Quality of Hire (TA Metric)

Quality of hire gauges how well new employees perform and contribute – essentially the ultimate outcome of recruiting.

It’s a bit abstract to measure directly, so companies use proxies like first-year retention (or attrition) rates, new hire performance evaluations, time to full productivity, and hiring manager satisfaction.

An especially telling metric is First-Year Attrition, i.e. the percentage of new hires who leave (voluntarily or involuntarily) within their first year. High early attrition usually signifies poor hiring decisions or onboarding.

Conversely, if 90–95% of new hires are still with the company after one year, it suggests strong hiring quality and fit.

The truth is that hiring is expensive and time-consuming, so losing a new employee within a year is very costly. It not only incurs the direct cost of replacing them (estimated at ~50–60% of their annual salary in turnover costs), but also means the initial hire failed to deliver expected value.

First-year attrition directly hits the bottom line, increasing overall cost-per-hire and lowering workforce productivity and morale. Quality of hire also correlates with longer-term performance and innovation – great hires become great contributors.

Value of Quality of Hire

When quality of hire is high, you see it in higher productivity, innovation, and lower turnover costs.

One former head of global talent attributes their improved hiring outcomes to focusing on quality and inclusion – producing concrete results like more patent filings and higher employee engagement scores from recent hires. Conversely, poor quality hiring shows in performance issues and terminations.

High first-year attrition hurts team morale and wastes time. That’s why all these top firms treat hiring as “make or break” – Jeff Bezos once said he’d rather interview 50 people and hire no one than risk a bad hire.

The data-driven rigor at places like Amazon and Google is aimed squarely at maximizing quality.

In sum, quality of hire is the North Star metric – improvements here drive long-term business value via a more capable, stable, and engaged workforce.

Companies with higher quality hires (as evidenced by rapid competency and longer retention) have a workforce better able to execute business strategy. For example, if your hiring process reliably selects high performers, you’ll see it in metrics like faster project completion, higher sales per rep, etc., down the line.

On the other hand, a bad hire can cost tens of thousands of dollars (some estimates say a “bad hire” costs ~30% of their annual earnings in wasted pay/training etc.).

Thus, ensuring quality of hire is arguably the most important recruiting outcome – all the other metrics (speed, cost, diversity, experience) must ultimately feed into hiring people who succeed in the role.