Imagine interviewing someone who appears to be the perfect candidate for your executive position. The individual is personable, intelligent, articulate, and boasts a list of credentials as long as your arm. You’re excited; your gut tells you to proceed with the hire. You should move quickly and make an offer, right?
Not so fast. An entrepreneurial company in growth mode should place even more importance on selecting the right individual because an accelerated growth curve opens up numerous opportunities for hiring errors. Today’s decision may appear to be the right one, but down the road it could prove short-sighted and hasty if a chosen candidate ends up wreaking havoc on the company.
In my decades running TriNet, a company providing HR services to technology, financial and professional service firms nationwide, I’ve seen my customer CEOs make or break their companies on the basis selecting their executive teams. Unfortunately, all too often our team ends up getting brought in to help unwind hiring decisions that CEOs made with the best of intentions – but ultimately became terribly expensive and time consuming. We find ourselves not only assisting in the proper termination of a poorly chosen executive hire but having to recycle through the entire recruitment and selection process a second time.
My feeling is that CEOs too often underestimate the amount of time and resources needed to arrive at an optimum hiring outcome. Entrepreneurs in particular tend to blow right by basic tasks such as defining a job specification or establishing specific steps in the hiring process. Without a process, the company ends up selecting people who may or may not be the correct for the role or company.
At TriNet, we recommend a three-step plan to reduce risk and increase your chances of hiring success in building a high performance executive team:
- Define the hiring specification
- Use a consistent process assessment and tools
- Learn from every hiring decision
Let’s explore each step.
Define the Hiring Specification
In defining the job spec, go into detail about both job duties and requirements. Most of the companies we encounter don’t bother to detail the hiring spec beyond a paragraph or two used for posting a job on Monster, and even that paragraph is typically written by an admin or HR generalist without much intervention by the hiring executive. It’s important for the appropriate executive to detail how successful performance will be measured, outline critical competencies needed, and list other relevant attributes.
In addition, it’s important to consider how your company’s future growth affects the competencies you will need from someone in that role. For example, if you’re hiring a senior finance person and your company is a three million dollar operation today while expecting to be a fifteen million dollar company in a few years, what kind of demands will your finance department face? What kind of role should your new hire ideally grow into? It always makes more sense to select someone who can face the challenges of the years ahead rather than churn out and replace individuals who can’t keep up with the demands of an ever-changing environment.
I’ve also been struck by the tendency for hiring managers to overlook the importance of defining the company’s culture and incorporating a culture screen into the job spec and assessment process. One way to look at defining your company’s culture is to think through what type of behaviors will be rewarded or penalized regarding how your company operates. What is the balance you want between getting individual results and demonstrating teamwork? How is integrity valued when conflicts emerge with company objectives or revenues? Is challenging management with requests for changes encouraged or discouraged? If your job spec and assessment process incorporates elements of your company values, you dramatically increase the odds of finding people who will be a long-term fit.
In our company, for example, one of our core values is being service oriented – including operating as part of a team. We like to hire individuals who show that they can collaborate across department lines to find new revenue opportunities. This is in contrast to other companies who might have compensation and reward systems that recognize only accomplishments within an employee’s own revenue unit. We reward individuals who routinely partner with other departments to help achieve the company’s overall goals – a practice which fits our ethic of being a service-based organization with a strong team spirit.
Our customer, The Bohan Group, operates in a similar way in terms of hiring on cultural fit. CFO Olivier Gindraux told me, “We do a lot of hiring based on the soft issues – how individuals view their work/life balance, for example, which all of us on the team prize. We also look at working styles, the level of trust they engender, and how they will be able to react to a fast-moving, relatively non-rigid working environment. We hire team members who share our values.”
Put the job spec in writing, and review it carefully before any recruitment begins. Why is it that retained search firms get one-third of a person’s first year compensation? Among other things, the search firm takes the time to walk the hiring manager through defining a detailed job spec, committing that spec to writing, and sticking to consistent assessment mechanisms. If you want to save yourself big bucks, define the job spec yourself and let it set the stage for the next step in the hiring process.
