Discover the meaning of employee lifecycle definition and the formula applicable to its calculation.

An employee goes through various stages in a company from recruitment, onboarding, orientation, career planning and development, as well as termination. These stages sum up the employee life cycle, and there are roles that the human resource department plays at each stage. A company should ensure that it is getting optimum benefits from employees at each stage of the lifecycle.

One way to do this is through talent management which can be applied at each stage of the employee lifecycle. For instance, how much time did it take to fill a position, how long did the employee take to get to full productivity, how long did the employee work for the company, how long does an employee take to fill a skill gap and other metrics. All these can be combined to obtain a formula for the calculating quality of hire since employees are expected to add value to the business in their life cycle.

Quality of hire formula

There is no definite formula for the quality of hire as it depends on a company. However, there are some important parameters that a company should measure such as job performance, employee productivity, job tenure, employee engagement, turnover rates, and ramp-up-time to acceptable productivity.

Example of a formula

Quality of hire (%) = {Cultural fit + Job performance + Engagement + Ramp-up Time}/N

Job performance is the average of all the new hires job ratings.

Ramp-up time/ productivity is the duration that a new hire takes between being hired and becoming productive.

N = the number of indicators. In this case, they are four.

The formula considers not only the performance and productivity of the employee but also the engagement and how an employee fits the company’s culture. It covers most of the stages in the employee lifecycle. It can also include other indicators relevant to the company.

A company should manage talent in a way that employees hired add value to the business. This is by making sure that they hire the best talent, the new hires are properly onboarded, and they get proper orientation, making sure that the employees undertake career planning and development and managing termination properly by following set policies and procedures.

Quality hiring ensures that employees stay longer with the company and they also add value. A longer employee life cycle is desirable since it converts to lower cost of recruiting new employees and higher productivity. As research has it, about 42-58% of employees leave employment by the end of the first year, while 56% leave by the second year.