The two most expensive decisions a leader makes are hiring and firing. Guess which costs more?
If you look at the expense budget of any organization you will see that the cost of people is usually 60% or more, which is huge. But the price of firing bad hires is actually staggering. It can run anywhere from 2-3X the person’s annual salary. That includes time for interviewing, on-boarding, training, lost productivity (of the hire, their boss, peers/colleagues, HR), impacts to customer relationships, not to mention the morale, trust and engagement hits as well as exposure to legal issues. In this Forbes article, Tony Hsieh, CEO of Zappos, said that bad hiring decisions cost them “well over $100M.”
But this article isn’t about the cost of bad hires, it is about avoiding bad hires by having a process that will help you make more right decisions than wrong.
What Gets In The Way?
During my career, I have lead recruiting organizations for companies ranging from the Fortune 500 to start ups. I have been responsible for thousands of hires from the C-suite down to entry level positions. From my experience, there are the 3 things that I have seen that get in the way of making the right hiring decisions:
Impatience: Hiring managers are usually in too big a hurry, and why is that? Because there isn’t a systemic process for constantly harvesting relationships with top talent so that there is a pipeline to turn to when the need arises. Far too often, especially with startups, when they aren’t hiring they get rid of their recruiters. Big mistake. Good recruiters are worth their weight in gold because they are constantly searching for talent on your behalf, whether you are hiring or not. It is all about building ongoing relationships. But if you do have to start from scratch, take the time you need to get it right. You may have to slow down to finish fast.
Naivete: Too many hiring managers don’t understand that a disciplined, repeatable process for hiring is crucial to making the right hire decisions consistently and ultimately to the organization’s success. We don’t develop products and services without a disciplined approach, why on earth should we hire without one?
Over Confidence: Many hiring mangers pride themselves on having a good “gut feel” for the right people and say they will know the right person when they see and talk with them. That is a crap shoot. The fact is, the people you are interviewing are very, very good at presenting their best side and navigating questions about those odd gaps in employment history or job hopping that doesn’t seem to have gone anywhere. There is way too much to lose here, so be humble. Trust but verify. Use a quantitative as well as a qualitative process to be sure.
10 Things you can do that will help you hire the right person every time:
- Define your value proposition so that you can describe it in a way that candidates can self-select. No need to embellish or sell which only increases your risk of making a mistake. Be honest. The worst thing that can happen to a candidate or a company is to find out that someone oversold themselves or the opportunity. It leads to disappointment and, more importantly, a breach of trust. It is a no win on all sides. Define your value proposition so that it attracts to you the people you want and need.
- Define the job. Not just the duties of the job but talk about the relationships, the stakeholders, the outcomes expected, the challenges the opportunities. Make sure people know what the day to day will be like so that they, and you, can determine if they will thrive in the role. Sugar coating is disastrous.
- Define the technical and behavioral success components and weight their importance. When we keep these elements in our head, they all seem equal when they are not and we run the risk of letting something that isn’t as important to success overshadow something that is.
- Develop behavioral questions to use in interviews to understand what people have actually done relative to your criteria, not what they think they would do. The best predictor of future behavior is past behavior. Plus, asking people to walk you through what they have actually done helps you assess how they think and how they manage challenges.
- Rate the candidate against criteria you have weighted in terms of their importance, determine where the gaps are and if they are manageable/coachable given the timeline for deliverables.
- Divide the key success factors among the interviewers and have everyone probe specific areas. This is basically getting a 360- degree view of the candidate. If you all ask the same things the candidate will get better as the day goes on and sound brilliant to the last interviewer. Mix it up, get to know the whole of the person.
- Have a homework assignment or a white-boarding where the final candidate comes in and does actual work with the team to see if how they think and behave is consistent with what you think you know so far in the interview process. Throw in some major curve balls to test them under stress or to test areas that are still a question in your mind.
- Hiring manager and recruiter together hold an interview team debrief (in person or by phone, but not based on ratings entered into an applicant tracking system) to get the 360-degree read on the candidate. Look for consistencies and inconsistencies. Validate and verify what you think you know.
- Hiring manager do reference checks and use behavioral questions when talking with references. Use questions like this: “We think so and so is a good fit but suspect that xyz may be new for him/her. Does that resonate with your experience? What was something you had to coach them through and how quickly did they learn, what was their attitude, etc.?” Many companies have recruiting do reference checks or don’t do them at all. I believe this is a huge mistake. The hiring managers should do them. You can get a ton of intelligence about what it will be like to manage the person. Plus, as the hiring manager, you are the one ultimately responsible for the decision. Take every opportunity to make sure you are right. More importantly, with a good reference check conversation, you will have the opportunity to jump start your new employee’s success and research shows that the more effective the on-boarding, the faster one becomes productive. Verify and validate what you think you already know. The other HUGE upside here is that it is an opportunity to expand your talent network by meeting other smart successful professionals.
- Be GREAT at interviewing. Make the whole process a two-way conversation and exploration. don’t sell; rather, talk to see if it is a good fit for both parties. If it is the right thing, no one needs to sell, the synergy sells itself. For more details on how to rock the interview, here is a blog that will guide you.
If you follow these precepts, your hiring will be more predictable, accurate, consistent and cost effective.
Copyright 2017 Sheila Madden, Madden Coaching & Consulting. All Rights Reserved.