To improve quality of hire (QoH) you must first understand the ’5 factors’ that affect it.

Quality of hire (QoH) continues to get lots of attention, just visit workforce.com, ere.com or the discussion boards for the Society of Human Resource Management or the Human Capital Institute.  Most of these studies and discussions focus on how to improve QoH, interviewing in particular.  However, this article is meant to be a discussion about what factors affect QoH, of which interviewing is only one of those five factors.  If you are considering investments in interview training or other assessment methods to improve QoH you should read this first as you might get a better ROI from investing in other areas that have an impact on QoH.

The first factor that affects QoH is the accuracy of the job description.  I’ll add that in my experience, with over 150 executive searches and consulting to several Global 1000 companies on leadership assessment and selection, less than 50% of hiring managers and boards fully understand what it takes to do the jobs they hire for!  They are usually mostly right and sometimes dead wrong.  When I develop a job description I analyze the hard and soft skills a person must possess, which includes ‘managing up’ and ‘coachability’, what motivates them to perform at their highest possible level, the acceptable and unacceptable cultural behaviors of the hiring company, and management style of the hiring manager.  Even with all this I don’t expect to capture 100% of what predicts on the job performance as I know there are external factors and some element of chance involved.

It should go without saying that if the job description does not include the correct KSAs improvement in any of the other factors that impact QoH will likely do little to improve QoH because you are hiring for the wrong thing.

The next factor that affects QoH is sourcing.  If you have accurately defined the job, but your sourcing efforts do not target 100% of the qualified candidates your QoH will suffer.     In my experience, unless you are directly sourcing candidates you don’t come anywhere close to identifying 100% of qualified candidates.  Probably more like 5-30% depending on economic conditions, but I have no scientific evidence to back that up.  A long time ago I changed my method of sourcing so that I could estimate the population of qualified applicants using a target list of companies by geography, sales, industry, and average annual turnover and switched to direct sourcing methods to avoid spending countless hours screening unqualified resumes.  I now come close to or exceed identification of 90% of the estimated qualified candidates for every executive search I do.  This type of targeted sourcing is probably the best way to improve QoH because it significantly increases the number of qualified candidates in the candidate pool.

The next factor that affects QoH is selling skills.  Once you have identified a qualified candidate (that is not already aware of and interested in your position) it takes good selling skills to break through the clutter of all the other things on the candidates mind to get them to pay attention to your opportunity, and it takes great selling skills to convince the most skeptical candidates to pursue the opportunity.  If you don’t have great selling skills you won’t get the candidates that believe they have great prospects in their current position to consider another opportunity!  This is not to say that you won’t find a great candidate, some of them are looking and some are unemployed.  But, for those who are looking or unemployed you may not need to be as strong in selling skills to get them interested.  Selling, by the way, shouldn’t stop after the candidate expresses an interest.  It should continue through the entire process, and is not just the recruiters responsibility!

The next factor that affects QoH is assessment (which includes interviews).  I prefer to use some combination of interview, work styles, motivation, cultural and ability assessments.  If you believe in the research done in this area, and I do, you know that an interview alone has at best a .4 correlation with performance, which means that only 16% of a candidate’s predicted on the job performance is accounted for in this method.  Using a combination of methods like the combination I favor, you can reach the .63 correlation level seen in some of the studies of assessment methods, and which accounts for 40% of a candidate’s predicted on the job performance.  For those who don’t think it is worth it, the work styles, motivation, cultural and ability assessments can increase the ‘cost of assessment’ by as much as 100%, but the increase in predictability of on-the-job performance could be 250% or more.  If you know your current correlation of your assessment method and the expected correlation of a future assessment method all you need is the financial value of performance and you can determine if the extra cost is worth it.

Let us assume your job description is accurate (e.g. it includes the knowledge, skills, and abilities (KSAs) that are directly linked to performance and none that are not) and the current interviewing process has less than a .4 correlation with on-the-job performance then improving interviewing accuracy will improve QoH.  I say .4 because this is the highest correlation I have ever seen between interviews and on-the-job performance in scientific research.  So, if you want to know if you should be looking at ways to improve interviewing accuracy just do a correlation study with your past hiring data and on-the-job performance.  If you are at or very close to a .4 correlation investments in this area may not payoff.

The next factor that affects QoH is offer closing.  Once you have identified those candidates that are more likely to be high performers you have to close them on an offer.  This is where the relationship between recruiter and hiring manager and conversion skills that the Recruiter Roundtable report references come in the most.  Even if you can identify and get qualified candidates interested it means nothing if you can’t close them.  In my experience the best recruiters in this area have exceptional negotiating skills (they don’t shy away from this, they live for it!), in-depth knowledge of everything the hiring company can offer and the ability to articulate it in terms of how it will impact the candidate’s life, and in-depth knowledge of what motivates the candidate.

What do you think?  Did I miss something?  Improving the ROI from human capital offers the greatest opportunity to improve organizational performance and profits, and improving QoH is a big part of this!

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