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The Cost of Quality of Hire Is Free

by
Lou Adler
Nov 1, 2012, 5:34 am ET

Deming, around 1980, in Japan

I was training a group of hiring managers in New York City a few weeks ago on the fine points of Performance-based Hiring. The conversation quickly focused to quality of hire: how to both measure and maximize it. One of the sales directors in the room was quite frustrated with his recruiting team, and suggested the way he controlled quality of hire was by rejecting 9 of 10 candidates their recruiters presented. The rest of the hiring managers then chimed by saying how disappointed they were with the quality of the candidates sent by their recruiters.

They attributed the primary cause to their recruiters’ lack of understanding of real job requirements. I suggested the problem was more likely a quality-control issue: using inspection at the end of the process to control quality of hire, rather than defining and controlling it at the beginning.

If you’re old enough to remember, back in the 1980s the Total Quality Management initiative became a global groundswell. This is turn spurred the growth of lean manufacturing, six sigma process control, and the Baldridge Award.  The simple idea was that if you controlled quality at every step in the process, rather than reject the results at the end, overall costs would decline and quality would be maximized. The was the promise and essence of TQM and what its acknowledged leader, W. Edwards Deming, proposed. It worked, and led to a huge world-wide quality and productivity boom.

If you look around your business today you’ll see evidence of this concept in every function and business process, except for recruiting and hiring. Folks in HR and recruiting tried to implement these programs, but didn’t get too far. The underlying problem had to do with the lack of a meaningful and repeatable process for maximizing quality of hire. Without this, applying TQM-like controls is comparable to pushing on a cloud.

The problem for hiring has not yet been solved. Most companies still use a hiring process based on high-volume attraction and a quasi-scientific process for weeding out the weak, with the hope that a few good people remain at the end. A process based on how top people find and select opportunities might be a better place to start. With this in mind, here are some Deming-like TQM principles for building quality of hire into the system at the beginning rather than inspecting it out at the end.

  1. You need to have the strategy right before you create the right process. According to current #1 business-guru Michael Porter, strategy drives process, not the other way around. If you’re in a talent scarcity situation where the demand for talent is greater than the supply, you can’t use a talent surplus process. Here’s a recent post I did for LinkedIn describing this and offering a reasonable solution. If your company is still using traditional skills-infested job descriptions for advertising and using this flawed information to filter out people, you are assuming there is an excess supply of top people. If this assumption is incorrect, you need to rethink your strategy and bring your downstream processes into alignment.
  2. Define quality of hire before you start looking. The recruiter and hiring manager need to define and agree to quality of hire when the requisition is opened. This is not a job description listing skills and experiences. It’s not even adding more technical skills to the job description, or narrowing the criteria to top-tier schools and top-tier companies, or adding more IQ. Instead, it’s defining the actual work the new person needs to do in terms of exceptional performance. I refer to these as performance profiles. You can then use this criteria to filter and interview people based on their ability and motivation to do this type of work at the level of performance defined. Done properly, everyone seen by the hiring manager is then a potential hire. (Note: this is a huge TQM control point. See Point 5 below.) 
  3. Build your sourcing and recruiting process around how top people look for new jobs and compare offers. Top people are not looking for lateral transfers; most find their next jobs through networking; few will formally apply before talking with the hiring manager; and they’re very concerned with the career opportunity, the challenge of the job, the impact they can make, and who they’ll be working for and with. Few companies build their core processes around the needs of these top people and then wonder why they can’t find them.
  4. Brand the job, not the company. After a few years in the workforce, top people are less concerned with the employer brand and more concerned with the actual career opportunity. Recruitment advertising should be written to instantly appeal to the intrinsic motivators of the ideal candidate. Very little of it does. Too many companies overspend on employer branding and not enough on creating custom and compelling job-specific career messaging. One size doesn’t fit all, especially as people mature and become more discerning career-wise. 
  5. Use meaningful metrics like the “4 in 2” to control the process. Four hire-able candidates in two weeks is a pretty audacious goal for the recruiting department, but not an unreasonable one, especially with tools like LinkedIn and CareerBuilder’s Talent Network now available. If the first two candidates are off the mark, it’s an indicator something is wrong. If a hiring manager can’t decide whom to hire after seeing four candidates, rejecting them all, something is terribly wrong. Usually the job is poorly defined, sourcing is inadequate, or the interview and assessment process is flawed. Regardless, step back and figure out the problem before presenting more candidates.

Of course there’s more to maximizing quality of hire than described here, but if you don’t build quality in at the beginning of the process, you’ll never get it at the end. Desperation or normal business pressures will then force the hiring manager to hire the best person who applied, not the best person available. I address more of this in my new eBook The Essential Guide for Hiring & Getting Hired (January 2013). For now, consider that it took 30+ years for the U.S. to accept Deming and realize that building quality in at the beginning is a far better process than inspecting it out at the end. Let’s not waste another 30+ years to realize that the cost of quality of hire is free.

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.

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  2. Keith Halperin

    Thanks, Lou. A number of things:

    I. As someone here on ERE said once (and I’ve repeated) managers want three things:
    A Quality of hire
    B Speed of hire
    C Cost of hire,
    and they can have any two of the three.

    II. Companies need to take a good, tough look in the mirror, and if the aren’t a top company (unless they’re looking for non-demand skills or other mitigating factors) they can’t HAVE top people- aka, the “Fabulous 5%” or certain in-demand skill possessors.

