“Failure isn’t fatal, but failure to change might be.”
John Wooden, coach
(Second in a Series)
In my previous column we discussed that our world is becoming an increasingly global, digital, and volatile place. As technology advances at high speed, the life cycle of business models diminishes accordingly. What is mainstream today, will be outdated tomorrow.
The employee and manager of the future will have to possess a radically different skill set. In turn, this implies a new selection strategy. We will cover this over the next months, but here I will focus on today’s practice of selecting talent. Where do things go wrong and how can we prevent hiring mistakes from happening?
PENNY WISE, POUND FOOLISH?
People are our most valuable asset, a regular quote in many of today’s annual reports of large corporations. But selecting the right person for the job is hard. It is one of the most important, yet complicated tasks of managers. In my experience, almost all organizations take the selection of talent seriously. Still, the practice of everyday selection is rife with mistakes.
Nowadays, any organization worth its salt has a professional HR department. They train their recruiters and management, and they spend a lot of money bringing in outside consultants. Still, the SHRM Foundation reports that a stunning 50 percent (!) of newly acquired top management positions fail within the first eighteen months. The Chartered Institute of Personnel and Development (CIPD) has calculated that a management mismatch costs roughly 2.5 times what that person makes in a year.
Harvard Business School has produced research showing that this figure is even higher, up to 3-to-5 times the annual salary, and ten times in case of highly specialist positions or top executives. The figures for a CEO or chairman of the board are undoubtedly higher! In other words, it makes sense to keep mistakes within recruitment and selection of new talent to an absolute minimum, if only for reasons of cost-effectiveness.
A TOP 5 OF HIRING MISTAKES
Although various causes could lead to miss-hires, let’s have a look at the top 5 of hiring mistakes that I have experienced over last two decades.
- Most hires are based on the knowledge and abilities of the candidate
- Companies do not (sufficiently) take into account the context
- Candidates interviews are unstructured
- Companies do not recognize the derailers
- Companies restrict themselves to a limited range of selection tools
1. Companies select based on knowledge and abilities
Over the last couple of decades, IQ, skills and experience have been key selection factors for employees and their managers. Although these criteria will remain valid to a certain degree, others will gain traction and might even become decisive. Although having bright and skilled people is a good jumping-off point and IQ is still a rather important factor, the predictability of future success is limited if not combined with the right personality traits, passion and (social) motives.
Therefore, it is essential to also screen talents/executives on who they are (personality) and what makes them tick (their motivational needs). We will discuss this in more detail in a future column and will also explain how you can examine this properly.
2. Companies forget to take the context into account
One of the very first steps you need to take when you start selecting talent is to outline the prospective employee’s new work environment. Another word for this is context. This is an essential step, because there is no such thing as universal skills and traits that will fit every single organization or match each conceivable scenario. The assumption that a highly talented person will succeed in any situation and every possible leadership role is inherently flawed.
Often, be it in sports, business or politics, outliers succeed in the context of specific challenges paired with a particular set of conditions. In other words, they excel under certain circumstances and with a distinct group of people with complementary skills. A soccer player who does well at Manchester United, may be less successful at Chelsea or Barcelona. Yet, many organizations still regard top talent as a universally effective magic potion.
Any observation of people is bound to be complicated and somewhat biased. None of us has an objective, unbiased view of the world. Positive and negative biases swirl around us, nudging our views.
Taking your intuition into account is fine, provided it is not the sole foundation for your decision. If you have, say, un uneasy feeling about a candidate, you need to examine the facts more and find a rationale – solid data – to back up your uneasy feeling. First impressions and trusted instincts are often over-rated.
The majority of today’s companies interview candidates thoroughly, yet in an unstructured way. Final decisions on candidates ought to be rational, objective and quantifiable! A good way to achieve this is by using a focused or structured interview, in which you use a list of predetermined criteria to decide if a candidate is suitable for the specific position. Based on scientific research (i.e. Schmidt & Hunter) the predictability of future success will increase significantly!
4. Companies do not recognize the derailers
Even companies that do interview their candidates in a structured way sometimes fail in selecting the right candidate. They often look closely at positive aspects but do not fully realize that too much predetermined criteria can be overkill — too much of a good thing can still be fatal.
These derailers, as we call them in executive recruitment, are difficult to avoid altogether because they are the downside of key factors of growth and prosperity. Charisma and self-confidence, for instance, can easily turn to arrogance or a lack of introspection if they are overdeveloped. For this reason, every interview needs to determine a candidate’s assets as well as their strength.
5. Companies restrict themselves to a limited range of selection tools
Although research has taught us that using a variety of selection techniques will produce a better prediction for future suitability, most companies still use a limited range of selection tools. They often arrange for two or three (unstructured) interview rounds, combined with a dash of intuition, and a short reference check to confirm the positive findings of the interviews.
Instead I would advise you to try my method for selecting agile talent, which consists of nine steps carried out over three consecutive stages: the preparation, the actual selection and the verifying of the conclusions. I am not saying that the combination of all the steps will lead to a 100% match in all cases, but guarantee that you will have far better and more reliable results.
I advise you not to imit your selection process to one or two traditional techniques that mainly focus on knowledge and abilities. Rather, include a variety of tools that also focus on personality and motivational needs and please realize that in selection the following rule still applies:
“You are hired for your abilities and fired for who you are.”