Hiring mistakes are expensive. The true cost of replacing a recently hired employee can quickly go above their annual salary (taking into account lost revenue and productivity). It makes sense, then, to have a hiring process that is rock solid, minimizes hiring mistakes and is able to produce results. Sadly this is not always the case.
What does the usual hiring process look like? If the need for a new employee is identified a brief is put together by a headhunter or internal HR partner in the company. This may include a meeting with the hiring manager and is always approved by the latter, often without amendments.
Based on the brief, the HR-partner or headhunter gets to work and puts together a long list followed by a shortlist of candidates to be presented. The candidates go through interviews, sometimes several rounds with multiple stakeholders, after which the stakeholders discuss among their opinions and feelings about each candidate. Often both the interviews and the discussions have no pre-agreed structure and as a result, the most charismatic candidate (or the one most similar to the HiPPO – highest paid person’s opinion) is chosen.
It might be that at the very end, some type of psychometric test and referencing takes place, but the de facto hiring decision is usually made before any of this happens. In fact, the decision is made it is taken during the first 10 seconds of the hiring interview with the decision-maker.
As Google’s former senior vice president of people operations Laszlo Bock puts it: “Most interviews are a waste of time,” as interviewers spend most of their time trying to confirm the impression they formed of applicants in the first 10 seconds of meeting them (Work Rules!, Bock, 2015). The interview is a mandatory part of the hiring process but in fact, its validity is extremely questionable, especially considering the usual practice of interviewing – interviews tend to be free-flowing conversations lacking any structure or an understanding of what it is you want to achieve with it and as such, they can do more harm than good.
When a hiring manager meets a candidate for the first time, both are overloaded with information – how the person looks, shakes hands, smells, is dressed, etc. All this triggers millions of memories and associations, most of these irrelevant. This is a natural reaction, but not necessarily are not helpful for making better decisions. The human mind tends to make things easier – to simplify, generalise, etc. All this leads to a well-known set of biases and mistakes in hiring decisions.
When having “just an informal talk,” you might learn things about the candidates’ opinions, hobbies or preferences, but these things are irrelevant to their future job performance. This is not to say that interviews as a whole are bad. When done with a well-defined structure and an understanding of what needs to be asked, interviews can be a potent tool.
The usual ways of improving the quality of hiring decisions
The knowledge about the cost of hiring mistakes is not a secret. This makes hiring managers anxious and leads to several processes that are used to improve the hiring decisions, and, presumably, reduce hiring mistakes. The main things used are different tests.
Tests of cognitive abilities
These are the most reliable ones. It is true that people with higher mental abilities (IQ) are more likely to perform better at their job – they learn faster, adapt better, etc. Now, if someone scores 10% higher on an abilities test, does that mean than she is 10% better at her job? Not at all. Job success depends on a plethora of factors including motivation, team-fit and the like. Cognitive abilities tests are most useful for junior-level hires, who don’t yet have a relevant track record. In executive hiring, candidates have years of experience and a proven track record that makes more sense than their cognitive abilities, the predictive power of which plateaus around IQ score of 120 – 130, which means that it’s not a differentiating factor for experienced and smart hires which executives tend to be.
Personality questionnaires are also frequently used as part of hiring-related assessments. There are some good ones on the market like Hogan, SHL and others that measure different personality traits and are proven to show reliable results.
Using these tests does not harm the process, but on their own, they offer very little of substance. More often than not, companies using personality questionnaires can not explain how they plan on using the data in making hiring decisions.
Let’s say you are hiring a sales executive and personality questionnaire comes back showing that one candidate is more extraverted and agreeable and the other one tends to be introverted and less pleasing. Which of them is the better salesperson and why? The extraverted one? There is no data supporting it! It’s a widespread belief that is not supported by any research. There is no clarity, and thus the test was not useful at all.
Using psychometric testing as a part of your selection process can help the people involved in decision-making feel more comfortable, reduce their hiring anxiety, and give the feeling that they have done everything to avoid (expensive) hiring mistakes. They rarely help make better decisions.
Same with assessment centres, reference checks and job-related simulations – they can all work, but they have to be well designed and properly executed to have valid results.
