Definition
Quality of hire tries to answer the question that speed and cost metrics leave out: was the person hired the right choice? There is no universal formula. Most organizations combine a few components measured after 3, 6 or 12 months.
Common formula
Quality of hire = average of the chosen components, each scaled to 100.
Common components: performance review, 12-month retention, hiring manager satisfaction, meeting the goals of the probation period.
Illustrative example: a new hire scores 80/100 on their first review, is still employed after a year (100/100) and their manager rates them 70/100. Quality of hire: (80 + 100 + 70) / 3 = 83.
Key takeaway
Define the components before hiring, not after, and keep them stable so you can compare sources and recruiters. It is also the best counterweight to a time-to-fill you might be tempted to cut at any cost. The cost of a bad hire guide shows what low quality costs.