“Hiring decisions are the most important decisions you make, and the hardest to undo”
So said Peter Drucker, the king of management consultants. And he was right. Studies show that hiring mistakes cost between 2 and 20 times annual salary, depending on the role.
If you make a hiring mistake at a receptionist level, it may cost 2x annual salary. Think of the new clients your receptionist can lose just by being inefficient or treating them with indifference.
A sales manager mis-hire may cost 4-10x annual salary. Think of the customers they can lose, the customers they will never be able to get a meeting with, and the customers who decide to give a portion of the business to another company because they don’t love their current sales person.
The cost of a CEO mis-hire is actually incalculable. This is the difference between hiring Steve Jobs or Adam Sandler to head up Apple. The right person in that role makes ALL the difference.
Here are the ways you may be going wrong in conducting hiring interviews:
- Hiring on ‘gut:’ you can just feel it. This is the RIGHT person! You have chemistry! There’s no need to dig into their background; it would just be offensive, and it’s unnecessary too. ‘Gut’ hiring uncovers an ‘A’ player about 40% of the time.
- Playing pretend: This is presenting an imaginary scenario, and asking the candidate to tell you how they’d deal with the situation: “What would you say if a customer told you to bug off?”This method tells you how good your potential employee is at spinning. If you’re hiring them to spin things, then this method makes sense. If not, your chances of finding an ‘A’ player using this method is about 35%.
- Being the ‘salesman:’ The person using this method, spends their time selling the person on the company and elaborating on why it’s such a great place to work. There are 2 problems with this method:a. When your lips are moving, the candidates’ are not. You can only learn things about them when they are doing the talking. When you’re doing the talking, you’re learning nothing.
b. This method violates a basic premise of human behavior: “People want what they can’t have, and chase that which eludes them.” The more you sell yourself and the company, the less a true ‘A’ player will want to work for you.
An ‘A’ player wants to be selected for a job that is both desirable and hard to get.
So what should you do? I’m a big believer in 3 simple elements to great hiring. They are:
- Build a job score card: That means defining what you want that person to do within the first 12 months of hire in order to be considered successful. Choose 3-5 measureable key result areas. One of my clients recently developed a 30/60/90 day score card with a key new hire. That is, what’s expected in the first 30 days, the first 60 days, and the first 90 days? Then they talk about the score card every week.That is a great method to keeping a new relationship on track.
- Do an in-depth interview: Depending on the role, that might mean 30 minutes or 2 hours. I like to divide a person’s career into ‘chapters.’ Chapter one might be high school/university, chapter two would be first job, chapter 3, second job and so on.Throughout that interview, I’m looking to find out if that person was better than their peers. My rule of thumb is: ‘The best indicator of future performance is past performance.’ You’re just going to get more performance like what they’ve already demonstrated.
- Check references: When you check references…a. Talk with direct supervisors. Not friends, cousins, co-workers, aunts, uncles or people they played slow pitch with. Direct. Supervisors.
b. Listen for the secret code. Supervisors are extremely reluctant to say anything negative about a past employee. But, they aren’t going to be effusive either. Watch for clues, like:
- I’d re-hire them… if the role was right
- Sure, they did a… decent job
- I’d give them about a 7 out of 10 in that role
I believe feedback that is either over the top enthusiastic, or dead dog unhappy. I’m highly suspicious of the murky middle.
So, use these tips to get better at hiring, and watch your team get stronger and stronger!