Blog Post

Kick Your Cookie-Cutter Hiring Strategy to the Curb

Ira S. Wolfe

President, Success Performance Solutions

Companies are at the crossroads of "flourish" and "flounder" when it comes to filling open jobs—because much to the dismay of many managers, hiring isn't cut and dry. In fact, it may be the defining difference between business success and failure.

As the complexity of work grows and talent shortages increase, talent management vulnerabilities are being laid wide open. Companies' competitors, desperate to find the right people to keep their strategic and growth plans on track, are ready to pounce on any opportunity to poach talent. It's equivalent to an exposed weakness in a company's firewall, right when a hacker wants to launch an attack.

No Time for Cookie-Cutter Hiring Strategies

Hiring managers have typically taken a cookie-cutter approach to finding top talent, relying on resumes, references and a standard set of interview questions. But companies are increasingly realizing that the traditional hiring process is inadequate when it comes to identifying a great candidate from a rotten one, due to personal bias and lack of consistency.

One solution "best-in-class" companies (the top 20 percent of profitable and productive companies) are employing is the "success profile", a benchmark of essential skills, characteristics, competencies and qualities of top-performing current employees. It's the first step to making recruitment and hiring easier and more effective.

But a success profile doesn't simply make things easier on the HR team, it also helps ensure that a new employee begins contributing to the company's bottom line as soon as possible. It's an investment with significant demonstrated ROI—according to a recent report by Aberdeen Group, best-in-class companies are 2.1 times more likely to have a success profile than all other companies.

Measuring Performance Against Predictions

A success profile is only the first step. The report found that companies that correlate the performance defined by the success profile with pre-hire assessments are 24 percent more likely to hire workers who exceed expectations.

While pre-hire assessments may not predict every facet of an employee's tenure with a company, they certainly offer a vast improvement over the vulnerable and error-prone traditional hiring process, which remains highly dependent on the interview, resume and references. All three of these tools are subject to personal bias, inaccuracy, and exaggeration, none of which would be tolerated in other functions of business, such as operations and finance.

The benefits of using pre-employment testing don't stop at improved performance either. Aberdeen found that businesses using pre-hire assessments experience 39 percent lower turnover, and are 17 percent more likely to have employees who rate themselves as highly engaged.

In addition, the assessments can be used post-hire to identify the capabilities and motivations of high potential employees, and accelerate their maturation and development.

Choosing the Right Performance Assessment

Like the hiring process in general, selecting the right pre-assessment test is not cut-and-dry either. There is a gigantic and sometimes confusing world of assessments out there.

Often the best choice comes down to timing—where in the talent lifecycle are you facing the biggest challenges? Different pre-assessment tests can be useful at different stages of talent acquisition, such as screening, the interview or guiding the manager in his final decision.

The Aberdeen Group report revealed several ways best-in-class companies use assessments:

  • The most valuable pre-hire assessment type is "cultural fit", with 53 percent of companies using it to guide or conduct the interview and another 13 percent in the final hiring decision.

  • "Skills and knowledge" testing is most helpful in the beginning of the process; 72 percent of the best companies use this type of testing to screen candidates and select the best for an interview.

  • The popularity of "personality" assessments are close behind with nearly one-third of the best companies using them.

  • "Cognitive ability" testing is used in almost every aspect of the hiring process, highlighting the importance of good critical thinking skills in many of today's jobs.

As detailed above, pre-assessment tests provide insight into an applicant's disposition, preferred working style, ideal workplace conditions and how they might interact with colleagues and customers.

While hiring the right employee will likely never be a walk in the park, success profiles and pre-hire assessments allow hiring managers to screen out high-risk candidates and identify the most qualified ones more efficiently and effectively.

Photo: Shutterstock

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A New Poseidon Adventure: Flipping Succession Planning Upside Down

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A New Poseidon Adventure: Flipping Succession Planning Upside Down

