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Why Hiring Should Be More Like Buying a Used Car

by
Deborah Kerr & Brian Vogel
Aug 31, 2012, 5:20 am ET

When you think about it, the process of buying a used car is pretty similar to hiring an employee.

Buying a Car

Hiring an Employee

Determine the budget Determine the budget
Search for cars (online and in publications) Search for candidates (online and in publications)
Research the car’s history using online tools Check the candidate’s history using resumes
Hire a trusted mechanic to confirm condition
Conduct a thorough test drive Conduct interviews…maybe a lot of them
Negotiate the best price Negotiate the compensation package
Drive the car home Onboard the new employee

Buying a used car means the buyer can get more car for the money, have less depreciation, and make lower payments. But, if the buyer isn’t careful, she might buy a car that turns out to be a lemon — unsafe and under-performing, maybe requiring hundreds if not thousands of dollars to fix or replace.

Few people purchase cars based on the seller’s description alone. Instead savvy buyers work to discover the facts about the car’s condition before they write a check. The car buying process generally looks like this:

  1. Determine the budget
  2. Search for cars (online and in publications)
  3. Research the car’s history using online tools
  4. Hire a trusted mechanic to confirm condition
  5. Conduct a thorough test drive
  6. Negotiate the best price

Focusing on facts rather than flash means the difference between getting a great deal on a car and buying someone else’s problems.

Notice where the hiring process differs from the used car buying process: there is no step to collect facts. We think “caveat emptor” applies as much to hiring people as to buying a used car. It makes sense that a buyer would spend the time and money to hire a trusted mechanic to confirm the condition of a $20,000 car.

And when the hiring process is analyzed, a manager likely has more data about one car than she had about her last three new hires. And the car data is much more reliable information. Why would a hiring manager neglect to confirm candidate facts before hiring an employee who represents a $60,000 expense in the first year? The problem lies in the decision data and figuring out what information is most predictive of future work success.

Let’s pop the hood and take a closer look at hiring.

Consider the resume. It is a marketing document designed to present an individual in a favorable way. (Think seller’s advertised description, new paint job, and a spritz of Lane’s new car smell spray.) Many people earn a pretty good living sprucing up resumes, making them look terrific, including the words that scanners search for and hiring managers respond to. But facts? While the list of prior jobs identifies where the candidate worked, evidence of work quality is missing. A resume also doesn’t help relate past experience to the responsibilities of the position he or she is seeking. This is further complicated by the fact that up to 60% of resumes contain erroneous information like job title, work duties, and dates. Just like the car seller’s description, the resume represents what the candidate wants a hiring manager to know.

Now, consider the interview (think test drive). Just as a car buyer would not make a decision based on driving the car a few miles, a hiring manager should not rely on an interview to provide reliable data. Most managers believe they will “just know who is a great candidate,” but in fact, the success rate of an employee hired based on interviews is about the same as randomly selecting a resume from the stack submitted: interviewer ratings of candidates are not related to subsequent success on the job.

It is fairly easy to influence interviewers to get higher interview scores, too. If a candidate speaks positively about the company or has a steady eye gaze, ratings will go up. The human interaction between interviewer and candidate can skew the ratings positively or negatively.

So, if the typical job candidate data sources deliver less reliable information than the used car buying process, what can the hiring manager do? Pre-hire assessment is the answer to the trusted inspection. Valid assessments accurately report the strengths of candidates — the key factors that are not observable, but are essential to success on the job. Assessments use un-fakeable data to report on the match between the applicant’s abilities and the demands of the job. Some even report how likely it is that the individual will fit in the company’s culture.

Assessments are the independent car inspector who reports on all the factors that matter — the ones the buyer can’t see. Candidates can’t fake them and using assessments improves the rate of hiring success.

Unfortunately most executives are unaware of the impact hiring mistakes have on their bottom line. Most hiring managers believe hiring is an exercise in amateur psychology and they rely on past experience and their intuition, neither of which provides reliable information.

