Disclaimer: most of what I'm about to say is second hand info. I'm a research postdoc, so teaching matters very little to me (all I need to do is show up). However, I know several people who did go through this process.
Current method: student evaluation. Treat it as a roughly equal mix of easiness, sympathy (1), clarity and charisma.
The best method would be to measure outcomes on standardized exams. However, in all cases I've seen, the teacher doesn't affect this very much. Very few places do this.
In practice, most teaching colleges hire mainly based on personal connections or random chance (whoever applied at the right time). So I didn't mean to imply that new entrants into the college market could do a good job of hiring teachers. Basically, they can do just as good a job as anyone else.
(1) Fun fact: my teaching evaluations went down about 40% after I stopped acting sympathetic and started writing my own tests.
"Sorry the test is so hard, I didn't write it. I'll try to help you pass it and see what I can do about a curve." -> good evaluations.
"Stop whining, i'll curve it if it's too hard. And yes, I do expect you to understand the concepts rather than just do mindless calculations." -> bad evaluations.
I could probably try harder to game the system, but I don't really want an academic job anymore.