Avoid Costly Hiring Mistakes by Improving Upon Selection Performance

by Roy Notowitz: Managing Director,Notogroup Executive Search

If you have any doubt just how destructive a hiring mistake can be to the health of your organization, consider the following: More than two-thirds of organizations report that the cost of hiring mistakes adds up to two to three times the employee’s annual salary, according to a recent survey of 444 North American organizations by Right Management. In addition to higher training, recruitment and severance costs, the biggest consequences of bad hiring decisions are lower employee morale decreased productivity and lost customers, the study says.

If not improved, the effect of repeated hiring mistakes can strain credibility with investors, reduce stock value, destroy an employment brand, and create a perception of risk to other industry talent considering your company as a place of employment.

Regrettably, the majority of hiring managers report that, in hindsight, the interviewing process revealed subtle concerns that ultimately became more apparent after the hire was made. The obvious challenge is that hiring managers are often too focused on other issues, too pressed for time, or lack the skills needed to conduct effective interviews.

In the software industry, for example, technical interviews are heavily weighted for obvious reasons. Yet if used as the primary selection strategy, they can be a poor predictor of whether an employee will succeed. According to a recent study by Leadership IQ, 46 percent of newly hired employees will fail within 1 8 months, while only 1 9 percent will achieve unequivocal success. Contrary to popular belief, technical incompetence was not the primary reason why new hires fail, according to the study. Instead, the reasons that topped the list were poor interpersonal skills, inability to accept feedback, inability to manage emotions, insufficient motivation to excel, and the wrong temperament for the job. In addition, experts cite hiring good people for the wrong job and passing over candidates for the wrong reasons among the most common hiring blunders.

Increasing your likelihood of success

Most hiring mistakes happen as a result of inadequate interviewing processes and training. In order to make a true impact on the quality of their key hires, hiring managers must be trained to move past the basics of giving a legally compliant interview and be shown how to take a more thoughtful and methodical approach to the interview process

One of the best ways to improve organizational performance is to enhance structured interviewing and selection competency within your organization. Believe it or not, traditional interviewing techniques result in an average of only 1 4 percent better than chance accuracy in predicting future job success. “By using structured interviewing techniques, it is possible to greatly increase the predictive accuracy of the interview,” says Dr. Charles Handler, principal of Rocket-Hire, a consultancy dedicated to helping organizations achieve value through their hiring processes. Structured interviewing involves carefully mapping the interview questions to the actual competencies needed for success, and deliberately asking the same questions of all candidates to create a consistent selection process. It also entails probing into candidates’ past performance and motivation to assess how they will perform comparable work in the future. Structured interviewing is more effective than traditional interviewing because it is job related, standardized and objective.

Developing structured interviewing questions

Asking the right questions is perhaps the biggest key to success in hiring. However, it is equally important for the interview team to carefully think through what the right answers are. “An answer that reflects a highly creative, free thinking, unsystematic approach to work might be great for a Hollywood screenwriter job, but might be a lousy answer for an engineering position,” says Dr. Steven Hunt, chief scientist at Unicru. Taking the time to think through what questions you want to ask and what sort of answers you are looking for will help to maximize the limited amount of time you have with each candidate. Well thought out questions also serve to facilitate a thorough exchange of information from which to better base decisions.

It’s important to develop questions that are specifically related to the competencies required for success and to gain a point of reference by developing benchmark responses from past or current top performers on the job. The context obtained from these benchmark responses will help the interview team to assign a numerical score that ranks the quality of candidate responses in each relevant category.

Once the interview criteria are developed, structured interviewing techniques like “behavioral interviewing,” which delves into a candidate’s past experiences and behaviors to determine future success, can substantially increase the likelihood of a successful hire. You may also want to supplement the behavioral questions with a set of “situational interviewing” questions designed to test a prospective candidate’s approach to real-life situations he or she may encounter on the job.

Behavioral interviewing: The concept behind behavioral interviewing is that past behavior is the best predictor of future behavior. The assumption is that the candidate will repeat the same behaviors when confronted with a similar set of challenges. To gain valuable insight, open-ended questions work best and should be followed up with probing questions to get at more specific information.

