How companies get recruiting wrong

Many companies go about recruiting in the wrong way. They focus too much on experienced candidates, overspend on the process, and they don’t get the best results. Worse, however, they ignore two much more cost-effective and productive methods of recruiting: developing the talent of current employees and turning their external recruiting focus to college graduates and inexperienced workers.

These are the conclusions of Wharton professor Peter Cappelli writing in the May/June 2019 issue of the Harvard Business Review.  Here are a few of his observations and recommendations:

Abandoned good processes and methods. Companies used to conduct a job analysis to identify the tasks and skills required for the job, and a job evaluation to determine where the job fits in the company’s organization and pay structure. Applicants were screened by IQ, skill, and maybe personality tests, and extensive structured interviews. However, today, the recruiting and hiring function has been eviscerated in many companies, and managers are left to write job descriptions and sort job applicants on their own. There is little to no collection of recruiting process metrics to determine what is working and what is not. Companies need to invest in improving their own recruiting processes, and, I would add, train everyone for their role in the process.

Understanding which new algorithms to use. Artificial intelligence search can identify job candidates quickly, and applicant tracking systems can sort job candidates by openings and identify the top job candidates. I would add to Cappelli’s observations that AI can also be used to track metrics and chatbots can be used to instantaneously update job applicants on their status and even recommend them to other openings if they are not a good fit for the original job. However, from there, too many new algorithms make claims that have not been scientifically tested. Writes Cappelli:

Then the process moves to the Wild West, where a new industry of vendors offer an astonishing array of smart-sounding tools that claim to predict who will be a good hire. They use voice recognition, body language, clues on social media, and especially machine learning algorithms—everything but tea leaves. Entire publications are devoted to what these vendors are doing.

The big problem with these new practices is that we don’t know whether they actually produce satisfactory hires.

Hire from within. Rather than the costly raiding of passive and competitor talent, Cappelli recommends more hiring from within and developing careers. He recommends that all job openings be posted internally and that companies take the time to get to know their talent and develop them. He cites research that shows outside hires take three years longer to perform than internal hires and cost more.

Persuade fewer people to apply. The hiring industry often shovels applicants  into “the funnel.”  Cappelli believes it is much better to go the other direction: create a smaller but better-qualified applicant pool to improve the yield. Why? Each applicant costs you money for sorting through and categorizing, and they pose a legal risk to the company due to issues such as discrimination. This strategy requires metrics to know your best recruiting sources. Instead, Cappelli recommends giving job candidates a realistic preview of the job. Companies like Google and Marriott do it with gamification.

Test candidates’ actual skills. Unstructured interviews, even high volumes of them, and college degrees, do not reliably predict successful job candidates. Structured interviews and job skill tests do achieve this goal. For example, programming tests can identify the most skilled software programmers, but the vendor should validate its tests, and the company should also validate the tests against a subset of their own workforce.

Recruiting is the number one concern of CEOs in the most recent Conference Board Annual Survey. PwC’s 2017 CEO survey reports that chief executives view the unavailability of talent and skills as the biggest threat to their business.

Despite the priority of CEOs, I remain amazed at how many companies recruit so poorly. Here is how to fix that problem:

  • Recognize the room for improvement by measuring the results of your recruiting process and comparing your metrics to benchmarks. Every recruiting organization should measure the net promoter score of job candidates, with a goal of scoring in the 90s.
  • Then, focus on improving your processes, like you would lean out a manufacturing process, and make sure everyone who is involved in recruiting, including hiring managers, is trained for it.
  • Use the long-standing research of Industrial/Organizational psychologists on the best recruiting methods and assessments.
  • Take advantage of the amazing technologies out there, such as AI to find job candidates and to automate much of your ATS administration. Use chatbots to increase your communication with job candidates and to improve the candidate experience. Stay away from technologies that use facial recognition and body movement technologies to assess talent as these technologies are still developing, and the early academic research suggests they are biased against women, and people of color, and simply may not predict good hires.
  • Don’t use any assessment, technology-based, or otherwise, that has not been validated by the vendor—and validate it against your own employees before using it.

We know how to do recruiting well. We need to focus on what works, apply it, and measure it! It will drive your profitable growth.

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults and provides hands-on support to improve recruiting and retention, cultures of innovation, and train agile leaders and teams.

Overcome your obstacles to these issues by subscribing to his weekly blogs. Go to http://www.victorhrconsultant.com. to subscribe. Watch for his book, Hack Recruiting, to be published soon.

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