Hiring: Can You Do Better Than Flipping a Coin?

Most top executives admit that they have repeatedly hired people who are “B” or “C” players, who have had an adverse impact on the company, who needed to be replaced. Most will admit they have someone on their staff right now that fits this description. Many studies have shown that without a formalized, professional approach to evaluating candidates, employers can expect 50-60% hiring accuracy, no better than flipping a coin.

I would define hiring accuracy as bringing a person on board who performs well, has a positive impact on the organization, fits with the team, and stays with the company a reasonable period of time. Based on what I hear from clients, hiring accuracy has not improved in the last 25 years. Almost every other aspect of corporate management has improved. Why not hiring? CEOs are smart people. They know how to use business case analysis, and seek expertise when they implement a new IT system. They will invest millions in top grade automated machinery, and establish finely-honed metrics for key performance indicators. BUT, they won’t invest in acquiring precision hiring methodology, choosing instead to judge job candidates by first impression and personality, and using an intuitive “gut feeling” process to make hiring decisions. This practice arguably suspends logic and sound business processes!

When an employer utilizes a performance-based approach, which defines specific, measurable objectives, and combines that with looking at tangible evidence of accomplishment and initiative, suspending intuitive judgment in favor of objective analysis, accuracy can improve to 80-90%. What CEO would not change a process immediately in order to get that kind of improvement? As our economy recovers and the labor supply shrinks, which will be steadily happening over the next 20 years as boomers retire, hiring is one process that needs to be better than a coin flip.

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Comment by Gina Cleo Bloome on November 10, 2010 at 11:40am: At the end of the day, there is no magic bullet which is why, as you state, accuracy has not improved in 25 years despite Behavioral Interviewing and the onslaught of psycho-behavioral pre-hire assessments which have been touted as the solution to identifying "quality " candidates.

The reason is that we are dealing with people not engineering a product. And people react to a variety of input when they work for a company. I've been considered a superstar and one company and a poor performer at another. And I was the same person bringing the same tools, abilities and attitude to both jobs. So what explains the wide discrepancy in the perception of my performance? The specific experiences, culture, people and their understanding of my role and their expectations with which I interacted with once I was on-board. Which is nothing that we can screen for in an interview.

No matter how much the assessment companies tell us they can.

Comment by Jessica Nicholas on November 11, 2010 at 12:37am: I definitely agree that hiring accuracy needs to improve. But, I'm not at all surprised that CEO's fail to invest in systems or services which could improve their decision-making processes when it comes to their people. Where do HR systems usually fall on the corporate to-buy list - do they even make the list?

We created a simple weighting table tool which allows hiring managers to assign each candidate a score for necessary experience or characteristics. The categories are weighted to provide accurate importance of each criteria to the overall search. Candidate's weighted scores for all categories are combined and then candidates are ranked by their total score. This allows a sightly more objective view of the candidate pool, but still requires hiring managers and executives to identify the real needs for each new hire in their organization.

Personally, I don't think hiring accuracy will improve until companies quit hiring based on a job description and start hiring based on future need. Who can do what I need today, but in a way that will get us where I want to be tomorrow? Also, hiring managers need to be honest about their deficiencies and start hiring people who they hope could one day do their job better than they can today. I know, it's crazy. But maybe that's why nothing has changed in the last 25 years. Let's try something crazy!

Comment by Mark Bregman on November 11, 2010 at 3:23pm: Why someone succeeds in one situation or fails in another is all about context. What did each of the companies specifically need to get done, and did the candidate have relevant experience to get those objectives completed. One really good person can't be good in every situation. Jessica is certainly right as well about "B" Players needing to hire people stronger than themselves!