The New Hire 90-Day Failure Rate is a Human Resources metric that’s used by businesses and companies in order to determine the percentage of new employees that leave the company in a set time period – in this case, in 90 days.
When it comes to this metric, companies check the percentage of employees that leave the company in the first 90 days and the percentage of employees that pass this so-called probation period.
This is an important metric not only for the Human Resources Department but for the management teams as well – as it can be used to determine how efficient the talent acquisition process is and how good the HR team is at finding the right person for the right job.
The Basics of the New Hire 90-Day Failure Rate
Also known as New Hire Turnover, the New Hire 90-Day Failure Rate comes in the discussion when an employee’s contract is terminated, due to various reasons – be them voluntary or involuntary -, in the first 90 days on his or her job.
While there may be plenty of excuses or reasons for employees to quit their job in the first 90 days, the company suffers the same – and we’ll soon look into the effects that a high New Hire 90-Day Failure Rate has on a company.
But first, let’s look into this metric’s formula.
New Hire 90-Day Failure Rate Formula
In order to calculate this metric when it comes to your company, you just have to divide the number of hires in calculation period that were terminated within the first 90 days of the contract by the total number of new hires during the same period of time and then multiply the end result with 100.
Keep in mind that, when talking about the total number of new hires during the same period of time, you must take into account only the employees that have worked for a full of 90 days – or else the results will be skewed and you will be left with an incorrect New Hire 90-Day Failure Rate.
What Comes with a High New Hire 90-Day Failure Rate?
First of all, your company will waste some of its resources during the recruitment and hiring process – therefore, if an employee leaves after 90 days, those resources will be forever wasted.
Basically, a high 90-Day Failure Rate means that your company loses money and time on employees that don’t fit the job they were recruited for – plus, they will need to be trained as well, which means even more money that’s being spent.
The New Employee is Not Always to Blame
If your company has a high rate of New Hire 90-Day Failure, then you might also want to take a look at the department that’s in charge of finding and hiring new people – namely, the Human Resources Department.
It’s true, the new employee may not like the job – but there is always the chance that the recruitment team did not make the right choices when choosing to interview or hire certain people.
In the end, it all boils down to the effectiveness of the recruitment team and process – this matters the most when choosing which people to hire.