The Goal: Hiring The Best Candidate For Every Position!

Jack Welsh at GE used a famous 4-box analysis to identify people who “make their numbers” AND “do it in the right way”. When people did both, they were considered superstars. In his model, he had particular problems when people made their numbers, but didn’t make them the right way – they made them at the expense of others and the broader business. In other words, they made their numbers but sub-optimized the outcome for the company.  His recommendation was to quickly move these people out of the organization. Having worked with the 4-box as the HR leader of a large corporation, I noticed that there were two types of people who fell into this bad category; those who intentionally sub-optimized because it made them look good to stack the metrics in their favor and those who unintentionally sub-optimized because the “business metrics” were designed poorly. The answer in most cases is to fix the metrics and not blame the people involved. Inherently, the vast majority of people want to do the right thing at work. In the hiring process, there is significant potential for “unintentional” sub-optimization of the business if you don’t look closely at the design of the metrics. 
 
Question: Are you certain you are not sub-optimizing in your hiring process?
How can sub-optimization happen in the hiring process? First, HR departments have pressure to develop metrics to measure their value. Like all areas of business today, HR functions need to have hard metrics showing return on investment. In an effort to come up with metrics, HR decides that speed of hire and cost of hire are good metrics and it’s easy for other functions to agree that these are good things to measure. Everyone wants people faster and at a low cost. This is where companies need to be careful and remove any potential for “unintentional sub-optimization.”
 
By focusing on speed of hire and cost of hire as primary metrics, you run the risk of making recruiting talent a commodity. When you do this, managers can show charts that say the speed of hire is faster and the average cost of hire is lower…..they are making progress. Nice idea and it looks really good in a monthly presentation to the company leadership. There is only one problem… talented people are not a commodity. Maybe today in this economy of high unemployment, sourcing people may appear similar to buying some raw material. Can a raw material lead a team of people to develop a new product, beat a competitor or achieve extraordinary returns? Can a raw material decide they don’t like you, leave you and take other raw materials with it? Sounds like a funny analogy but there is nothing funny about it. If you focus on speed and cost metrics and not on the process, long-term quality, and fit of every hire, you are wasting money! 
 
Adding a Quality Metric – Be Careful
To combat the potential quality problem, someone in the organization usually says “we need a measure for quality of hire as a way to balance against the speed and cost metrics.” Only one problem… recruiting quality is difficult to measure and has to be longer-cycle and backward looking. You only know if you made a good hire if you give the person time to be successful in the role. That may take 6 months or perhaps years to measure accurately. When you measure the speed, cost, and quality of hire, the quality metric always gets the least priority because it’s the most difficult to quantify. Think about it, you have a recruiter who is under pressure to perform from their manager. The manager wants to be able to make a good metric report to their leadership showing improvement. You have speed and cost easy to measure and show graphically and quality very difficult to measure and certainly hard to hold the recruiter accountable. Given this, is there potential to minimize the importance of quality and to sub-optimize? Most company recruiters want to do the best job possible and are well intentioned. But, if the system of measure is not carefully crafted, they may be forced to move quality to a secondary goal.
 
What can you do to ensure your hiring process has the right focus?
 
1. Make the desired outcome your top priority – the best candidate for each Job
Getting the best person for every opening is the outcome to focus on first. There have been many studies on the cost of mistakes in hiring. Conservatively, each hire mistake costs a minimum of six months of base pay in waste, retraining, and recruiting costs. A study by the Hay Group indicated that the direct and indirect cost to replace a professional employee is as much as 18 months of pay. These are just the tangible costs. What about the intangibles? Your employee’s see the turnover and what do they think about your Company? What do your customers think when they talk to new people with less experience because of turnover?   The best candidate has more than just the right skills, experience and knowledge; they need to have the intellect, values and culture fit for the organization. These attributes take time to assess and observe. Be careful placing too much emphasis on speed and cost of hire.
 
2. Ensure the process is right – and you will achieve speed and cost
As a business leader, you should require a process map highlighting the roles of everyone in the recruiting process and the steps involved. Everything in the process should be focused on the ultimate outcome of hiring the best candidate – from the initial requisition, to recruiting sources, to hiring manager responsibilities and ultimately to the job offer.  Put together a small cross-functional group, including some people trained in Lean Thinking, to develop your hiring process with HR. Done correctly, your outcome will be a process focused on hiring the best candidate AND a process that will be fast and cost effective.
 
3. Measure process compliance
If you designed a good process for hiring the best people, measure the compliance with the process. Let the process design lead to better hiring outcomes. For example, if the process says the hiring manager will submit their feedback to HR within 24 hours of the interview….measure that! If HR is to generate the offer letter within 24 hours of the hire decision, measure that part of the process. Let the process map show you where you need to measure.

4. Track quality over time     
Use performance reviews as a tool for measuring the quality of your hires. Using the 80/20 rule will make it easier. What were the internal or external recruiting sources for your top 20% of performers? What were the internal or external recruiting sources for your bottom 20% of performers? You can do this by functional area, by manager, by location. This backward look will give you great insights and help you achieve your number one staffing goal…to hire the best people.