IT Best Practices

IBM’s Secret to Reducing Hiring Mistakes

How do you ensure that you hire exactly the right person for the job? It should come as no surprise at this point that the answer is metrics. In a white paper for IBM, Dr. Rena Rasch collects statistics from over 33,000 workers across 26 countries, 18 industries, and 21 occupations to determine how they hire and how well they are hiring. The results might surprise you.

Whoops, Meant to Hire the Guy Behind You

An average of 39 percent of recent hires would not be rehired, which means roughly two in five hires do not pan out. The use of efficiency metrics, like Rasch’s example of time to fill, increase hiring mistakes by 11 percent, whereas effectiveness metrics like quality of hire decrease mistakes by almost 18 percent. In descending order, the metrics most commonly used to assess recruitment process effectiveness are quality of hire, number of qualified candidates, time to fill a position, cost of hire, and process adaptability. However, a majority of companies (30 percent in the study) use only a single metric to assess recruitment process effectiveness. Thirty-six percent of the time, this one metric is quality of hire, whereas time to fill is the one metric 18 percent of the time.

Analysis of the quality of hire metric gets broken down further, determining which variables get used to measure it. Employee performance appraisal ratings are factored in 60 percent of the time, followed by employee fit in the organization at 52 percent, and feedback from coworkers and peers at 50 percent. Quality of hire according to feedback from coworkers and peers appears to correlate with the highest likelihood of rehire. By comparison, number of candidates, time to fill, cost of hire, and promotion speed are all prone to decrease likelihood of rehire.

Rasch derives four primary insights from the data. One, organizations that use the best combinations of metrics as outlined above stand to increase percent of rehire dramatically. Two, prioritizing quality metrics over quantity metrics is the best bet. And the last two go like this:

  • Strike a balance between quality and quantity: HR leaders and hiring managers need to manage the trade-off between practical constraints, like cost of hire and time to fill a position, with the desire for the highest quality hires.
  • Mind your measures: Given the frequent use of performance appraisals as a measure of quality of hire, these appraisals should be as accurate and unbiased as possible.

You can view the full white paper here:

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