Have you ever heard a hiring manager utter any of the following phrases?
- “I just had a gut feeling about him”
- “I’m going to pass on this candidate, but I can’t put my finger on why”
- “This person had great eye contact and firm handshake – definitely someone we should hire”
These are comments made by highly confident interviewers, yet woefully unprepared. This turns their meetings and evaluations of candidates into guessing games akin to picking stocks by throwing darts. At the same time, we hear that people are the greatest asset of a company.
The reality is companies are investing hours of meetings, pouring over research, and crunching numbers on decisions such as whether to spend $500 per month on purchasing a new software. Meanwhile, they will spend many multiples of $500/mo of salary, benefits, etc… for a person they spent an hour with in a conference room, and can have significantly larger consequences than choosing the wrong software.
Where is the breakdown in the process?
The scenario is common. An interviewer rushes into the conference room late. Apologizes to the candidate and quickly skims the resume during the first moments of the meeting. The interviewer then proceeds to ask lame questions, such as:
- “Tell me about yourself”
- “What are your greatest weaknesses?”
Unfortunately, these questions leave little room for results, other than superficial data, such as:
- Did the candidate smile?
- Were they nervous?
- Was their handshake firm?
- Did they make eye contact?
The decisions based on these meetings favor the candidates who are simply good at playing the game of interviewing and reveal little about their capabilities or attitude on the job.
How Costly is this to Companies?
Most managers overestimate their ability to interview and select the right person when in reality, it’s more like a 50/50 crapshoot. Similar to how most drivers think they are great drivers, most hiring managers believe they are amazing interviewers.
To make matters worse, making a poor hiring decision can be very expensive. The department of labor states the cost of a bad hire at a conservative estimate of 30% of the departing employee’s salary. On the other extreme, famed CEO of Zappos, Tony Hseih claims bad hires have cost his company over $100 million – and that is at a billion dollar company!
When making a bad hire, it’s not simply enough to consider the salary of the employee, the following should also be factored:
- Recruitment advertising fees and staff time.
- Relocation and training fees for replacement hires.
- The negative impact on team performance.
- The disruption to incomplete projects.
- Lost customers.
- Outplacement services.
- Weakened employer brand.
- Litigation fees.
Job Descriptions are also to Blame
Unprepared & unfocused interviewing are only partially at fault. Job descriptions share responsibility for these hiring misfires. The main issue with job descriptions is they provide a laundry list of requirements, experience, education, credentials, etc… however, they rarely describe the major initiatives and success factors for the position. These indirect predictors fail to capture the performance expectations, knowledge and potential required for the success of the person in the role.
The Solution is in Performance Based Hiring
Our team at True North believe there is a better way to identify talent and avoid the guessing game. We have incorporated Lou Adler’s Performance Based Hiring as the foundation of our hiring process. More details can be found from Adler’s book “Hire with Your Head”. It has resulted in a high percentage of successful hires and engaged employees who are clear on expectations.
The most important step in performance based hiring is building a success profile.
The Success Profile
A success profile calls out the exact things you would like to see the new hire perform on the job, and leverages action verbs. Then identify candidates who have done similar things in the past (and ideally still have opportunities for growth in your role, to attract the best person).
Best Practices for the Success Profile
Be clear on the 3-5 most important objectives you would like this position to be responsible for delivering on
- Tie those objectives into the overall company goals (how will this person move the company forward?)
- Outline the success metrics against specific milestones
- This aligns the stakeholders so everyone knows why you’re hiring and what this person will work on (this isn’t always as clear as it should be)
- Avoid requiring years of experience, for example; 5 years of customer service experience.
- Better to explain what the person should be capable of doing for your customers and how they will evaluated.
- Divide & Conquer
- Organize the hiring team so each person goes deep rather than wide on their interview portion. Also request that the prepare ahead of time and align their questions with the success profile.
- This will provide more thoughtful and important insights and enable better decision making on the candidates
The Challenge Assignment
We also include a challenge-assignment into the hiring process. Whether it’s for VP of sales, a frontend engineer, or an office manager, we like to assess our candidates performance against a role related challenge, related to something they would do on the job. This assignment can be take home or during the onsite (or both). The challenges should take no more than 2-3 hours and could be something such as build a financial model in excel, solve a coding challenge, or build a ppt on how they would tackle the first 90 days on the job.
The challenge assignment is good for the candidate as it provides them an opportunity to truly understand the job and the challenges, rather than guess based only on meetings in a conference room. Sometimes a candidate will opt-out during the challenge assignment because they no longer believe it’s a skills match. This is good thing, and saves both of you from investing future time, or even moving forward with an offer for an obviously poor fit.
Implementing Performance Based Hiring
Our team had a shared vision as we decided on our values we wanted to build our company around, along with where we wanted to take the organization.
Our first step was communicating this vision and setting the tone from the top in the importance of interviewing.
All interviews were given priority over every other meeting with the exception of customers. Our investors, our finance meeting, even our executive meeting took a backseat. Then the leaders of the company were held accountable for preparing ahead of each candidate, understanding what the role was for, the objectives, and the key area they were to vet for.
We leveraged our inhouse applicant tracking system, Greenhouse, which encourages a more customized process with detailed and thoughtful feedback.
Once the tone was set, we have worked to train our new interviewers into this model and hold them accountable for being prepared, on-time, and providing valuable feedback. Interviewing is a privilege, and as a result, our team, which has a majority of software engineers, have received rave reviews from both our clients and our executive team.
A few examples
We are big believers in performance based hiring and advise our clients to also take the guessing out of such important decisions.
Below is a partial image of a success profile we built for one of our positions.
Below is a partial example of a different position we hired for, and how we structured the hiring team. By breaking up the role into specific chunks and focus areas, it enabled us to go deep and come away with a more informed and data-driven decision, while reducing influence from superficial characteristics.