How to Measure Quality of Hire
Learn of our 5 great ways to measure quality of hire which makes organisations make informed decisions about future hires.
The term “skills-based hiring”, or “skills-based recruiting” has become common place, and is currently in vogue amoung human resources and talent acquisition circles. At first-glance, skills based hiring seems like an obvious concept, as naturally employers want their employees to have skills, and on some level, have been recruiting for skills this whole time. However, although employers claim to hire based on skills, this historically as not always been the case.
In this article, we will outline what we mean by skills based hiring, why it matter in recruitment, and how it represents an innovation over and above traditional hiring practices.
Skills based hiring is a recruitment strategy that involves selecting candidates based a specific set of skills instead of their experience. Historically, employers have been hiring for experience instead of skills, pretending that previous experience, CV content, or interview responses were sufficient measures of certain skills, giving candidates the benefit of the doubt. For example, if a candidate holds a degree in mathematics, employers would consider this sufficient evidence of numerical reasoning ability, and thus avoid addressing this specific skill during the recruitment process.
In reality, qualifications and experience are poor indicators of performance in the workplace, and make for highly ineffective selection tools. Indeed, even candidates with degrees in highly quantitative subjects can score low-average on numerical reasoning tests, as mathematical knowledge does not equal numerical reasoning. The latter, however, is a substantially more powerful predictor of performance in the workplace, with reasoning tests representing one of the most evidence based approaches to screening. Even if educational attainment was a useful measure of these skills, degree results would only be a useful indicator for a year or two after graduating, as naturally people develop their skills over time. As a result, educational achievements 5-10+ years ago simply have no baring whatsoever when it comes to their present day skills.
This blind faith in experience inevitably results in mediocre employees, as the actual skills required to perform in the role were not being measured directly.
This shift away from experience and towards actual skills addresses many of these inefficiencies which hampered success in experienced-based hiring processes.
Often, candidates will simply claim that they are skilled in a particular domain, and rather than actually test their claim, hiring managers would simply believe them. This blind faith in experience inevitably results in mediocre employees, as the actual skills required to perform in the role were not being measured directly.
Although there are many compelling reasons to shift towards a skills-based hiring approach, and to avoid an experience-based hiring approach, the question remains, why are companies changing lanes now?
A number of major changes have recently occurred in the employment market which have necessitated a change in recruitment strategy.
Firstly, the increased use of AI generated content from candidates have caused organisations to distrust CVs, cover letters, and application form responses, and rightly so. Naturally, with easily accessible AI tools, almost anyone can draft the perfect CV for any give role, along with a highly targeted cover letter. Organisations can, therefore, no longer assume that a high quality CV is associated with quality of hire, and instead should assume that any content provided to them is AI generated.
Consequently, organisations are quickly realising that skills cannot be inferred from their CV or any other pre-written content, and instead must be directly measured.
Organisations can, therefore, no longer assume that a high quality CV is associated with quality of hire, and instead should assume that any content provided to them is AI generated.
Additionally, there has been a growing movement against educational requirements in selection. Historically, candidates from prestigious universities, or with high degree classification, were given preferential treatment in the recruitment process. Increasingly, research has shown this to be ineffective as a recruitment tool, and for many reasons:
Organisations are starting to catch on to these realities, and are organically moving away from qualification-based hiring, and towards a more skills-based approach.
Lastly, with a global shift towards remote and hybrid working, the size of applicant pools has increased dramatically, as organisations can now accept candidates around the world. Although this allows organisations to access top talent from anywhere, it does make traditional interviewing more difficult. Often times, you may never actually meet your employee, and so cannot conduct a traditional interview. Although video interviews are often used in-lieu, this break from tradition has allowed employers to go back to the drawing board, and re-think their selection processes for the better. In doing so, this creates an opportunity to consider including additional assessments as part of the recruitment process, particularly to ease the administrative burden associated with large volumes of applicants.
Organisations may adopt skills based hiring practices for many different reasons, but when applied optimally this approach yields a number of key advantages. Most importantly, it allows employing organisations to maximise what psychologists call “predictive validity” i.e. the organisations ability to predict real-world performance from their selection process.
HR practitioners and hiring managers often forget that selection and recruitment is simply a predictions market, whereby the employer predicts which candidates will make the best employees.
This is the whole premise of an interview, as hiring managers assume that those who perform best in the interview will concurrently make the best employees. By measuring the specific skills that matter in the role, you refine your predictions of eventual performance, improving both the quality and quantity of available information that can be used to predict performance in-role, improving the quality of hire.
Skills-based hiring also has the added benefit of limiting opportunities for liars and exaggerators, ensuring that truthful candidates aren’t unfairly disadvantaged.
