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Effective Hiring Requires the Right Steps in the Right Order

November 14, 2013

Your company depends on the right people being in the right jobs, but finding them can be costly; in some industries the annual churn rate exceeds 50%. Weak labor markets and click-to-apply online applicant collection systems hinder a companies ability to identify the right applicant for the right job. Consider the British call center industry: In 2012, 7 million people applied for 260,000 jobs. With a U.S. and British call center turnover rate hovering on average around 35%, the cost of hiring is significant by any measure. Anything above 15% turnover is an opportunity waiting to be addressed.

The cost of hiring is a “hard number” that most companies are watching – with general apathy. Chief Financial Officers want to stop the bleeding but HR owns the hiring process. But what about the “soft number”? That is a much bigger cost to a company and is just as real. What amount of business is lost or never acquired due to the wrong people being hired? What is the cost of R&D projects missing their critical milestones? What is the cost of manufacturing value streams being mismanaged. What is the cost of poor managers that run off good people? Missed opportunity is difficult to measure but you don’t have to look too far to know something needs to change. In today’s fast moving competitive environment, the lost opportunity costs must be included in any turnover analysis.

Most companies have a standard hiring regimen: Recruiters start by posting a job online and reviewing résumés, move on to phone or face-to-face interviews with the most promising candidates, and then draw on various tests, to determine which applicants are the best fit. Why are companies putting assessments at the end of the process? Simply because it involves a budgeted dollar amount that is seen as a pure nice-to-have cost rather than a strategic tool.

Research and our own experience with clients suggests that this approach is backward. Any company, including manufacturing, medical device, healthcare, city management, retailers, call centers and professional services can reduce hiring costs and make better hires by integrating multiple assessments at the right place in the process. Using a short, web-based test early in the process efficiently weeds out the least-suitable applicants, leaving a smaller, better-qualified pool to undergo the more costly aspects of the process.

An integrated multiple-assessment approach makes sense for several reasons. Evidence suggests that many more applicants today—by some estimates, nearly 50%—embellish their CVs than did so in the past, reducing the utility of résumés as initial screening tools. And most resumes do not adequately identify the job-critical soft skills of the candidate. At the same time, a few web-based talent assessment tests have proven themselves to be highly predictive and have made testing less expensive and more convenient. Client feedback about the tests we offer, across industries, shows the process and the tests are excellent predictors of performance – and save our clients a great deal of time and money.

High-Low Performer Analysis for Benchmarking Isn’t Good Enough Any Longer

People Performance Bell CurveMany assessments use a benchmarking process referred to as high-low performer analysis. The company assesses an incumbent subset of high performers and low performers and determine which traits are consistently found in each group. Conclusions are drawn based on the analysis which are then referred to as the benchmark for hiring. Several assumptions make this 20+ year old strategy an undesirable approach. The assumptions that everyone in your high performer group are true high performers is very subjective for most jobs. The assumption the bottom performers are true low performers simply because of their talent design is very subjective as well. Basically, with this approach, you are relying on your current workforce/incumbents to dictate what the benchmark should be rather than relying on an objective and scientifically valid process that is free of adverse impact.

Is There A Better Approach? – In a word, Yes!

First, we use a patented process to benchmark the job’s true talent demands. This process for job benchmarking is considered by the OFCCP and EEOC as being effective at minimizing biases that cause adverse impact. The result is an accurate picture of what talent traits are important. The benchmark also provides suggested interview questions for the face-to-face interview step (more about that later).

For candidate screenings, our clients employ a highly efficient multi-step process that utilizes different assessments at different points in the process based on the type of position. The following table shows the general approach:

MRS = Minimum Requirements Screening

Type of Job Step One Step Two Step Three Step Four Step Five
Hourly MRS Opinion Survey Face-to-Face Interviews    
Skilled Trade MRS Opinion Survey Talent Insights Assessment Face-to-Face Interviews  
Professional, Sales and Office Staff MRS Opinion Survey Phone Screening TriMetrix HD Talent Assessment Face-to-Face Interviews
Managerial MRS Opinion Survey Phone Screening TriMetrix HD Talent Assessment Face-to-Face Interviews
Executive Executive Search Phone Screening TriMetrix HD Assessment Review of Candidate by Hiring Committee Face-to-Face Interviews

