How-to: Improve the typical hiring process (in 4 steps)

Hiring mistakes are expensive. The more senior the employee, the more expensive the hiring is. The true cost of replacing a recently hired employee can quickly go above their annual salary (considering lost revenue and productivity).

It makes sense, then, to have a hiring process that is rock solid, minimises hiring mistakes, and produces results. Sadly this is not always the case.

The usual process for hiring starts when the need for a new employee is identified and a brief is put together by a headhunter or internal HR partner in the company. This may include a meeting with the hiring manager, but it's 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. The candidates go through several rounds of interviews with multiple stakeholders. In the end, the hiring decision is reached by the stakeholders discussing among themselves their opinions and feelings about each candidate.

Often, the interviews have no pre-agreed structure. As a result, more often than not, the most charismatic candidate (or the one most similar to the HiPPO - highest paid person's opinion) wins.

It might be that at the very end, some psychometric test and referencing takes place, but the de facto hiring decision is usually made before any of this happens. Often the decision is made within 10 seconds of the hiring interview with the actual 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). 

Free-flowing conversation ≠ hiring interview

While interviewing candidates is a mandatory part of the hiring process, its validity is highly questionable. Especially when considering the usual interviewing practice - they tend to be free-flowing conversations lacking any structure or an understanding of what you want to achieve. As such, they can do more harm than good.

When a hiring manager meets a candidate for the first time, information about how the person looks, shakes hands, smells, dresses, and more is overloading. All this triggers millions of memories and associations, most of them irrelevant. 

This is a natural reaction but not necessarily helpful for making better decisions. The human mind tends to make things easier. 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. Interviews can be a potent tool when done with a well-defined structure and a clear understanding of goals.

Improving the quality of hiring decisions

Knowledge about hiring mistakes and the biases that cause them is nothing new. Hiring managers have known about them for years and thus have tried to remedy the situation. One of the more popular ways of improving decision making is the usage of different tests and questionnaires.

Tests of cognitive abilities

The IQ test is one of the most widely used test for cognitive abilities for a good reason. People with higher mental abilities (IQ) are more likely to learn faster, adapt better and thus, perform better at their job.

The problem is that the predictive power of such tests plateaus around the score of 120 - 130, meaning that it’s not a differentiating factor for experienced hires like most executives tend to be. 

Moreover, in executive assessment, candidates have years of experience and a proven track record. All of which are better at predicting future performance than a 15% higher IQ score ever could.

Personality questionnaires

Using personality questionnaires does not harm the process, but they offer very little substance on their own. 

Imagine you're hiring a sales executive, and the tests come back saying that candidate A is more extraverted and agreeable, while candidate B tends to be introverted and less pleasing. Which of the candidates is a better fit and why?

With just the test result, there is nothing to suggest that one is better than the other. There’s no clarity, and thus, the test was not helpful. While popular, often, companies using these types of personality questionnaires can't explain how they plan to use the data when making hiring decisions.

The problem is not so much the tests themselves, although there are definitely bad ones out there, but 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.

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.

A better hiring process

The only sure way to ensure that competent and motivated candidates are selected is to use a repeatable, evidence-based decision-making process. 

Daniel Kahneman, psychologist and economist notable for his work on the psychology of judgment and decision-making, refers to this slow, deliberate decision-making method as System 2 thinking. 

Quick, effortless snap judgements are often subconscious and difficult to spot. These mental shortcuts introduce many confounds to the hiring process when not controlled for. 

Adapted from Kahnemann’s work on hiring and decision making, the gold standard hiring process can be broken down into four steps:

1. Define clear criteria;

2. Measure all criteria separately, using reliable methods;

3. Summarise assessment results;

4. Hire the candidate with the highest score.

1. Define clear criteria

In executive assessment, there are three (four) types of criteria to define and measure:

• Threshold characteristics

• Differentiating competencies

• Fit factors

• (Gut feeling)

Threshold characteristics

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. 

Additionally, you might want to consider adding other criteria connected with work experience in a multinational organisation or specific skills like familiarity with a particular ERP or similar.

Differentiating competencies

Competencies are the knowledge, skills, and abilities required to perform a job successfully and can be used to differentiate between average and excellent performers. 

Defining the critical competencies of a job and evaluating candidates' competencies in a systematic and structured manner is the most objective way to make better hiring decisions.

Properly analysing the job and clearly defining the differentiating criteria makes it possible to choose between candidates objectively. Even if the candidates are a close match and choosing between them is hard.

Without this analysis, the choice is often made based on a gut feeling, e.g. hiring managers will choose the person who most resembles themselves. 

Fit factors

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, consider which of the candidates better align with the core values of the team and who brings more behavioural diversity in terms of competencies and behaviours.

Gut feeling

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 a place among other criteria and rate it with the same scale as the other criteria.

There is a high probability that the person you feel most comfortable with is most similar to yourself. The best thing for the team would be to hire the opposite.

2. Measure each criterion separately 

The next step is making sure that each criterion 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. 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 ensure 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 lengthy 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’re included in the shortlist? Instead of taking 10 minutes of valuable interview time for a long company presentation, simply ask, if the candidate has any questions.

If several people are 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 summarise 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 hiring the wrong person. 

Rate each criterion separately to avoid the halo effect of one good (or bad) answer over-shadowing the rest of the interview.  Preferably during the interview or at very least immediately after.

3. Summarise assessment results

Example candidate comparison table from Wisnio

After finishing with interviewing candidates, it’s helpful to combine all assessment results into a comparison table that shows the scores for each criterion for each candidate.

Having all scores visible makes it easier to compare candidates against and inquire more information from evaluators when the scores vary wildly between evaluators.

4. Hire the best candidate

The next and final step is making the hiring decision. In the perfect world, you’d hire the person with the best overall score. But the hiring decision is one of these lonely decisions that executives have to make on their own. So consider all the pros and cons, take into account all the advice of your colleagues and then make your own decision. Take your time for this, don’t rush.

You don’t need to eliminate or disregard your gut feeling about a particular candidate at this stage. While in general, gut feeling alone is a horrible way to hire, when combined with data and other considerations, your gut is telling a story based on facts and not emotions, and thus it’s ok to listen to it.

Conclusions

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 four-step process:

• Define and agree on the hiring criteria (3 – 9). Use those criteria for interview questions;

• Based on relevant data, rate each criterion separately (immediately after the interview – everyone separately);

• Combine and summarise the ratings;

• Hire the candidate with the best score.