More often than not, poor hiring decisions are the result of a hiring process that’s poorly designed—or entirely unstructured. Although structured selection processes are more challenging to design and time-consuming to carry out, their benefits to the business significantly outweigh any upfront investments in their development. Every instance of turnover costs anywhere from 100 to 500 percent of a lost staffer’s salary.
The more structured the process…
Researchers and practitioners have consistently found structured selection processes to result in better hiring decisions than unstructured processes; the more structured the process, the better the hiring decisions.
Based on years of research at Strategic Management Decisions (SMD), an employee survey, assessment, and analytics company, and over 100 years of research elsewhere, we’ve determined how different selection approaches compare to flipping a coin—that is, a 50-50 chance of making a good hiring decision. Unstructured interviews are only 10 percent more effective than flipping a coin, resulting in a potential of eight poor hires for every 20 new hires. The more sophistication and structure added to the selection process, the lower the risk of making poor hiring decisions. With behavior-based structured interviews, that figure goes down to six out of 20. A multiple-hurdle approach like the one outlined below can take that figure down to 4.5. (Add in a brief personality assessment or short role-play/simulation, the kind of assessment services we offer at SMD, and that figure can drop all the way down to 1.4 out of 20—a 93 percent chance of making the right hire.)
Developing a structure
In a typical case, SMD begins designing a selection process by conducting a thorough job/competency analysis to identify the critical knowledge, skills, abilities, and competencies required for newly hired staff to be successful. We ask incumbents and high-performers in the key roles, “What specifically differentiates a great performer from a poor performer?”
Based on the results of a job/competency analysis for a particular manufacturing company looking to hire 70 new sales representatives, SMD created the following multi-hurdle selection process:
Hurdle 1: Initial phone screen
• Delivered by the hiring managers or HR
• 30-minute conversation to discuss the role, the qualifications needed, and job expectations, providing a realistic job preview
Hurdle 2: Personality inventory
• Completed online by job candidate; cost-effective
• Provides assessment of several personality dimensions; results indicate candidate’s level of fit with the job and likelihood to be successful
Hurdle 3: Structured interview
• One-hour fact-to-face interview, conducted by the hiring manager
• Focuses on specific behaviors and competencies required for the role
Final Hurdle: Assessment Center with structured role play
• One-hour role play, involving four different sales meeting scenarios
• Rating guide provided to assess performance.
The multiple-hurdle approach allows organizations to save money by eliminating unqualified candidates early in the process, using more economical selection tools (phone screens and the online personality inventory), and putting only the most qualified candidates through the more costly and time-consuming portions of the process. You don’t have to do all of the hurdles, but the more that are included, the more likely you are to hire the best candidate.
It’s critical, especially on a large hiring project, to keep a precise record of all job candidates and their performance at each step of the selection process, irrespective of whether they are ultimately hired. A proper and complete paper trail helps to ensure the legal defensibility of your selection process, should any issues arise, and can provide a straightforward way for hiring managers to document the performance of each job candidate and make appropriate hiring decisions. SMD’s cloud-based talent software, SMD Link, includes a tool for tracking that information called The Selection Decision RoadMap, depicted below.
By using a system like the RoadMap, hiring managers can readily differentiate job candidates at every hurdle, and ultimately make objective, evidence-based hiring decisions.
Scott Mondore is co-founder and managing partner at Strategic Management Decisions, an employee survey and assessment company that provides analytics-based, actionable ways to improve specific business outcomes. Reach him at email@example.com, or find out more about SMD on their website.
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