    III. Branding isn’t recruiting, you can’t really control it, and it won’t put good butts in chairs FAST, anyway.

    IV. The cost of consistent quality hiring is too high for most companies to pay- that of giving up the control of the hiring process based on the greed, arrogance, fear, and ignorance/incompetence (GAFI) of the founders, CXOs and hiring managers who usually control the process, and turn it over to proven fact- and experience-based Generally Accepted Recruiting Practices (GARPs, which unfortunately don’t yet exist…

    Cheers,

    Keith

  3. Gordon Alderson

    Lou,
    Thanks for another excellent article.
    Quality, low cost and speed can all be achieved within every recruitment assignment. This is not a zero sum game. Just recruit with the end defined.
    In addition to the recruiter ensuring that the Hiring Manager has defined the end before starting work I would add:-
    It is vital that, before beginning work, the Final Decision Maker (whoever signs-off the Hire) contributed to defining the end.
    Otherwise The Final Decision Maker’s ego can get in the way. Too often the whole assignment has to be re-initiated.
    Every time the Final Decision Maker is committed from the outset the End Result is:-
    Speed, Low Cost AND Quality.

  4. Carol Schultz

    Lou: Very good post. You have given a high level view of what I call Recruitment Process Optimization and so much about what I write about and discuss with CEOs. Nothing can happen without business and exec team alignment. Only then can you benchmark the organization to create “hiring/performance profiles such that you can create an effective talent strategy.

  5. Keith Halperin

    @ Gordon: With respect,I believe it’s a major disservice to lead hiring managers recruiters, and candidates to have a perfect recruiting experience every time, or indeed ANY TIME. It assumes perfect rationality (which doesn’t exist- we’re all prone to inherent cognitive biases which prevent this), complete /accurate/timely information/communication/agreement (very unlikely despite best efforts) and great luck (impossible to anticipate). I think it’s better to minimize the expectations of all parties up front, and then over-deliver.

    @ Carol: I think the $64M question is how to keep the founders, CXOs, and hiring managers the hell out of our way (while getting there buy-in) and let us recruiting experts create and implement a fact- & best practices-based recruiting process, and not allow the dangerous GAFI (see above) of those parties to mess everything up, as usual….

    Happy Friday, ‘Crutaz!

    Keith keithsrj@sbcglobal.net

  6. Richard Araujo

    @ Gordon,

    Defining the end is next to impossible in some situations because of the a’fore mentioned issues many companies have. For example in a private company with three owners and one senior executive manager, like the one I’m currently at, you get four different views as to the performance requirements of the position; what needs to be done and the time frame in which it needs to be done are not agreed upon, ever, no matter how many meetings are held to keep their views aligned. Further, while one person may be the HM and official decision maker, the other three will constantly insert themselves into the process, demand changes in time frame and requirements and outright kill qualified candidates.

    There are some managers who can not and will not be tamed, period. Some companies simply chew people up and spit them out, and are successful not because of their internal management and hiring practices, but in spite of them.

  7. Gordon Alderson

    @Richard
    You precisely describe the situation I faced in July 1992; I feel your pain. I resolved to stop consultants complaining about clients who, as you describe, “kill qualified candidates”. They complained once too often “Yet another client has changed the location of the goal posts”. It was not good enough for me to tell these consultants “You have to dig deeper when taking the brief.”
    I set out to assist clients, from the outset, to painlessly find what they agree are most important attributes they want us recruiters to find in exemplary candidates.
    By “painlessly” I mean no meetings; just each contributor doing their own individual analysis. Less than 45 minutes work for each contributor. Insisting that at least the Hiring Manager AND the Final Decision Maker are contributors (or please commission another recruiter to conduct the assignment). Include contributors with different languages. No start on recruiting until the Spec is complete. I could go on but won’t.
    Since July 1992 I have continued refining the process. It has worked hundreds of times using MS Excel. It is now being developed for availability here in Australia on a SaaS platform. Once the SaaS-version is accepted in Australia, as I trust it will, my vision is that it will be available worldwide.
    How do I know it works? Fewer than 4 interviews for each person hired. Six months after each person starts I return and ask their immediate boss “If you knew Mary as well 6 months ago as you do now would you have hired her?” The result is 100 percent “Yes”. No re-work to satisfy a recruitment guarantee.
    In summary:-
    Defining the end is possible. It is not our task to tame managers. Our clients have the expertise to define what they need; us recruiters need to provide a way to help them do that.
    Now you have Speed, Quality and Low Cost (fair profit).

  8. Carol Schultz

    @Keith: The objective is not to keep founders and CXOs out of the way. It’s imperative that they understand the value of alignment and it’s effect on talent strategy. Problems occur as a consequence of misalignment and the attitude that recruiting is HRs responsibility. Talent is a CEOs responsibility.

  9. Richard Araujo

    @ Gordon,

    I’d definitely be interested in seeing that tool when it’s available. I’ve tried single one-on-one meetings here, same bad results. The stake holders are just going in twelve different directions each and to say they are all ‘difficult’ personalities is severely understating things. I got screamed at, literally, for over forty minutes once for what was deemed an improper use of the Harvard comma. In a job ad I was specifically told not to write or edit no less, and which came from one of our copywriters.

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