The High Stakes of Hiring
Dr. Duff Watkins
Cornerstone International Group, Consultants to Boards and Management
Here’s a riddle: what costs $60,000 per attempt, has less than a 20% chance of success, and is done by every Australian company whether they want to or not?
The answer: recruitment. If you did not know the answer, you are paying for your ignorance!
Statistics1 in the US indicate that the average cost of hiring a worker is $60,000. For key employees the cost rises to 2-3 times their remuneration package (due to hidden costs such as loss of productivity, overtime for remaining staff, cost of replacement, etc.). Moreover, surveys reveal that 35% of all job change is due to mismatches between the person and their job and that 8 out of 10 of all employees would consider changing jobs if the right opportunity presented itself. Obviously, when hiring, the stakes are high.
Cost-effective recruitment is simply matching a job to a person. A job always occurs in a context, never in a vacuum. A job always requires a person to perform certain tasks but it also places unique demands upon people. Demands differ from tasks. In general, tasks are observable, tangible and usually have a start and a finish. Demands are intangible, amorphous and usually ongoing processes. Giving speeches is an ambassador's task, being diplomatic is a demand placed upon an ambassador.
Take two Financial Controllers in different international computer companies. For both Financial Controllers the tasks are identical: report to overseas parent companies, act as company secretary, and oversee corporate accounting. But the demands placed upon those two individuals differ greatly, especially if those two companies are IBM and Apple! When faced with a job's demands, an employee can only respond in terms of personality (Fig. 1). Personality can be difficult to assess but it changes little over time and is the most decisive factor in work performance. Research confirms that psychological assessments are almost four times more accurate than interviews when it comes to predicting a person's success at work.2 Demands, not tasks, are what stretch a person on the job. Any ambassador can give a speech, but how many can defend US policy to a group of angry Australian wheat farmers?
Success at work results from the way a person interacts with their job (Fig. 2). That is, an employee's work performance; be it good or bad, money making or money losing; is produced by the interaction of the job demands and the employee’s personality. This is the key to cost-effective hiring.
To hire cost-effectively, first describe the vacant position in terms of tasks. Ask "what activities are to be done?" When an employee goes to work in the morning, gets out of the lift, and goes into the office, what do they do? How do they fill their day?
Second, ask "what tasks are to be done in the job in 3 months, 6 months and 1 year's time." Employers frequently discover that there is a substantial difference between what is wanted now and what is required later.
Third, differentiate between the formal and informal demands of the job. Formal demands are essential to do the job. They are hard data, easily ticked off a checklist. Examples of formal demands are sales experience, specific marketing training, industrial relations expertise, and so on. Informal demands, however, are soft data and include such things as team orientation, ability to manage others well, commercial acumen, etc.
Fourth, do not interview in isolation. Far too many interviewers rely on their intuition and gut feel alone in assessing the abilities of job seekers. While intuition and gut feel are important criteria in making hiring decisions, they are statistically proven to be the most unreliable basis for recruitment when used apart from reference checks, psychological testing, and management assessments.3
Finally, the key to cost-effective recruitment is predicting the candidate's behaviour in the actual job. To focus elsewhere is to lose in the high stakes of hiring.