Hiring people that have staying power is not just a major focus for most CEOs; it’s also their biggest pain point.
According to the annual Challenge Survey by The Conference Board, attracting & retaining talent has become the number one concern of CEOs. In this new war for talent, it’s the vital skill to master if you intend to build a successful company that’s durable over time. If you settle for anything less than top-performers, you’ll need to micromanage on the backend — and that’s the true time suck.
It’s no wonder CEOs stress about hiring. Sadly, 50% of new hires fail within 18 months. Can you imagine trusting any other part of your business to a coin toss? But I’ve found – with some practical changes in the recruiting process – that most executives can improve their batting average to 90% or more. Over 25 years of recruiting 3,000 people, I’ve seen firsthand the impact it can make on any business in any industry.
“The vast majority of business problems are actually people problems, resulting from recruiting mistakes.”
But first, you must make a commitment to never again settling for B-Players, to no longer relying on your gut, and to focusing on the things that are actually predictive of candidate success. (They might surprise you.)
Here are the five painful lessons I’ve learned while recruiting 3,000 people: the same things I now teach my MBA students at Kellogg School of Management’s first-ever course on recruiting.
90% of Business Problems are Recruiting Problems in Disguise. Struggling to launch new products and services on time? Missing your numbers quarter after quarter? The vast majority of business problems are actually people problems, resulting from recruiting mistakes. Stop searching for a better strategy; start searching for better talent.
Your company’s successes or failures are ultimately a function of the people behind the strategy.
Above All Else, Focus on DNA. A common misconception: a Rockstar at one company will be a Rockstar at every company. It just isn’t so. Another set of recruiting myths we like to bust? Rockstars don’t necessarily need industry experience to excel, nor do they need to come from a certain Ivy League school or achieve a 4.0 GPA.
Here’s the thing: the more requirements you add to a job description, the more people you’ll alienate from applying. This can mean the difference between finding the best candidate for the job and settling for a B-Player.
The single most important factor to keep in perspective when recruiting is whether or not a candidate will mesh with your company’s unique DNA. Your DNA involves 3-5 traits that describe and guide your company when making any decision. You may be tempted to hire a Rockstar that checks all the experience boxes but is a mismatch in your company; it’s vital to fight this urge. DNA mismatches will bring you down in the long term.
Invest in an Employee Referral Program. New Rockstar hires are closer to you than you may think. An employee referral program is the key to constantly filling your pipeline with promising candidates. Companies that set it up right can count on this as the source of 50% of new hires moving forward (for most companies, it’s less than 25%).
Employee referrals are essentially the Holy Grail of recruiting. They deliver the highest quality of candidates, the shortest duration of search time, and the lowest cost-per-hire. The reason is simple: Rockstars attract Rockstars. The key to success with employee referral programs is consistent promotion.
Furthermore, tapping into your existing network builds goodwill while increasing morale. Be sure to incentivize employee referrals, but know that the specific amount isn’t important. When Google increased its referral rewards from $2,000 to $4,000 per successfully hired candidate, it found no significant impact on referral quantity or quality.
Be a “Boring” Interviewer. I’m not sure how many times I’ve had to explain to the hiring managers I work with that interviews are not entertainment. After all, this is how most treat the process of interviewing, haphazardly asking questions as they come up, with no predetermined rhyme or reason to them.
My process is definitely boring: asking a predetermined set of questions in the same order, of each role, to each candidate. Entertainment aside (or lack, thereof), this allows me to compare each interviewee apples-to-apples in a much clearer fashion.
While interviewing, I also challenge the hiring managers I work with to address their own confirmation biases. Treat your gut as being wrong, because it often is. Instead of trying to find data to confirm your first impressions — do the exact opposite. Hunt for opposing evidence and candidates will consistently surprise you.
Commission a Test Drive. How do you know if a candidate is who they’ve claimed to be during the application and interview phase? The best way to predict a candidate’s success within your company is to invite them for a Test Drive — also known as a job audition.
Nine out of ten hiring managers skip this component, which has been found to be the single-most predictive element throughout the entire recruiting process. Regardless, it can be time consuming, so it’s best saved for your final two candidates.
A Test Drive lasts a few hours to a full day, during which you put the candidate through situations they’d regularly face if hired, so that you can understand how they problem solve, treat fellow employees, and even customers.
Sometimes, the “tried and true” way of doing things is really just an excuse that gets in the way of improving processes to find success. Stop sabotaging yourself by clinging to outdated traditions. Rockstar candidates are rare, so adapt your practices accordingly.