With the minimum cost to hire one person being around 20% of annual salary, it pays to get the facts on a candidate from a validated assessment instrument. The solution is to get the kind of factual, verifiable information that you get before buying a used car: an accurate picture of the candidate’s real strengths identified through a valid assessment system.

So next time you’re ready to hire, don’t be distracted by the fuzzy dice or new car smell. Instead get a scientific assessment and never again have to say, “Now, remind me again … why did we hire that guy?”

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  1. Ziv Eliraz

    “Get a trusted reference/referral” is missing – fourth row on the right. Not always possible, but certainly very useful when you can! Getting a reference from someone who actually “drove the car” for a few months is a great way to figure out how it works (pun unavoidable…)

  2. Ronald Katz

    Really good piece! I love the car buying analogy. You’re right assessments and testing are the fact gathering we’d get from a “trusted mechanic” (boy, there are two words you don’t often see side by side). Reference checking is another key ingredient.

    Here’s an interesting tidbit about references or “try before you buy” to keep your analogy going. As stated in a post from this summer (http://penguinhr.com/blog/?p=84) 76% of companies do check references for all the people they hire. 69% of people check out a restaurant online or with friends before eating there, but only 3% check out a hospital’s rep before undergoing voluntary surgery (we’re not talking ER here). Talk about the potential for buyer’s remorse!

  3. John McCormack

    The assessment analogy also applies here: how good a match is the vehicle for the way you intend to use it? What is the likelihood that I can keep it running smoothly and how should I go about maintaining it? How upgradable is it?

  4. Josh Tolan

    Great comparison, Deborah! In some cases, the interview (over-the-phone, video, or in-person) cannot be the deciding factor when hiring new employees; assessment tests certainly are necessary at times. However, it should be given its due. Interviews help employers see past a candidate’s new coat of paint into his rusty, duct taped interior. Interviews may not eliminate all candidates in all circumstances, but they always narrow the pool of candidates significantly.

  5. Brian Vogel

    Ziv,
    Certainly agree that references can prove valuable when information will be openly shared. Sticking with the buying of a used car analogy, one can certainly ask someone who rode in and/or drove the vehicle how the ride was but aren’t they probably going to respond with the usual: “yes, I rode in this vehicle from this date to this date” and nothing more? Filling in the blank with a scientific instrument that provides facts we believe is the better route.

  6. Keith Halperin

    Thank you, Dr. Kerr and Mr. Vogel. An additional point to make is that often recruiters are like and sometimes WERE used carsales(wo)men…

    Cheers,

    Keith

  7. Sylvia Dahlby

    LOL – I have often told prospective customers to buy an ATS like they’re buying a used car. Many of these same principles apply to HR/recruiting technology evaluation – it’s great advice to focus on what you really want and “…don’t be distracted by the fuzzy dice…”

  8. Barry Deutsch

    The author recommends using “scientific” assessments to determine whether to hire a candidate and paints the metaphor of using an independent auto mechanic to validate the working condition of the car right at the time of purchase.

    This is why the metaphor is broken. Doing assessments on skills and personality does not predict future performance. It can assess the precise level of the knowledge or skill at the time of the interview, but it cannot determine how the candidate will apply those skills and knowledge in your unique role in your unique environment.

    I do believe skill and personality testing can play a role in validating what you heard from the interview. However, nothing should take the place of a well thought-out performance/success based interview process.

    Too many companies have made the mistake of being overly dependent on testing.

    Barry Deutsch
    IMPACT Hiring Solutions
    http://www.impacthiringsolutions.com

  9. Deborah Kerr

    Dear Mr. Deutsch -

    Thanks for your comment! It is true that job knowledge and skills tests as well as interviews can be useful, but we are writing about a different kind of assessment: cognitive ability and personality testing which are known to be correlated with future job success. There is quite a large body of research about valid assessment as a predictor of future performance – it actually produces the highest correlation to future success.

