finding that out.

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 Business Outcomes (Rare)

Measuring Business Outcomes resonates well with the C-suite

and investors, and it is well-suited for high-volume roles or senior
leaders where measurable outcomes – such as revenue growth
and sales-per-hire are clearly defined. In sales roles, for instance,
while there are many variables, they ultimately have the same
objective: booking and generating revenue. If the average is 10
sales per quarter, and one salesperson only has two sales, then
you have something to work with.

Organizations often see themselves in multiple continuum

categories, a result most likely tied to an organization’s increased
sophistication. After all, no method is better than any other –
they are equally valid and merely identify how an organization
measures value. Which of these is most appropriate will vary by
company, department and role.

While the numbers are objective, what they mean is not

necessarily clear. There can be many other factors that affect
business outcomes outside of recruitment methods, but it is
almost always a good place to start. If there is a quality issue, take
it back to the recruitment process and see what the variables
were between the performing and underperforming hires.

Defining and measuring Quality of Hire

comes with challenges, but the benefits it
brings make it worthwhile.

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HOW DO I OVERCOME CHALLENGES
TO MEASURING QUALITY OF HIRE?

Arriving at a place where your organization is ready to measure Quality

of Hire and benefit from it does not come without effort. The top four
challenges are:

1. No common agreement on critical roles

2. Difficulty tracking and reporting
3. Perceptions are subjective
4. Expectations are unclear

These challenges often arise from companies trying to evaluate all employees together.
Instead, start by evaluating only the highest-priority roles within your organization, i.e.,
the highest revenue generators or 40% of a prioritized list. Working closely with hiring
managers and senior leaders to arrive at consistent and agreed-upon definitions will
then help keep the practice manageable by making sure you are getting only the most
meaningful and impactful data.

It is also critical to understand who should be held accountable for integrating Quality of
Hire into an organization. Senior leaders, talent management, talent acquisition and hiring
managers all play critical roles in answering the following questions:

• What are our most critical roles in the organization?

• What are the traits that correlate most directly with quality performance
in those roles?
• How can we quantifiably measure those traits?
• When and how often should those measures be assessed?
• How can we use what we know to predict future success?

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HOW CAN I IMPROVE QUALITY OF HIRE?

We have found six common levers that lead to stronger hiring results,
improved workforce performance and better Quality of Hire.

There is no silver bullet and no magic formula that work in every environment. These are
simply areas you can monitor and adjust to make sure you are on the best path to quality
for your organization.

1. Employee Value Proposition

Your Employee Value Proposition (EVP) is the primary message candidates receive about
your company aside from your public brand, and it is key to achieving better Quality
of Hire. Smart EVPs will attract the candidates you want while turning away those who
would not make a good fit. Think of it as your organization taking a side in the classic
“The Beatles or The Rolling Stones” debate – one side appeals to some individuals more
than the other.

The right message will create an emotional connection with your target audience and
highlight points of difference that encourage them to work for your business instead of
another. You need to monitor and update your EVP periodically, but it is one of the few
tools you can implement that will bolster your recruitment efforts while you sleep.

2. Workforce Planning

Workforce planning and retention metrics include the cost of turnover, workforce stability,
workforce capacity, turnover rate and reason, voluntary termination by top performers
and key position turnover rates.

To further develop a picture of your workforce quality, consider collecting data on new
business growth, physical work location, offshoring, economic trends, retirees and the
transfer of knowledge.

There are tools available that can help you track these metrics, including services such as
human capital forecasting and retention diagnostics. Understanding this data will help
you predict your future talent needs.

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3. Hiring Manager Experience

Your organization’s hiring managers define recruitment quality, which arguably makes
their opinions the most important. But there is often a disconnect between HR and
hiring managers.

Cielo’s Talent Acquisition 360 research shows a significant gap between the expectations
of hiring managers and talent acquisition’s ability to meet them. According to a study
performed by the Corporate Executive Board Recruiting Roundtable, the majority of
recruiters (57%) feel that hiring managers do not understand recruiting, while an even
larger majority (63%) of hiring managers feel that recruiters do not understand the jobs
they are trying to fill. Something is clearly broken between talent acquisition and hiring
managers, so you must find the root of this disconnect and bridge the gap to truly deliver
quality talent.

