What is quality of hire?
Quality of hire is a recruiting metric that estimates how much value a new employee adds to the organization. There is no single universal measure, so employers usually combine a few indicators, such as performance rating, manager satisfaction, retention and ramp-up speed, and review them some months after the start date.
A common formula
One common industry approach is to average several scored indicators: quality of hire = (performance score + ramp-up score + engagement or manager-satisfaction score + retention score) divided by the number of indicators used. Each organization decides which indicators it uses and how each is scored, so the result is only comparable inside the same company and method.
Using it well
Pick indicators before hiring begins, measure at a consistent point such as six or twelve months after the start date, and compare by source channel or interview method. Avoid reading too much into a small sample of hires.
Example
A company scores each new hire from one to five on performance, manager satisfaction and ramp-up at six months, adds a retention score of five if the employee is still there, and averages the four numbers.