To assess whether a candidate is “results oriented,” for example, you might ask the initial following question: Please tell me about a time when you set a difficult business goal and were able to reach it. The follow-up probing questions might then include: What setbacks did you encounter and what did you learn as a result? Who were the key stakeholders and what was your role in managing their expectations?

Situational interviewing: The concept behind situational interviewing is more theoretical and is aimed at learning how someone reacts to certain hypothetical situations. The assumption is that the candidate will react similarly in real situations. An example of a situational question might be: How would you develop an understanding of what our customers want? You can then delve deeper by asking more detailed questions in response to the candidate’s answer: How many customers would you survey? What would you ask them?

Additional interviewing tips

In addition to preparing a set of behavioral and situational questions that are tied to the competencies needed to perform the job, you can ensure the success of your selection process by adopting the following additional interviewing tips

Maintain a consistent format: In order to compare candidates and make informed hiring decisions, it’s important to keep the assessment process consistent from one candidate to the next. This entails keeping the same interview team for every interview, using the same questions as much as possible, and soliciting interview team feedback in a consistent manner.

Seek contrary information: Most interviews focus exclusively on a candidate’s attributes and accomplishments. Seeking contrary information is a method used to confirm a stated competency by understanding the mistakes, challenges and learning opportunities candidates have experienced. Asking candidates about the mistakes and challenges they have encountered provides valuable insight into what role they played in the success or failure of projects, how they learned from mistakes, and how they reacted to stressful situations.

Listen carefully and take detailed notes: The typical interview length of 60 minutes is pretty short. Given the limited time you have with each candidate, all the nuances and details you gather take on extra significance. Making a point to listen carefully and take detailed notes will help you to better recall and analyze candidate responses. It will also ensure that you are actively listening to the candidate. If 1 0 minutes pass during an interview and you have not written any notes, you are either not asking the right questions, failing to pay attention to the candidate, or doing too much talking and not enough listening. The notes you take will also serve as valuable discussion points with other members of the interview team.

Pay attention to cultural fit: Employees who are a good cultural fit perform better and typically stay with their respective companies longer. Most executives and HR leaders have thought about their organizational culture, but may not have translated it into a strategy for the purposes of hiring. Failure to objectively assess your culture can lead to disastrous hiring results. So how does a company go about defining its culture thoroughly enough to determine whether a potential employee will be a good fit? To get started, the questions of “Who are we?” and “What are we about?” are important conversation topics to bring up with the executive team, customers, employees and potential candidates in the software industry. Once you’ve defined your organizational culture, design a set of interview questions to assess prospective candidates’ work ethic, values, communication style, and overall organizational fit.

The future of employee selection

Extensive research has shown that well-designed, scientifically-developed assessment instruments can accurately predict the performance of a candidate in a given job and environment. A range of companies including Unicru, Hogan Assessment Systems, and Bigby Havis & Associates have created scientifically-developed assessment instruments to help companies evaluate the full range of hard and soft skills associated with high performance in specific jobs and industries. These assessments are designed to look below the surface information that applicants present to systematically predict which applicants will be the best hires for a given position. Consulting firms such as Rocket-Hire can help to determine what assessments to use since using the wrong tools can also result in bad hiring decisions.

You may ask: Is there truly a science behind selection? Can hiring managers of the future put aside gut instinct and trust the science behind selection to help them make smarter hiring decisions? The answer is a definite “yes.” Still, “many staffing professionals, hiring managers and candidates do not understand how assessment tools work and are unaware or skeptical of their value,” says Hunt. Moreover, many HR practitioners have not adopted scientifically-developed assessment tools because of the complexity associated with selecting and implementing the right ones.

In spite of the challenges, staffing assessment and employee selection tools are becoming more widely adopted as companies continue to strive to eliminate hiring mistakes. My recommendation is that you leverage these tools, along with structured interviewing techniques, when selecting candidates for key positions in your company. The more information you have upon which to base your hiring decisions, the better the decisions you will make.

The hiring decisions you reach today will likely affect the destiny of your company. Knowing what you’re looking for and how to assess it will enable your organization to avoid costly hiring mistakes, while allowing it to achieve business success well into the future.