Hiring is Key to Success

Quality hiring practices are a key component in any great organization. Many organizations struggle with the “silo syndrome” meaning key functions within the organization don’t communicate well. Hiring is an HR function or a stand-alone event.

You don’t find too many top executives touring the country running mini-camps like Jim Harbaugh is doing. He’s constantly experimenting, breaking standard norms, in order to attract better players for the business of Michigan football. He understands better players gives him the opportunity to have a better business. He takes a creative, systemic approach to recruiting and landing top players. Elon Musk at Space X and Tesla is another CEO who is actively involved in the recruiting and hiring of top talent. These two businesses are in the midst of revolutionizing two of the most stayed industries in the world.

Why is effective hiring so challenging? One of the main reasons is our mindset. The act of offering someone a job is a binary decision-making process. The prospective employer decides whether to offer or not offer the position to the candidate and the candidate decides to accept or not accept the position.

In my almost 5 decades of running businesses and consulting for businesses, this good/bad, win/lose and go/no go mindset permeates the entire process.  The key word is process, because a process is not a binary decision. A process is a series of events with intuitive, emotional and practical decision points throughout each event. It is complex, not a simple good/bad decision.

An article in Forbes magazine shows that firing someone generally costs:

  • Entry level employees 30-50% of their annual salary to replace them
  • Mid-level employees, up to 150% of their annual salary
  • High level, specialized employees up to 400% of their annual salary[1]

 

Hiring poor candidates, letting people go or firing them is a very expensive game. This suggests hiring process is a critical operational investment. So why do we spend so much money to hire and fire people while reducing the process to a good/bad or yes/no decision-making event?

Attribution theory[2] is a good place to start looking. This means people have a tendency to attribute “when one errs to the external attribution (the other person’s fault, the market or any kind of excuse outside of yourself). “The person I hired was great when he started, but then something changed and we had to fire him.”

When things go well we have a tendency to attribute the “brilliant” results internally. “I am so smart to have hired this very capable person and look at all the good work he/she accomplishes.” This kind of thinking on the part of management is brutally expensive, leads to poor overall operational performance and restricts the positive learning to make the team, department or company more profitable.

Doing a good job of hiring people and retaining them is hard work. The fact that it is so expensive to replace people means that strong hiring practices must have a much longer tail than the pre-hire and hiring decision itself. I often hear from disappointed employers, “I don’t know why I hired that person?” Or, “I hired the person to solve problems, not create more problems.”

The quotes are endless expressing disappointment about the performance of people. My experience tells me management that constantly complains about difficulty hiring good people is unaware of the deeper issues depleting their organization.

The psychology of the candidate and the employer are often quite similar. Many employers are anxiously excited to hire people and the candidate is anxiously excited about finding a job. The key theme is anxiously excited.

The hiring process becomes a dance about finding the “right” job and the “right” employee. This dance is stressful for both. I’m a coach who helps managers hire more effectively. I see frustration and disappointment from the management side when employees don’t meet management’s expectations.

The person who was hired with all this hope and promise now depletes the energy from the formerly hopeful manager. The manager avoids talking with the now “problem employee” and the manager (and other employees) suffer with poor performance and declining moral. Another scenario is more direct, but not any better. The manager tells the “problem employee” they are not doing the job well and gives an ultimatum, “Improve or else!”

Usually in both these situations people are fired or quit. Management blames the employees and the employees blame management. Management returns to the hiring process to find Mr. or Ms. Right and the dance continues.

Management in more successful organizations understand that hiring is a systemic process that involves the whole organization:

  • Recruiting, including clear written expectations regarding the responsibilities of the job;
  • Assessments that provide insights in order to ask meaningful, individualized questions pertinent to the work responsibilities;
  • A simple system to keep score regarding the opinion of the hiring manager during the hiring process and the opinion of a person’s performance after being hired;[3]
  • Mentoring, adult learning opportunities, teamwork and advancement;
  • And an organizational system, which promotes individual responsibility, emotional rewards and monetary awards commensurate with your performance.

 

Top organizations understand that the above principles make them more attractive, help them develop quality people and build stronger profits. Hiring is far from the simple act of saying yes/no. It is all about having a mindset and culture that understands it is about “Creating an environment for success.” It starts with welcoming a good person to the company and the company works in concert with each person to grow stronger. Strong businesses emulate the focused work of strong teams.

 

 

[1] Cameron Keng, “Employees That Stay in Companies Longer Thank Two Years Get Paid 50% Less,” http://www.forbes.com, (June 22, 2014)

2 Saul McCleod, “Attribution Theory,” www.simpleypsychology.org, (2010)

3 Ben Dattner, “A Scorecard For Making Better Hiring Decisions,” www.hbr.org, (February 4, 2016)