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Hiring by Design, Not by Chemistry
Every new hire will ultimately contribute either to moving your business forward or to holding it back. Acquiring and retaining “intellectual capital” has become the primary competitive advantage. So, why wouldn’t you use the most advanced technology available for selecting the strongest candidates and for avoiding costly selection errors?
Competencies differ in the extent to which they can be taught. Content knowledge and behavioral skills are easiest to teach. Altering attitudes and values is harder. While changing motives and traits is possible the process is lengthy, difficult and expensive. From a cost-effectiveness standpoint, the rule is “hire for core motivation and trait characteristics, and develop knowledge and skills.” Most organizations do the reverse: they hire on the basis of educational credentials (MBAs from good schools) and assume that candidates come with or can be indoctrinated with the appropriate motives and traits. It is more cost-effective to hire people with the “right (motive and trait) stuff” and train them in knowledge and skills needed to do specific jobs. Or, in the words of one personnel manager, “You can teach a turkey to climb a tree, but it’s easier to hire a squirrel.”
Competency Assessment Methods Spencer, McClelland, & Spencer
“Poor hiring shows up not merely in poor decisions but also in poor morale. When the less competent employees reach critical mass, their low performance standards become the de facto standards of the organization. The longer established employees who are well equipped for the job abandon their old high standards and conform to the new, lower ones.”
- Frank Schmidt, Ph.D. University of Iowa
The cost of training one technician averages $70,000 and averages $200,000 for an air traffic controller.
The last applicant seen is three times more likely to be hired when testing is not used.
Rule of thumb: There are no “bad” or “good” employees. But, there are people who end up in the wrong job, which does a disservice to everyone. Consequently, the hiring process is better viewed as a compatibility study than a thumbs up or thumbs down process.
“We’ve found your assessment to be extremely reliable in determining critical competencies. Your expert system is a tremendous tool for determining the strengths and weaknesses of our applicants. We wouldn’t make a hiring decision without it.”
- Vice President of Human Resources Financial services corporation
The Facts
- 50,000 organizations in the U.S. use testing to help them make decisions about hiring, placement, and promotion.
- Turnover, replacements, and retraining costs for:
- a mid-level manager are $320,000 (TRW Corporation study, 1991).
- a sales person are $155,000 (Riordon Research)
- an engineer are $180,000 (TRW Corp.)
- a production worker are $40,000 (1 ½ x salary)
- True turnover costs equal the sum of:
- salary
- benefits
- recruitment
- training
- medical claims
- opportunity loss
- impact on morale
- customer ill-will
- legal exposure
- Poor hiring causes productivity, quality, and profits to suffer.
- The worst candidates are typically screened out, but it’s the marginal ones who slip through and who adversely impact your organization’s productivity and morale (and it’s hard to terminate them).
- EEO guidelines state: “… tests, when used in conjunction with other tools of personnel assessment … aid in the development and maintenance of an efficient work force and … aid in the utilization and conservation of human resources.”
The Benefits
- It’s objective, cost-effective, legal, and it works.
- Candidates are uniformly impressed that the organization takes its mission so seriously that it uses such a systematic and thorough approach to the acquisition of human resources.
- Testing significantly reduces turnover and the high costs associated with it.
- When the best-fit applicants are hired, they settle into the new position more quickly and travel the learning curve faster.
- The hiring evaluation report becomes a working document for the individual and their manager. With the evaluation report in hand, the manager has a much clearer understanding of how to motivate, develop, and coach the new hire.
- When correctly matched to a job, individuals perform for the satisfaction of mastery and achievement.
The Process
- Job analysis
The job in question is evaluated with that job’s immediate boss and others who interact closely with that position. We analyze the criteria with a computerized tool and develop a consensus competency model that identifies the job’s critical success factors and the characteristics an individual must have to succeed in the role. - Interview
The candidate spends two to three hours in a structured interview with an advance degreed, psychologically trained consultant. - Computerized testing: Cognitive abilities (when appropriate)
The candidate is administered a battery of tests, tailored for the job in question. Tests used assess numerical skills, verbal skills, critical thinking abilities, and mental alertness. Norms used by our expert systems are specific to the job class. - Computerized testing: Personality and vocational inventories
Candidates are tested against the competency model to insights into goodness-of-fit issues such as thinking style, motivators, work style, interpersonal orientation, and influence style.
The Information You’ll Have About The Candidate
Career outlook: evaluation of career history, personal mission, and job motivators and de-motivators.
- Cognitive abilities: in-depth description of critical analytic skills, reasoning abilities, verbal and numeric skills, and mental quickness.
- Use of cognitive abilities: receptivity to ideas, problem-solving aptitude, and practicality/creativity of thought process.
- Work style: energy, pace, approach to planning and thinking, need for recognition, need for organizational freedom, attention to detail, orientation to action, work ethic and conscientiousness.
- Relating style: optimism, restraint over feelings, objectivity about feedback, handling stress, management of strong emotions, resilience and composure.
- Interpersonal factors: sociability, assertiveness, first and lasting impressions, perceptiveness, competitiveness, agreeableness, acceptance of diversity, and service orientation.
- Management and leadership style: desire to persuade and influence, approach to persuasion and influence, approach to managing relationships and conflict, communication style, and adverse factors that could impact relationships.
- And more: a graphic profile of personality traits; topics for special consideration and their implications; management advice; specific follow-up interview probes to pose to the candidate and another set of questions to ask of references; and an in-depth developmental report.
“When staffing key positions, we feel it is absolutely essential – for the best results for our company and the highest probability of success for the new hire – to use all available information, including your expert system (ASSESS), which is an in-depth psychological evaluation system. This is also a tool that’s been invaluable as a developmental instrument to help ensure the availability of qualified personnel to meet our future staffing needs.”
- Chief Executive Officer National retail organization
Annual corporate turnover averaged around 15% in recent years. And, nearly 80% of turnover is due to hiring mistakes.
- Harvard University Study
Final Thoughts
At first glance, it may seem like a lot of unnecessary trouble and expense to hire employees in the manner described above. After all, there is often the pressure of needing to fill positions quickly in highly competitive labor markets. Immediate utility and convenience often take precedence over the in-depth selection process outlined here.
Perhaps you can cite successes when using a less formal process. However, the data would indicate that poor job performance is a frequent outcome of using a less rigorous hiring protocol.
In an era when there are metrics for almost everything related to business success, the intriguing questions are:
- Why, when there are proven processes for hiring the most compatible and best people for jobs at all levels, would companies not measure what can be measured?
- Why leave to chance the most critical factor for success in business today: having the right people in the right place at the right time?
- Why wouldn’t a company want to gather all of the information it could about the critical success factors for a position, and know from the very first day what the developmental needs are for the new hires?
- What is it costing your company not to do this?
Hire by design. Improve the odds.
Read more on this topic in our article titled: Hire by Design. Not by Chemistry!