Hiring with a 90% Success Rate
Every month at least one of my clients complains to me about a wrong hire. Usually, within the first few weeks of onboarding, it becomes clear that a big mistake has been made. The amount of energy, time, and money that goes into getting rid of a wrong hire is painful to digest. Most people are not able to comprehend that they’ve been laid off so quickly and become angry and frustrated that they couldn’t meet the expectations. This often results in them fighting back, trying to squeeze everything they can out of your firm, or at least trying to make your life a living hell for as long as possible.
Considering recruitment and lawyer fees, training hours, the time spent away from actual work… and the countless sleepless nights, the cost of a wrong candidate can be as high as 15x that employee’s salary. Frustrating and painful, but luckily avoidable.
In his book Hire for Attitude, Mark Murphy explains that 46% of new hires don’t stay longer than 18 months with 89% of the time attitude such as coach-ability and EQ being the cause for new hire failures, not technical skills. This means, choosing candidates based on their CVs — with all their accomplishments highlighted and mistakes removed, is a sure-fire way to set yourself up for failure. In a study by the National Bureau of Economic Research Compared to computers outperformed the human ability to pick the right candidate by at least 25 percent, those employees stayed far longer and performed just as well or better.
Hiring is “the single biggest problem in business today” according to The Economist. On average, success amounts to around 50%. A considerably low chance of onboarding a person that sticks with you through the highs and lows for multiple years. Hiring A-players takes hard work and effort. However, the right talent will influence and shape your culture and impact your long-term success. Simply put, do everything in your power to increase this number and save yourself massive headaches. It’s well worth it.
As Steve Jobs of Apple said, “Go after the cream of the cream. A small team of A+ players can run circles around a giant team of B and C players. Management guru Jim Collins concurred: “… the single biggest constraint on the success of my organization is the ability to get and to hang on to enough of the right people.”
In his book Who, a method for hiring, Geoff Smart introduces a framework for designing a hiring process that attracts the best talent, ensures new hires are truly aligned with the company values and vision and helps measure ongoing job performance. Below is a summary of the methodology based on more than 1,300 hours of interviews with over 20 billionaires and 300 CEOs.
The four biggest hiring mistakes
- Lack of clarity on what the job requires and what the person needs to accomplish.
- Lack of good candidates and no process to attract great talent.
- Inability to choose the right candidate, using instinct, and picking based on likeability.
- Losing the selected candidates.
Many leaders focus on the “What’s” in their organizations, e.g. the strategies, products and services, systems, and processes. However, when you address the “Whos” and put the right people in the right places, the “Whats” will naturally fall in place.
1. SCORECARD
The Scorecard is more than just a job description. It clearly defines the specific skills and expertise you need and why you need them. By starting with the end in mind and determining what success of the role means, candidates will know what’s expected from them and the value they should bring to the company. The Scorecard can then be used as a performance review tool and to provide ongoing feedback during one-on-one meetings.
A Scorecard includes the following:
- Mission — In a couple of sentences, clearly state why the role exists.
- Responsibilities — Clarify the areas of responsibilities of the role and how they align with the department.
- Outcomes — For each responsibility, determine KPIs or measurable outcomes that define success.
- Competencies — Define strengths, attributes, and characteristics the role requires and that ensure cultural fit.
2. SOURCING
Sourcing is about systematically looking for and identifying potential talents before you actually need them. Most managers don’t plan in advance. Once a position opens up they rush to recruiters hoping to get a hold of someone reasonable in the shortest time possible. Good companies know how to get people to apply once a position opens, great companies are constantly recruiting. They have a process in place that allows them to pick and choose top tier talent. Hosting regular recruiting events, actively networking, and asking for referrals means you’ll always have a list of highly qualified people you can reach out to once a position opens up.
Referrals from your own or your employees’ network are proven to be 4x better than complete strangers — on average, they stay 2x longer and cost ½ the sourcing cost. Make your best people recruiters by introducing a strong reward program to bring in people they trust and believe in. With a 10k+ referral bonus that is paid over the first 6 months of onboarding, people feel motivated to go out there and promote your company to potential candidates while staying responsible for high-quality people. For each position, senior executives should source at least 3 candidates who can pass a phone interview.
3. SELECTING
Selecting based on likeability and gut feeling is one of the greatest mistakes people make when hiring. Not only does it result in a less diverse team, by unconsciously choosing people with similar interests and perspectives, but it leads to ignoring facts and sometimes even red flags.
Structuring the interviewing process in a way that gives the optimal experience for the candidate and maximum information for the interviewer drastically increases the chances of hiring success.