Use a Consistent Hiring Process and Assessment Tools
Over the years, we’ve seen the typical hiring process be limited to an unstructured interview. It still amazes me that so few entrepreneurs and managers take the time to think their interview process through in advance. Many hiring managers simply sit down with the candidate and have a chat or focus solely on technical qualifications. This is an understandable mistake and is a comfort zone for most hiring managers. But it’s not the lack of technical qualifications that causes most hires to be faulty, and relying on them constitutes a serious hiring trap.
The first step to avoiding such a trap is to have a basic script, and apply it to each interview. The script needs to evolve from the key elements of the job spec and incorporate both technical qualifications and inquiries related to company values. A script ensures that each candidate is assessed on key issues and enables the hiring executive to rate the candidate against the criteria developed in the job spec.
To increase the odds of hiring success, don’t rely exclusively on one or two interviews, but instead use multiple assessment mechanisms for each candidate. Collecting input from multiple sources will always improve quality of the decision outcome. Being overly reliant on one or two managers conducting unstructured interviews as the basis for hiring is probably the largest contributor to failed hires.
So what additional assessments can a hiring manager bring into the process? The answer depends on what’s in the job spec. Many forms of assessment are available and must be tailored to fit the needs of both your company and its open position. Among those we see used on a routine basis include:
- Pre-interviewing candidates by phone prior to an in-person discussion (don’t forget the pre-written script).
- Online screening assessment for basic qualifications. Multiple choice questions can be easily scored to help narrow down the usual flood of initial candidates.
- Short essay questions. Whether the candidate answers via an external Web site or simply by e-mail, narrative responses to behavioral questions can be effective for gathering information relevant to both competencies and cultural fit.
- Online testing that may be job specific (e.g., programming or sales) and/or personality profile screenings. In either case, tests should have results calibrated against successful job performers in the company before the test is incorporated into the hiring decision process.
- Simulated job exercises, such as inviting candidates to perform a representative task that can be consistently administered and scored across all candidates.
- Written application forms. Even if resumes are used at the front end of the process, TriNet insists on a compliant application form that includes specific dates of employment, listing of any felony convictions, and reference check release authorization.
- Documented completion of reference checks by the hiring manager – again using a consistent screen.
- Background checks. Horror stories abound about phony degrees, unreported criminal convictions, lawsuits, credit issues, or other facts that should have been detected in advance of the formal job offer. If you lack the resources to pre-screen yourself, you can outsource the function for a nominal price.
Learn from Every Hiring Decision
I’m a fanatic about the need to learn from every hire, and it has helped TriNet improve our own hiring process. Any time we have someone who failed to live up to our expectations leave the company, I drill down to my management team to see what we learned. Not surprisingly, we learn more from our mistakes than our successes.
For example, a manager we had high hopes for left after eighteen months. While his work was more than satisfactory and he seemed to be a good cultural fit, we ultimately were not able to satisfy his expectations for growth opportunities. We replayed the interview discussions and reviewed how we set our expectations in accordance with the candidate’s interests – with an emphasis on lessons learned for next time.
You may have begun to recognize that the solutions to most hiring problems are actually simple ones. It’s just that most companies don’t bother to employ the tools that can help avoid risk and ease the hiring process. They fail to define and write down the hiring specs, ignore the requirements of their company’s specific culture, and avoid using multiple mechanisms of assessment.
This is especially true for entrepreneurs, who tend to trust in their own ability to pick the right talent by instinct. But instinct is no substitute for the steps like defining job specs, employing assessment tools, and learning from past mistakes. These methods require an investment of time and resources, but they also yield benefits for you and your company that won’t simply be felt in the short term – but for the long haul.
© 2006 Ewing Marion Kauffman Foundation. All rights reserved.
Martin Babinec Founder, President and CEO TriNet