Naturally, experienced-based hiring simply takes the candidates at their word when it comes to their experiences, incentivising lying during the interview and on their CVs.
Naturally, experienced-based hiring simply takes the candidates at their word when it comes to their experiences, incentivising lying during the interview and on their CVs. For example, the typical interview question starting with “Tell me about a time when…” is the ideal opportunity for savvy but dishonest candidates to invent positive sounding experiences, none of which ever happened. This approach inevitably reduces the quality of hires, but more importantly it penalises honesty during the recruitment process. This may result in a preponderance of dishonest employees within the organisation, who are more likely to display counter productive work behaviours that harm the organisation.
In addition to be fairer from an honesty perspective, skills based hiring is also fairer from a diversity and inclusion perspective. Experienced based hiring inevitably advantages candidates from privileged backgrounds, who have greater access to social contacts, prestigious universities, and can afford to seek unpaid opportunities for experience. Consequently, candidates from privileged groups tend to perform better in experienced-based hiring processes, increasing the probability of receiving job offers (which itself further entrenches their advantage). Skills-based hiring however, pays no heed to these advantages, and provides a level playing field for everyone, regardless of their background. Ultimately, all that matters are the candidate’s skills in the present moment, not their experiences in the past, representing a fairer and more meritocratic way of hiring.
Although it may seem straightforward, adopting a skills-based hiring approach requires significant planning. Man organisations have been using experience-based hiring for so long, that the mind-set shift required can be deeply disruptive, requiring careful planning and execution. To maximise the probability of success, organisations should follow these five stages when moving from experience-based hiring to skills-based hiring:
The first and most important step on the journey towards skills-based hiring is to actually identify the specific skills you want from employees. Employers often have a tacit sense of what matters in recruitment, but lack anything structured or formalised which outlines exactly what is needed. Naturally, in experienced-based hiring processes, many hiring managers simply ignore specific skills all together, and just assume that any important skills will have already been acquired, given enough previous experience. Consequently, it’s always worth formalising this process, and specify exactly what skills you plan to measure and recruit for well ahead of time.
Employers should also keep in mind that "skills" come in three different forms.
Once you have identified the specific hard, soft, and cognitive skills required for the role, you can move onto the next stage, which is identifying assessments which measure these specific skills.
Next we need to identify assessments and assessment modalities which can effectively measure these key skills. Because these three skill types are inherently different from one another, we will need access to a range of different assessment types. Some skills can be measured using questionnaire-based assessments, others can utilise technical interviews, and some will employ tests with objectively correct answers, which can include the following:
Once you have identified the specific types of assessment that are required, you then need to find a provider. Naturally, when looking at online assessment providers, you must always keep quality and psychometric rigour in mind, in addition to other practical considerations. As a result, you shouldn’t simply choose the cheapest provider, or the provider with the smoothest online platform, as these concerns should be considered secondary to the quality of the assessment. Consequently, I always advise asking for technical manuals and other evidence of validity, reliability, and fairness when selecting a vendor, ensuring that the assessments are robust and effective.
Perhaps the most difficult stage from a mind-set perspective is to drop CVs / resumes all together, and replace them with simple application forms. CVs are notorious for introducing bias into the process, and now that CVs are readily written by AI, there is no advantage to reading a personal statement from a CV. Instead, we strongly recommend using simple application forms to capture key information from candidates. For example, if the role requires a specific degree subject, professional qualification, or the right to work in a particular location, then application forms with qualifying questions can be used. This saves HR professionals and hiring managers from reading countless CVs, reducing the administrative burden placed on the employing organisation.
Using application forms can also improve the candidate experience in the long run. Qualifying questions can provide instant and unambiguous information to the candidate regarding their application. If they do not meet one of your key criteria, then you can automatically inform the candidate that they were not successful. This ensures that candidates are never left in limbo, improving the candidate experience. Additionally, candidates need not get anxious about the quality or content of their CV, as you simply won’t ask for it. By focusing on yes / no answers to qualifying questions, you minimise the potential for error, which is a major source of anxiety in nervous candidates.
Fundamentally, there is nothing in a person’s CV which serves as a reliable measure of any workplace relevant skill, and thus it should not be used in selection decisions. Instead, what little information that is required from a CV can be captured more efficiently using an application form, requiring far less human input on both sides.
Although skills based hiring is commonly associated with assessments, interviews are still essential to the recruitment process. However, interviews will require restructuring to avoid reliance on experience and to refocus interviews on the required skills themselves. The simplest way to do this, would be to utilise questions which present hypothetical, or future orientated scenarios, rather than past-orientated questions. Naturally, these questions do not advantage people based on their experience or incentivise them to confabulate situations which never really happened, and instead just focus on their actual capabilities.