The problem is not so much the tests themselves, although there are definitely some bad ones out there that measure nothing. The real problem is a lack of well-defined criteria to benchmark the results against. An evaluation method is only as good as what it is being compared against. Without set criteria to compare against, it’s no better than flipping a coin. In other words, a random choice.
What does a good hiring process look like?
In a nutshell, the gold standard of a hiring process is the following:
- Define clear criteria
- Measure all criteria separately, using reliable methods
- Summarize the assessment results
- Hire the candidate with the highest score
This is not rocket science but is rarely followed in real life. Teamscope helps to do this and therefore make better hiring decisions.
In executive hiring, there are at least 3 (4) types of criteria to define and measure:
- Threshold characteristics
- Differentiating competencies
- Fit factors
- Gut feeling
These are the bare minimum characteristics that a candidate has to possess to qualify. For example, when hiring for a CFO role, you would not consider anyone without a proven track record in finance and accounting. You might want to add some other basic criteria like work experience in a big/international/matrix organization or specific skills like the use of a certain ERP.
Competencies are the knowledge, skills, and abilities that are required to perform a job successfully and can be used to differentiate between average and excellent performers. The term is well-known for many years starting with Lyle Spencer and Signe M. Spencer’s book “Competence at Work” (1993). Still, in most cases, the brief for search includes only threshold requirements and has a vague description of differentiating requirements, if at all.
Defining the critical competencies of a job and evaluating the competencies of candidates in a methodical and structured manner is the most objective way to make better hiring decisions.
For example, we have a candidate who is good in conceptual thinking, team leadership and very attentive to details and the other who is excellent in planning, organizing, and ensuring accountability, but scoring less in conceptual thinking and team leadership. Which one is better suited for the role?
If you haven’t analysed the position earlier and clearly defined the differentiating criteria, chances are you will make the decision based on your gut feeling. In practice, this means you will take the person most similar to yourself.
Great things are never achieved by a single person. Everyone works in teams. The rule of thumb is that people work better in teams similar in values and different in everything else.
To achieve that, we can measure competencies and behavioural (personality) traits. Assuming you have selected finalists based on the highest scores on the previous two, you should consider who is well-aligned with the core values of the team and who brings more behavioural diversity in terms of competencies and behaviours.
Should gut feeling be excluded from hiring decisions? It depends. It works well with decision-makers who have a demonstrated success record in choosing high-performs to similar roles. For anyone else, it is probably not much use and can even be dysfunctional. But if you still want to use it, give it the place among other criteria and do your best to not let your gut feeling influence the other ratings.
There is a high probability that the person you feel most comfortable with is the person most similar to yourself. The best thing for the team would be to hire the opposite.
Interview structure and criteria rating
Now that the criteria are set, the next step is making sure that each of them is measured and benchmarked against. Just writing them down is not enough. For criteria that can be measured like personality traits and values, use valid instruments. For those that can be clarified during an interview – do it. But each question during the interview has its role and nothing should be asked without a clear understanding of the rationale for asking this question.
Have a plan and a structure for the meeting to make sure that you get all the needed information out of it and don’t waste time on things that do not matter. For example – the usual ritual of giving a long presentation about your business is usually a waste of time. Wouldn’t you assume that the candidates have been briefed about the business and vacancy if they already appear on the shortlist? So, instead of taking 10 minutes of the valuable interview time for a long company presentation, simply ask, if the candidate has any questions.
If there are several people involved, like in interview panels, let everyone rate each criterion on the same scale (e.g. from poor to excellent on a scale of five) and later summarize the ratings. If you “just discuss” first, you will more probably base your decision on your “gut feeling” or “liking” and adjust the scores to this initial feeling which risks the wrong person being hired. To avoid the halo effect of one good (or bad) answer over-shadowing the rest of the interview, rate each criterion separately. Preferably during the interview or at very least immediately after.
For any hiring project to be successful, it has to be based on a well-defined process with clear action steps and criteria. Without it, the project risks turning into a vanity competition of the HiPPO choosing a candidate based on their gut feeling and initial impressions, both of which are susceptible to biases.
When in doubt, use the following five-step process:
- Define and agree on the hiring criteria (3 – 9)
- Use set criteria for interview questions
- Based on relevant data, rate each criterion separately (immediately after the interview – everyone separately)
- Combine and summarize the ratings
- Hire the candidate with the best score