4. Talent Management

While traditional talent management focuses on hiring and turnover, today’s talent
management must be more integrated into the business. It must link business priorities
and critical workforce issues and drive results through organizational enhancements.

Effective talent management improves an organization through strong succession

planning, bench strength assessments, human capital metrics year over year, current and
future organization charts, special emphasis areas, employee profiles and action plans.
These are strategic measures and data points that are becoming even more important for
properly analyzing the quality of your hires. Without them, you are essentially crossing
your fingers and hoping everything works out for the best.

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5. Employee Orientation

A case study from Texas Instruments showed that employees who complete orientation
reach full productivity 60 days faster than employees who do not. Corning found that
69% more employees remained at the same company after three years if they completed
orientation compared to those who did not.

Seeing as the value of talent increases over time, the importance of having employees
complete orientation should be self-evident. Make sure you have a robust onboarding
program to convert candidates into employees and keep your quality hires in place.

6. Cost-Per-Hire

First-year turnover is often considered a telling indicator of quality. According to PwC

Saratoga, “The average cost of turnover for new hires is equivalent to one and a half
times the annual pay of the departing employee.”

So while it might be tempting to spend less per hire to reduce costs, it actually becomes
more expensive over time. According to Bersin by Deloitte, doubling spending per hire
results in 40% less new hire attrition and 20% faster time to fill. Finding the right mix for
your organization can have a substantial impact on your Quality of Hire.

“The old adage about people being your

greatest asset is not true. People aren’t your
greatest asset. The right people are!”
- Jim Collins, Author of “Good to Great”

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Defining and measuring Quality of Hire certainly comes with challenges, but it also brings
benefits that make it clearly worth the effort. It is not a stretch to say that Quality of Hire is
essential to your organization’s success. Accurately measuring, leveraging and predicting
it adds dividends to your bottom line.

No single metric perfectly determines Quality of Hire, so you must start with a basic
understanding of the traits that matter most to your organization – by role – and increase
your sophistication as you learn. Using Cielo’s Quality of Hire Continuum on page 6 will
help you determine the metrics that work best for your organization. Do not wait until you
think you have perfected the process to implement measurements, or you will never get
started. Begin with the end in mind and tie your measurements to business outcomes and
financial impact. Frequently assess your Quality of Hire levers.

To truly benefit the organization, you

must report your findings regularly,
consistently and comparatively – and
communicate them broadly. The future
of your organization depends on it.

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ADDITIONAL READING
For complimentary insights referenced in this guide or on the topic
of Recruitment Process Outsourcing, consider the following thought
leadership from Cielo:

Crafting a Powerful Employee Value Proposition

To compete for top talent, your organization needs to have an Employee Value
Proposition (EVP) that resonates with employees and candidates. But creating, refreshing
or overhauling your EVP is no simple undertaking. To do it successfully, you should follow
a proven approach. We created this guide to help you craft a powerful EVP that will
boost employee engagement and increase your organization’s ability to attract and retain
the right high-performing talent.

Talent Acquisition 360 Report: Aligning Talent Priorities for Business Success
Cielo’s exclusive report identifies gaps that exist between stakeholder perceptions
when it comes to talent acquisition priorities, metrics and technology. It also lays out
recommendations for addressing those gaps, achieving stakeholder alignment, and
building a winning strategy.

Visit cielotalent.com for free access.

Cielo is the world’s leading strategic Recruitment Process Outsourcing (RPO) partner and
industry innovator delivering RPO, Total Talent Acquisition, Consulting and Executive Search
services in over 100 countries. We design comprehensive, people-centric solutions and leverage
Cielo TalentCloud – our award-winning technology suite featuring CRM, AI, automation and
analytics capabilities – to help our clients find, attract and hire the specific talent to move their
businesses forward. To learn more, visit cielotalent.com