For employer who currently rely on unstructured or conversational interviews, this is the ideal time to move towards structured interviews. Research clearly shows that structured interviews are substantially more predictive of performance than unstructured interviews. Naturally, interviews that use the same questions for each candidate will provide more consistent results, improving the ability to detect high performers. However, many hiring managers prefer unstructured interviews, as they allow for smoother and more natural conversation. Although this may improve the experience for candidates and the interviewer, this doesn’t justify the loss of efficacy caused by unstructured interviews, and thus employers should always use structured interviews in selection.
The final consideration when designing an interview process is to ensure that hiring managers are adequately trained to conduct interviews. Effective interviewing is itself a skill, and the quality of interview results are directly related to how effective the interviewer is at interviewing. Although this seems obvious and intuitive, very few hiring managers actually receive formal training interviews, introducing a major inefficiency into the process. This, combined with reliance on unstructured interviews, is likely to dramatically reduce the efficacy of the selection process, harming quality of hire unnecessarily.
The final stage is simply to monitor and improve your skills-based selection processes over time. With experienced-based hiring this approach is almost never followed, as convenience is prioritised over effectiveness. A skills based hiring approach however, calls for a more rigorous review and validation process, allowing HR professionals to evaluate the efficacy of the process and make improvements. Over time, this should ensure that your selection processes steadily improve over the years, yielding progressively better quality employees while avoiding mishires more frequently.
There are several ways that organisations can gauge the effectiveness of their assessments, interviews, and overall selection processes. Firstly, individual assessments can be validated on incumbent employees, and then their results can be correlated with performance review data. This will ensure that these assessments actually measure the skills required for the role, and that those skills are important to performance in that role. Additionally, you can track the performance of new hires and see whether subsequent cohorts are actually improving in quality compared to previous ones, vindicating the selection process.
Finally, once you have your validation data, you then use this information to improve the selection process. For example, if you find that certain assessments are underperforming relative to expectations, then you can begin searching for alternatives. Additionally, if you discover that a specific assessment is exceeding expectations, and is highly predictive of performance, you could then use this assessment earlier in the process, allowing you to test more people. Ultimately, what gets measured gets managed, and given the huge potential upside for improving selection processes, it just makes good business sense to keep employee selection under review.
Given the general trends in recruitment and the workforce as a whole, we can foresee skills-based hiring becoming increasingly utilised. Although many employers may not be conscientiously adopting skills-based hiring, the organic changes in recruitment will lead them down this path, as reliance on experience becomes increasingly unviable. Ultimately, I see three main trends which will drive this shift towards skills-based hiring, which will have significant implications in the recruitment space in future.
Firstly, we can foresee the usage of AI continuing to increase, both in terms of scope and complexity. Currently, applications like ChatGPT can very easily generate personal statements, cover letters, and CVs for people, making these inherently obsolete tools. In future, we can envision AI assistants who can create online profiles, make applications, even schedule interviews with organisations, all while hiding the fact they are in fact not human. This makes reliance on experience and content even less viable as a screening tool, as AI will readily take advantage of any selection process still incorporating experience-based hiring.
Secondly, we can envision workplace relevant information, skills, and knowledge becoming increasingly available online, reducing reliance on formal education. Consequently, the most skilled and knowledgeable applicants may not have even formally studied their topic of expertise, but achieved mastery none the less. This naturally makes formal qualifications less important in the workplace, as their association with skills and knowledge will become increasingly weakened. It would, therefore, make sense to assess these key skills directly, as formal qualifications will be unlikely to distinguish between skilled and unskilled candidates.
Lastly, we can foresee the workforce becoming increasingly globalised and interconnected. As remote working takes hold, employers will start to consider applicants from around the world, not just in their local vicinity. This has several implications which make experience-based hiring less viable. Given the substantial increase in applicant pool size that this would create, more scalable solutions will be required to sift candidates, reducing reliance on interviews and CV sifting. Additionally, language issues may reduce the effectiveness of cover letters and CVs as selection tools, as spelling and grammatical errors will be more common. Finally, different educational and qualification structures internationally would prevent employers from using nation-specific qualification criteria i.e. GPA, UCAS points, degree classification etc, necessitating their removal from job requirements.
Although many balk at the concept of skills based hiring, claiming that skills have always been important in recruitment, we believe that skills have actually taken a back seat compared to experience.
This is despite the fact that research shows experience to be a poor predictor of future performance, and this research has been available for decades. Consequently, a move towards skills (and away from experience) is a major step forward when it comes to maximising predictive validity in employee selection, especially in the face of transformational change caused by AI and globalisation.
Learn of our 5 great ways to measure quality of hire which makes organisations make informed decisions about future hires.
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