Geoff Smart created the below interview framework making it easy to select the right candidate fitting the scorecard.
Screening Interview
The recruiter or HR schedules a 30 min phone call asking the following questions. Make sure not to test for chemistry or collect irrelevant information.
- What are your career goals? (is there alignment)
- What are your biggest strengths with examples?
- What are your areas for improvement with examples?
- How would your last five bosses rate your performance?
Topgrading Interview
The hiring manager (possibly with one other person) schedules 2–3 hour interviews with the few selected candidates. Starting in the early schooling years and for each job they’ve had, let them tell you about highlights and low points. Listen for patterns and themes.
- What were you hired to do?
- What were your biggest accomplishments (that you’re most proud of)?
- What were some low points or mistakes?
- Who did you work with? What are their names and what would they say about you?
- Why did you leave that job?
Keep digging deeper and ask for more details. Don’t tolerate answers about their weaknesses which are actually strengths (perfectionism, etc.). The more senior the role, the longer the interview. Some hold 4–6 hour interviews with top candidates, it’s almost impossible to keep a facade for that long.
Focus interview
The Focus interview has the purpose to identify if the candidate fits the scorecard and has the potential to achieve the desired outcomes. It’s conducted by future colleagues who spend 30–45 minutes on each of the core responsibilities.
- What are some of your biggest accomplishments in the area of … expense management
- What are some of your biggest failures and mistakes in the area of …
Reference interview
Don’t ever skip this step. Reference interviews calibrate the magnitude of the candidates strengths or weaknesses. For an important role, speak to 5–7 references of which some of them are not the ones they provide.
- How do you know this person?
- Some of their biggest strengths?
- Some of their areas of improvement?
- How would you rate their performance?
- The candidate said (time management) was an issue, how big of a deal was it really?
4. SELLING
A-players usually have more than one job offer. It’s on you to sell the company and role to them just as much as it is on them to sell themselves. Consider the five F’s below, the most important criteria for someone taking on a new job:
Fit — High-performers want to make an impact and feel needed. Highlight how the company’s vision and strategy align with the individual’s goals and ambitions.
Family — Identify the needs and constraints of their family and make the change as convenient for them as possible.
Freedom — The most valuable talent doesn’t want to be micromanaged. They want flexibility and freedom to make decisions and achieve objectives their way.
Fortune — Be specific about financial upside and stability. Layout future base, bonus, benefits, and equity.
Fun — A culture by design attracts great talent. People want to have fun at work, build relationships, and feel part of something bigger than themselves. If there’s a fit, it’s an essential selling point.
5. ONBOARDING
People often feel lost when starting a new job. A lack of direction and communication leads to poor performance and frustration on both sides. When onboarding a new employee, share the company’s strategic plan with them to communicate the long term vision, purpose, core values as well as annual and quarterly OKRs (objectives and key results). Ideally have all core processes standardized and documented and the organizational structure and responsibilities for each department and individual accessible in a shared file. Creating transparency in how the company operates and what everyone’s role makes it easy for people to understand how they fit in and what their contribution will be.
Using the Scorecard and Quarterly OKRs to define what success looks like in the first 30, 60, and 90 days, new employees will know exactly what’s expected from them. For the first month, meet them on a daily basis and keep communicating the core of the company (purpose, values, long term vision) and objectives while providing constant feedback. Assign a 90-day onboarding buddy who helps them navigate through the onboarding phase, so they won’t have to come running to you for every little question. Invest in training especially within the first quarter. You can really shape someone during this time and save yourself a tremendous amount of energy down the line trying to adjust their working style, behavior, and performance. Then, if the expectations aren’t met, there are no surprises if you take action and move on.
Companies love to throw goodbye parties for people leaving. Why not welcome new employees and celebrate their arrivals? Invest in a fantastic “30-day welcoming package”, organize a party with their team, send a good wine to their house, sponsor a spa weekend with their spouse, etc. Why not make their first month unforgettable and get them excited about their new job, an investment with actual ROI, instead of celebrating people who are on their way out of your company?
Conclusion
Hiring is one of the greatest challenges in business. On average it takes two months for someone to really start working after they’ve been hired and up to a year to be up to speed with everything in the organization. This means only after about 12 months, the consequences of the hiring decisions are fully realized. Many organizations are not clear on exactly what skills and experience are needed and what success for the new candidate would look like. Mastering this challenge by creating a systematic process to recruit only A-players has the potential to change your organization forever. After all, people are what determine the success of your company.
