The Top 7 Reasons Why Your Process Continuously Produces Hiring Failures
Unexplainably, few in corporate recruiting attempt to measure the failure rate of new hires from their external hiring processes. However, those who have done the research (i.e. Harvard Business School, The Corporate Leadership Council, and LeadershipIQ) have found that the failure rate within 18 months of hiring for most jobs is 46 percent and for executive hires, it can reach 60 percent. Obviously, if any other corporate process failed at a rate anywhere near 50 percent, it would be immediately scrapped, but for some reason corporate recruiting processes drone on with little change. I define a hiring failure as a new hire who voluntarily quits before their first anniversary date and any new hire who within 18 months was terminated, left under pressure, received significantly below average performance reviews or who was placed on official disciplinary action.
Anyone who takes the time to scientifically examine the traditional corporate hiring process would quickly realize that it fails so often because it is built on a house of cards because so many steps in the process are dominated by lies, deceptions, and gut feelings. For example, few are truthful in their resume (lies), most strive to tell you what you want to hear during interviews (deception). And because managers use gut feelings to make many hiring decisions, hiring managers can have an interview assessment accuracy rate of as low as low 0 percent.
The recruiting process is currently ranked No. 1 among all talent management actions for producing business impacts on revenue and profit. But imagine how much larger its business impact would be if its embarrassingly high failure rate was cut in half?
Unfortunately, Lies, Deception, and Gut Feelings Dominate the Hiring Process
Most recruiting leaders and nearly every corporate executive are not aware of the extremely high failure rate of the external hiring process. And the reason there is an absence of alarm is that the “new-hire failure metric” is seldom calculated, reported, or is its dollar impact calculated. And until recruiting collects data that connects the cause of hiring failures directly to these inaccurate aspects of the hiring process, nothing will likely change. Incidentally, candidates may also be guilty of “gut decision-making” because the recruiting firm Challenger/Gray estimates that “25 percent of all workers regret taking their new positions.”
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But let’s now push aside the failure numbers and see the top seven reasons why most corporate hiring processes experience these ridiculously high rates of failure. The hiring components with the highest negative impacts are listed first.
- Resumes stink as a selection device — by design, all resumes are written from a totally biased perspective, because they are written with the goal of making the owner look as good as possible. We also use resumes as a primary selection mechanism despite the fact that by design, they omit all negatives. It is 100 percent positive by design because all negatives and shortcomings have been purposely omitted (no one in their right mind includes errors and negatives in their resume). Resumes also contain many lies. In fact, as many as 78 percent of resumes are misleading and 53 percent contain outright misrepresentations. In addition, the very best candidates may, despite the capabilities, still, have weak resumes … not because they haven’t performed in previous jobs, but because they don’t have time, are reluctant to brag, or they have weak marketing skills. In addition, if the writer is not skilled at populating their resume with the right keywords, their resume may never even be seen by a recruiter or hiring manager. And because corporate recruiters average only 6 seconds reading a resume, the scanability of a resume becomes more important than its content.
- Interviews take a lot of time but they predict about as good as a coin flip — no less than Nobel laureate Daniel Kahneman found that in his experience, interviews were “almost useless for predicting the future success of recruits.” Interviews are also full of deceptions. Obviously, during the interview, the candidate is trying to tell a story that makes him/her look great. But despite their job-related capability and their experience, if they are not good at telling stories under the pressure of an interview, they’ll never get hired. There is a great deal of deception during interviews because most interviewees are striving to provide answers that they think that the interviewer wants to hear. Interviewers are at the same time purposely limiting information about the negatives of the job, the manager, and the firm. Interviews are also subject to the gut decision-making whims of the interviewer. And because it has been estimated that 90 percent of corporate interviews are unstructured, most interviewers currently have unfettered discretion to ask brainteasers and other non-job-related questions that have no predictive value. And in direct contrast, interviewees are seldom asked to solve any of the real problems that they will face if they get the job, even though work samples have the highest predicted value of any selection device. One academic study even found that companies would be more effective in selecting good candidates if they looked at the resume/background information only, and skipped the interview completely.
- The job selection criteria used are often inaccurate — the job selection criteria used by recruiters and hiring managers to screen in candidates are often not chosen in any scientific way (many managers make them up on the fly). And as a result, these selection criteria are not accurate predictors of on-the-job success. Many commonly used selection criteria like years of experience, grades, and the school attended may result in an unconscious bias toward factors that don’t accurately predict on-the-job productivity (years of education ranked No. 16 out of 19 on the best predictors of job success meta-analysis list). Obviously, if you’re looking for the wrong job skills and experience (that are based on a manager’s gut feelings), the odds of a hiring failure increases dramatically.