Minimum Requirements Screening
Most online applicant tracking systems have the ability to create customized questions specific to a job’s minimum requirements. The proper construction of these questions is critical to this step being effective. Poorly worded questions or poorly designed scoring of responses will ensure this step fails at meeting its objective – to identify the best in the pool. A well-designed screening questionnaire eliminates the need for an applicant to complete an online resume/CV profile. Many desirable applicants are lost at this step because they don’t have the patience to enter their resume in the online system. If you want better applicants, you must shorten this initial step. We suggest skipping the collection of a full resume until later and using minimum qualification questions instead.  Those that meet the minimum qualifications are moved immediately to the Opinion Survey step.

About The Opinion Survey
We call this a “quality of person” test. Applicants complete a 20 minute assessment that captures work-related attitudes about supervision, work, customer service, drug use, work-related theft and safety and risk avoidance. There is a version that asks questions about sales attitudes as well. In addition to the attitude scales, there is a validity score that indicates the level of authenticity for the responses. Different versions are offered to the employer that match to a specific job type (sales, customer service, etc.). The Opinion Survey is a low-cost assessment that can be administered via online employer tools after a short survey to qualify the individual. It is designed and priced to use  as a tool for reducing the larger candidate pool to a smaller subset of qualified candidates. This is the most economical strategy we have seen that is highly effective at identifying high potential candidates very quickly. A quick review of the Opinion Survey results will tell you if the person should move to the next step.

We use the Opinion Survey in some executive level searches for our clients. For some situations, clients have had concerns that too many assessments would scare away the passive candidate. So we recommend the Opinion Survey be used but we also consider it to be optional and situational for the executive level hire. However, if you use it for one candidate, you should use it for all candidates for the same job.

The Talent Insights Assessment
For hourly and skilled trade jobs, if a person makes it through the first prior steps, an investment in this moderately priced talent assessment will not be wasted. The Talent Insights assessment identifies the behavioral style and motivators of the applicant. Our research and experience validates this approach is excellent for determining job match in many skilled trade jobs. If the Talent Insights assessment shows a reasonably good job match, the investment in a face-to-face interview will not be wasted.

For Professional and Managerial candidates, the next step after the Opinion Survey is to obtain the full CV/resume and conduct a 30-minute phone interview. The phone interview has two purposes, 1) to further validate the person is qualified and has no pre-existing reason that would cause an offer to be rejected (relocation, unreasonable salary requirements, etc.) and 2) to “recruit” the candidate, basically start selling the virtues of working at your company.

The TriMetrix HD Talent Assessment
What used to cost $5,000 or more (and still does) to conduct a full day assessment using an I/O psychologist, a few in-basket exercises and assessments has been made completely obsolete. Today, the TriMetrix HD assessment does a better job of assessing the person’s talents (ask about validity and reliability studies) and the report and executive summary make the analysis easy-to-understand and discuss internally. The Job-Talent Gap report provides additional insight specific to the job (see Job Benchmarking discussion above). What used to cost thousands of dollars is now $300 – $500 based on position and level of analytical support desired.

The Face-to-Face Interview
With a hiring manager fully armed with the candidates resume and assessment results, interview questions are able to be laser-focused. You want to validate the strengths of the candidate in tangible ways (through their work experiences) and determine to what extent their weaknesses (bigger gaps for the job’s talent requirements) will be a liability for achieving success in the job. You will no longer look at the interview as a “discovery” interview. Instead, you’ll see interviewing as a “validation” interview.

For our larger, multinational clients, the amount of cost avoidance as a result of applying the steps in the right order has been significant. For example, flying a person half-way across the country to interview with HR and 5 or more key people is an expensive proposition. The cost of travel is an easily measured hard cost. The cost of each person’s time for the interviews is a very real soft cost. It makes much more sense to have all the information possible beforehand to know that the investment is worth it.

What is Your Hiring Process Costing Your Company?
For a complimentary cost of hiring and turnover analysis contact Carl Nielson at cnielson@nielsongroup.com.

Want to get started with a proven process that enables you to hire the right people for the right job? Give us a call today at 972.346.2892.

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