A poor hiring decision is expensive. Replacing an employee costs organisations anywhere from thousands of euros to hundreds of thousands of euros. A mishire has indirect costs too, leading to declining employee morale, poor employer branding and a diluted company culture.
The bottom line is, the cost of a bad hire can be astronomical for your business. So why do so many companies get hiring wrong? And what can be done about it?
What we're getting wrong about hiring
Making a wrong hiring decision has a domino-chain effect that negatively harms your ROI. Let's look at common hiring mishaps that could cost you a great hire.
#1 Job descriptions that over-rely on hard skills
The job description. It's based on what experience and hard skills are required for the job. The only problem is, experience overlaps very little with job performance.
Job descriptions heavy with hard skills requirements have the potential to alienate many people, resulting in organisations missing out on vital talent. Harvard Business Review recently analysed a handful of middle-skill job descriptions. Results showed that 37% of the listings requested degree requirements, meaning that some 15.7 million people were screened out of the candidate pool.
What's more, being too rigid with a requirements list risks shutting out diverse talent, with women being less likely to apply for jobs if they don't feel like they meet all the requirements.
The bottom line is talent acquisition teams must think carefully about how they come across in job descriptions and ensure their copy and messaging aren't keeping eligible candidates from applying.
Solution: Next time you draft your job description, run a calibration check with your hiring team and map out the role requirements and responsibilities. What will the candidate own? What skills should they possess, and how will they grow into the role? Pinpoint what requirements are essential for the position and which aren't.
#2 CVs as a screening method
Rumour has it that Leonardo Da Vinci created the CV when he wrote a letter to the Duke of Milan in 1482 requesting a work placement. Does this mean CVs are still as relevant today as 500 years ago in identifying a person's values and behaviour?
Spoiler alert: no.
While there is nothing wrong with CVs, persay, they're not helpful in identifying values and behaviour. The CV fails to accurately predict how well a person will succeed at their role, get along with their colleagues and integrate into company life.
From a diversity standpoint, using CVs to screen out candidates risks alienating a large population cohort.
On average, applications from candidates with a "Black name" get fewer callbacks than similar applications with a "white name."
This aligns with a paper published by two economists from the University of Chicago. Respondents to help-wanted ads in Boston and Chicago had better luck if their name was Emily or Greg than if it was Lakisha or Jamal.
In reality, any number of biases can crop up when scanning someone's CV, leading hiring managers to discard qualified candidates because they don't share similar traits or background.
Overall, the staple ingredients of the CV, including a person's education and years of experience, are the weakest indicators of ability and the strongest potential for bias.
Solution: Use an assessment tool to objectively evaluate candidates based on their competencies, personality, logical reasoning abilities, and potential to thrive in the role. This means that talent is assessed for their potential and individuality at the earliest stage of the recruitment process instead of using a CV to evaluate their role suitability.
#3 Interviews led by likeability and gut feeling
Say you're a candidate lucky enough to get this far into the hiring process. Your next hurdle is the interview. Chances are, the recruiter might be set off by your accent, or they might instantly take a liking to you since you share a similar background or possess an easy-going, extroverted demeanour.
While most recruiters know they need a clear structure to the interview process to land suitable candidates, some applicants may be treated differently in the interview room. What complicates matters further is if the hiring manager has had less interview training.
One candidate might go through a version of the process. The hiring manager may discuss the candidate's profile with their superior, who calls a friend of a friend to get some inside information and then decides to hold their own interview. In this situation, there's an inherent risk of picking the wrong candidate to progress with.
Solution: Create a structured interview process that minimises the risk of bias and inaccuracies. That includes mapping out the role long before you map out your interview questions, asking competency-based and behavioural interview questions, and evaluating candidates' answers using interview scorecards.
Keen to master the art of interviewing candidates? Check out our ultimate guide on conducting great interviews here.
The ripple effects of a bad hire
The compounding effects of a poorly-thought-out hiring process are enormous.
More bias and subjectivity in your hiring lead to less diversity and weaker innovation.
That's not all. Unstructured hiring also increases the risk of selecting sub-optimal hires since we evaluate aspects that are less strongly linked to job performance.
And when you hire mediocre performers, you risk seeing lower individual performance.
Which leads to lower team performance and company performance. Simply put, you have a homogenous team of mediocre performers and hope they will do miracles.
But fewer great hires also lead to reduced team engagement. Who wants to work with people not living up to your expectations?
Lower team engagement risks your most valuable team members walking out. That, in turn, can impact your employer brand. Selling a company with so-so employees will be much harder than pitching a stellar team to new candidates.
All of this can dilute your hiring quality even more, and what you start seeing is a cascading effect of low performance. What you don't want to do is end up here- the death knell of poor hiring practices.
How to improve your hiring process: strive for operational excellence
There are three essential elements when driving for operational excellence in hiring.
- - Set up a structured hiring process containing methods that help you focus on the relevant aspects of an individual.
- - Iterate and improve your process by leveraging data
- - Win over your hiring managers
Let's unpack each element in more detail.
Introduce objective assessment methods
We must ensure we include methods that help us move away from making decisions based on a person's height, gender and background. By using more objective methods that capture the person behind the CV, you will be better equipped to recognise a unicorn hire when you see one.
When we look at the research, the best tools to identify true talent is to combine psychometric assessments, such as a personality and logic ability assessment, together with skills tests or case excercises, and of course, structured interviews with pre-defined questions and criterias. These evaluation methods will enable you to measure aspects that are truly essential for the role without being impacted by factors such as looks.
Your secret weapon as a recruiter is ensuring that every method you include has a clear purpose, measures relevant aspects, and follows a pre-defined structure. Without the right tools, such as a good ATS, a solid test provider, and an appropriate interview tool, you are setting yourself up for failure as a hiring organisation.
Measure impact, iterate and tweak
Reaching operational excellence is more than just offering the best possible process on paper. It is proving that the process works. Start by tracking key metrics like quality of hires and time to hire.
As Alva's Head of People, Linnea Bywall comments:
Get your hiring managers onboard and work together
Once you have created a structured process and proven its value of it, it will be a lot easier to get your hiring managers onboard and truly enable them to build the best possible team. When you can show the value you bring, it will be easier to work closely with the hiring managers. At the end of the day, having hiring managers using your process will create a positive trend where you hire better.
To wrap up
When you run an unstructured hiring process, you expose your organisation to a real business risk. When you include structured, objective methods and use a data-driven approach, you make hiring THE driving factor of positive business outcomes.
Curious to know how Alva helps brands like Happy Socks and Circle K to achieve operational excellence in hiring? Try Alva for free today.