    We agree about being “overly dependent” on a single assessment and the need for a good interview as well as other kinds of content knowledge testing. We are big fans of data-driven decision making and believe that each aspect of the selection process can deliver information useful in making a selection decision, but each should be applied knowing the strengths and limitations ( or correlations) of the tests used in each step in the decision process. (“tests” here refers to each activity that either eliminates or includes an applicant during the selection process – see the fact sheet for the EEOC’s Uniform Guidelines on Employee Selection Procedures available at http://www.eeoc.gov/policy/docs/factemployment_procedures.html.

    SHRM has a very useful section, too: http://www.shrm.org/LegalIssues/FederalResources/FederalStatutesRegulationsandGuidanc/Pages/Uniformguidelinesonselectionprocedures.aspx

    For a good overview on the subject of assessment and how the results correlate to future success, you may find these articles useful:

    Schmidt, Frank L. and Hunter, John E. 1998. The validity and utility of selection methods in personnel psychology: Practical and theoretical implications of 85 years of research findings. Psychological Bulletin 12: 262-274.

    Robertson, I. T. Smith, Mike. 2001. Personnel selection. Journal of Occupational & Organizational Psychology 74(4): 441-472.

    Deborah and Brian

  10. Barry Deutsch

    Deborah,

    My issue is not whether testing is valid, but rather whether it is really predictive in hiring – especially for candidates in roles that require a fair amount of experience and seniority. My perception is that most testing will give you a data point of where someone is right now – not how they will respond in your unique role and culture.

    That gap between what they bring to the table (current data on skills/cognitive intelligence/personality) does not translate well as predictive indicators of performance on a practical basis for most hiring.

    My recommendation for my executive search clients, and in the workshops I lead for CEOs and key executives is to test, test, and test some more. However, I recommend the tests be used as a validation, verification, and vetting approach of what was heard-seen in the interview process, not as a decision making tool or predictor of future performance.

    Thanks again for pointing out some good research on the use of testing in hiring.

    Barry

  11. Why Hiring Should Be More Like Buying a Used Car | Affintus

    [...] article is also featured on ERE.net – http://www.ere.net/2012/08/31/why-hiring-should-be-more-like-buying-a-used-car/#more-27527 This entry was posted in Blog. Bookmark the permalink. ← The Myth of Job [...]

  12. Keith Halperin

    Thanks, Dr. Kerr. Can you recommend some general cognitive ability and personality tests which are reliable, affordable, and do not have adverse impact?

    Cheers,

    Keith

  13. Barry Deutsch

    I use the 16PF as the primary tool in my executive search practice, and am starting to test a tool called the McQuaig. I also recommend to some of my clients for specific roles – usually around technology that they use the Wonderlic Cognitive Intelligence Test. The other tool I’ve had a lot of success with is one put out by Calipers.

    Barry

  14. Brian Vogel

    Keith,
    There are a plethora of valid assessments available with new players entering the market often – you can search on “pre-hire assessment” and find options at varying price points. In evaluating the tools and how to best implement, I particularly liked Dr. Charles Handler’s perspective that he offered earlier in the year: http://www.ere.net/2012/04/11/grow-up-already-evaluating-your-pre-employment-assessment-maturity-level/

    Personally, I happen to like the assessment system we are currently using because it incorporates cognitive and personality into one instrument, plus it maintains a database of candidates that continue to be used in sourcing efforts. It also has a matching functionality for promotion or development as well as crowd matching. Further, the subscription pricing makes it very affordable. After looking at several assessment offerings a few years back, we chose Affintus.

  15. Nathaniel Barr

    I’m a little late to the discussion, but I’m curious about the outcome of Barry and Deborah’s discussion.

    Barry – it appears that you were investigating other assessment tools. How’s that going? Deborah mentioned that there are different types of assessments and I’d like to highlight that statement. There are definitely tests that measure a person in a specific moment, but there are other tests that measure a person’s long-term persona and abilities.

    Further to that, a valid and reliable assessment can also predict future success by comparing the individual tested against a benchmark of desired traits. That’s where you really dive deep and see how well a person will perform.

    I’m glad you’re looking at multiple assessments and would encourage you to continue. How did your review of McQuaig go?

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