The 16% Solution, Part 2: Fixing a Broken Hiring Process

May 10, 2004

In Part 1 of this article series, I discussed the contribution good hiring and placement can bring to the bottom line. I also discussed how to begin resolving the problem. In this section, I’ll continue my recommendations. Once you have identified a department with a major headache, determine whether the manager is a promising thought-leader who wants to attract favorable attention or another member of the produce family. Tell him or her you want to investigate whether recruiting can help. Discuss the problem and jointly arrive at an estimate of costs (this could either be a very short or very long discussion, depending on the skill of the manager). Brainstorm a broad range of cost factors, such as employment fees, open seats, coaching time, interview time, training, time to productivity, customer relationships, lost sales, legal fees, and the number of low-skilled people needed to perform the work of one high-skilled person (and so forth). Once you translate work problems into hard dollars, you’re half-way home. If a manager cannot connect money with employee performance, he or she won’t be in the job for long. Find another department manager who is on top of the problem. Now you need to go about resolving the problem by discovering what’s being missed in the pre-screen. Think about what makes the difference between a high performer and low (or termed) performer in terms of:

  • Ability to learn on the job or in training
  • Problem solving on the job? Mistakes in judgment
  • Technical knowledge
  • Time management and staying organized
  • Project planning
  • Selling
  • Getting along in a team
  • Serving customers
  • Presentations
  • Communications
  • Work ethic, attitude, honesty, and quality
  • Treatment by first line management
  • Salary, compensation, work benefits, work conditions, and opportunity

Few people are willing to work under undesirable or non-competitive working conditions. Sometimes, hiring better employees and expecting them to work under bad conditions will lead to more problems. If you suspect this is the case, empathize, offer to buy the manager a free lunch, and pretend you are having a stroke. Next you’ll need to ask what the manager would spend to reduce the problem by just 10%, 20% or 30% over the next year. This will give you some idea of the budget you have to work with and set expectations that should be easily exceeded. Under normal conditions (i.e., good managers and competitive working conditions) you can reduce turnover by 25% to 50%, increase new employee productivity 100%, and double training-class pass rates. The saved dollars should not be hard to estimate. Under poor working conditions, nothing much will happen. Now that you have the manager’s interest, you have an opportunity to shine. It’s important that you find someone qualified who can help you at this point. There are several good reasons for this:

  1. We are all good at some things and bad at others. Wisdom is recognizing the difference.
  2. Hiring quality would not be a problem if recruiters, HR or line managers knew what to do in the first place. The problem is obvious, the solution is challenging.
  3. Pre-employment testing is deeper than it looks; universities devote entire graduate programs to it.
  4. The field is filled with vendors who have no idea what they are doing. In many situations, the organization will not figure this out until one or two years later.
  5. You don’t want to blow your golden opportunity.
  6. It would be presumptuous to assume everything we need to do and know could be reduced to a few hundred words.

How Can You Separate the Good from the Bad and the Ugly? You can reduce your chances of making a vendor error by asking the following questions:

  1. Are they members of the appropriate professional associations? Specifically, the American Psychological Association (the parent organization of professionals trained in psychological principles), The Society for Industrial and Organizational Psychology (the division of the APA affiliated with professionals who apply psychological principles to solve business problems), and the Association of Test Publishers (people who develop or provide tests for assessment, selection, screening, certification, licensing, educational, or clinical use). Reputable vendors belong to reputable trade associations.
  2. Are their products developed primarily for hiring, placement, and business purposes? This is a special discipline, not another “good idea.”
  3. What theories do they use to backup their claims of effectiveness? No theory, no product.
  4. Do they use a wide variety of tools, or only a few they developed? Everyone cannot be good at everything.
  5. Do they rely primarily on written tests (bad) or combinations of cases, written tests, simulations, and structured interviews (good)? Every test is a mix of favorable and unfavorable conditions. Good solutions come from intelligent combinations.
  6. Are they in the hiring market (good), the training market (bad), or both (bad)? Trainers tend to see hiring as an “extension” of their trade. This would be like a podiatrist seeing cardiac surgery as an extension of foot care.
  7. Do they assume all job titles are alike (bad) or do they treat your job as unique (good)? Some tests can be transported from one job to another, but this does not eliminate homework. It only reduces it.
  8. Are they willing to do your project without doing a validation study (bad)? If your testing isn’t validated, how do you know it works?
  9. Do they compare each applicant to an average of high producers? This is like mashing peaches, pears and grapes together, then trying to separate the fruit. Averaging is bad science. It assumes factors are different between high and low producers, and confounds “how” a job is done with “what” is done. This is a sure indicator of vendor incompetence.

Internal recruiters and HR departments have a major opportunity to make immediate bottom-line differences ó but only if they have the initiative, ambition, and skills to do so. Some examples:

  • One internal staffing department was able to make a significant contribution to their sales department. New salespeople’s performance increased across the board by one full performance grade (ratings were based on percent of quota achieved).
  • A professional staffing organization reduced seven-week turnover by 50% in one company, increased three?month productivity by $4000 per agent in another, and reduced 90-day attrition by 50% in a third.
  • An HR director at a medical service organization reduced voluntary turnover among oil-rig medics by half.
  • A major automotive company assembles more cars per day than any other automaker in the U.S.
  • A small savings bank reduced turnover by half.

The tools are there. The skills are there. The knowledge is available. Become the lead dog or get used to the view. Note: Sixteen percent is the average percentage of candidates who can demonstrate skills for the job in a multi-trait/multi-method pre-hire system.

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