- Fit assessment is subjective and inconsistent, so it is often highly inaccurate — after identifying whether the individual can do the job, most want to add another assessment step, which is to determine if the individual “fits” with the organization’s culture and way of doing business. Fit assessment is a critical determination because if a candidate fails it, they are permanently ruled out. And as a result, there’s no way of ever knowing whether (despite their negative fit assessment), they would’ve still turned out to be a top performer. In addition, the underlying assumption of fit is that individuals are rigid and that they can’t change or adapt to a new culture (which in my experience is completely untrue). Fit assessment becomes even more problematic because few firms clearly define what they mean by “fit,” most assess it subjectively using their gut feelings, and the fit assessment criteria vary dramatically between hiring managers. There is, of course, a great deal of deception during fit assessment because candidates will strive to provide the answers that they think the interviewer wants. Unfortunately, there is never a feedback loop with the exit interview process that reveals how many new hires left because they didn’t fit. And without this data, there can certainly be no proof of a correlation between fit assessment and on-the-job performance at an individual firm.
- The reference checking process fails to predict on-the-job success — in a meta-analysis covering the selection methods with the highest predictive accuracy, reference checking was ranked No. 13 out of 19. Using reference checks to select between candidates or to validate a single candidate is highly problematic because many individuals who provide references are biased in favor of the candidate (especially references provided by the candidate). In addition, because of lawsuits, most reference givers are reluctant to give any negative preferences. And even the information provided by references that attempt to be accurate may be misleading because success at a past firm may not be a valid predictor of performance at your firm. As a result of the subjectivity of the reference checking process, it is quite easy to get a “false positive” reference that indicates that a candidate meets your criteria, when in fact, they are actually quite flawed.
- The individuals making the hiring decision are not trained and may have unconscious biases — although many urge interview training for hiring managers, providing the traditional form of interview training doesn’t seem to have a significant positive impact on improving hiring results. One study illustrated the low impact of interview training when untrained strangers after 15 seconds of watching videotaped interviews reached essentially the same conclusions as interviewers who had been trained for a full six weeks. Because few managers have updated interview training, most involved in recruiting are not even aware of the many pitfalls that can occur during hiring. Many involved in interviewing also have unconscious biases which have a major negative effect on the selection of diverse candidates. In fact, some hiring managers have as high as an 80 percent error rate in selecting the best candidate from interviews.
- Despite what you’ve been told, history is not always a good predictor — most interviews are dominated by behavioral interview questions, which ask the candidate to describe how they behaved in the past (behavioral interview questions ranked No. 6 and job experienced ranked No. 14 out of 19 on the best predictors of job success meta-analysis list).This historical approach might seem logical on the surface. However, when you are hiring externally, the content of jobs and the best way to perform varies dramatically between companies. And that means that a successful approach undertaken in one company’s culture may not lead to success in another firm. Jobs and the approaches required to succeed in any job change rapidly. And that might mean that any job experience longer than two years may be irrelevant. Behavioral interview questions can now be found in advance on social media sites like Glassdoor, making it easy to prepare for them. And because there is no way to verify the specific answers during reference checking, these types of historical questions favor those who are willing and capable of embellishing their role and for taking credit for things that they were only tangentially involved in. A superior approach is (after explaining your firm’s corporate culture) to ask candidates how they would handle the job’s current problems under your firm’s corporate culture and values.
I’ve written in the past about the need to calculate new-hire failure rates. Once you realize that your firm’s new-hire failure is incredibly high (especially when compared to 6 Sigma standards), the next step is to identify why it has such a high failure rate. It fails so often because so many elements of the hiring process inherently contain lies, deceptions, and gut feelings. Because so many involved with corporate recruiting are quite comfortable with the existing impreciseness of the process, you shouldn’t expect any major changes until you quantify the dollar impacts of hiring failures and you shift to a data-driven hiring model where recruiters are rated on their new-hire quality.
At some point, you must institute a hard-and-fast rule that automatically eliminates any selection process that cannot prove that it accurately predicts new-hire on-the-job success. I for one don’t predict much of a chance for change at most firms. That is because after 40 years in this field I find that both recruiters and hiring managers actually like treating recruiting more like an art than a science. Because as an art, the current sloppy approach allows them to avoid structure, to ignore deceptions, and to freely use their gut and their intuition.