Organizations make significant investments in efforts to hire the right candidates – the people who have the right experience and cultural fit. By carefully managing the performance and potential of these people over time, the organization can grow its leadership pipeline, keep a steady inventory of needed skills and competencies and remain nimble in the face of change (which we have plenty of all around us these day) – all of which can have serious impact on the bottom line. However, much of this pie-in-the-sky stuff relies on being able to locate and cultivate high-potential and high-performing talent across the board. Without an integrated succession management solution, recognizing and developing talent can be an ever-elusive process. The questions we are seeing asked today include: does the traditional top-down approach to succession management still make enough of a difference? Does managing succession for a slim strata of senior executives take full advantage of the kinds of talent data we now have at our fingertips? It doesn’t have to be so. Succession management can be an interactive process between senior leadership, managers and employees at all levels of the organization. And, if we trust them, we can actually let employees become active participants in their own career development. (Shudder.) Career Management (Succession Planning Flipped Upside Down) This "bottom-up" approach is gaining momentum because who better to tell us about employee career path preferences than employees themselves. Organizations actually have talent management and other HR systems in place that allow for collecting and analyzing a whole slew of data around: Career history Career preferences Mobility preferences Professional and special skills Education achieved Competency ratings Performance scores Goal achievement Training and certifications Etc. In short, pretty much everything we’d want to know to make well-informed succession planning and talent pooling decisions. For some, the leap is simply putting some power into the employee’s hands. The talent management system of 2011 is capable of displaying a clear internal career path for employees and then, on the basis of all that data bulleted out above, showing a "Readiness Gap" – what do you need to do to make the step to the next level? And if your talent management environment comes armed with a real Learning Management System, you can take it to the next level with a dynamically generated development plan that gets the employee on the right path to actually closing those gaps. Faster development, faster mobility. Organizations that seriously favor internal mobility don’t just make employees stick on pre-defined career paths – they can search for ANY job in the company and check their Readiness levels. I might be in accounting today, but what I really want to do is move to marketing. Giving employees the chance to explore various career avenues within the organization helps assure that "water finds its level" – that is, that the right people with the right skills and the right levels of motivation and engagement find the right job roles internally. Employee participation is key, but make no mistake – managers play an important role in this interactive process. They must be prepared to provide career coaching, identify development opportunities and recommend employees for job openings. The candid discussions require that employees have open access to information so they can best understand the criteria necessary to move to the next level. A Two-Way Street Employee-driven career management is just one tool. The more traditional top-down approach to succession management remains indispensable. But organizations that value talent mobility and the ability to be able to shift and mobilize talent resources quickly will find that attention to career pathing can be vital. For employees, of course, the impacts are immediate and include boosted levels of engagement, higher retention, increased productivity and more.

The Hidden Costs of Ignoring Your Talent Management Strategy

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The Hidden Costs of Ignoring Your Talent Management Strategy

Building and maintaining a successful company hinges on having the right people to execute projects and drive results. People, we hear time and again, are your company's most valuable asset. But their success — and HR's ability to recruit, engage and retain them — depends on HR pros who are strategic decision-makers, armed with the proper tools to let them excel at their jobs. Modern HR professionals manage much more than payroll and benefits. But their technology tools, in many cases, haven't evolved past basic productivity software like email or Microsoft Word. HR simply can't be strategic with old-school tools that reduce people to statistics and give little insight into what the numbers mean. Emails and spreadsheets were not designed to deliver meaningful insights into people's performance, suggest when employees should be promoted or highlight skills gaps in a company. For that, HR needs a broader, more strategic set of talent management tools, which lets professionals manage every aspect of the workforce, from training and performance reviews to collaboration and succession planning. Yet, research shows that less than 25% of companies use a unified, holistic approach to their talent management. The Real Costs of "Doing Nothing" As a Talent Management Strategy The critical relationship between business strategy and HR strategy too often gets overlooked by senior leadership. While it may seem like the company is saving money by managing recruiting, training, performance and succession via manual and paper-based processes, in reality it’s costing your business more than you know. For example: Without a talent management strategy, a company with 2,000 employees is losing almost $2 million every year in preventable turnover alone. Businesses that don’t invest in learning suffer from decreased employee performance and engagement to such a degree that they can expect to realize less than half the median revenue per employee. That’s a direct impact on the business. In employee performance management, organizations without a focused strategy waste up to 34 days each year managing underperformers and realize lower net income. To learn more about the business impact of talent management and how to start building out your strategy, check out the eBook Why Your Nonexistent Talent Management Strategy is Costing You Money (And How to Fix It) and register for the March 19th webinar, Building the Business Case for Talent Management.

The Return of the Moderate Merit Budget – Wreaking Havoc on Pay for Performance

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The Return of the Moderate Merit Budget – Wreaking Havoc on Pay for Performance

With the economy now on steadier ground, most organizations have returned to administering a merit budget to the pre-recession levels of 3 to 3.5%. In the years immediately following the economic downturn, many merit budgets were eliminated entirely or were reduced significantly and reserved for a select segment of the employee population. Pay for performance has become a necessity for many organizations that are expected to accomplish more with fewer resources. I often get asked: "How can I truly award my top performers with such a limited budget? Should I do so at the expense of my ’Meets Expectations’ performers? What if I need to retain my ’Meets Expectations’ performers and giving them 0% to 2% increase puts me at great risk for turnover? But if I don’t recognize my top performers, don’t I risk losing them...?" These are difficult questions to answer, however you can determine the best solution for your organization by considering the following: Are your employees paid at market pay levels? Is your organization’s performance management process mature? Does your organization have other compensation programs in place to reward top performers (e.g. variable pay)? Market Pay If turnover is a concern, and your organization needs to maintain ’bench strength’ in order to achieve its strategic objectives, your biggest priority should be to ensure that you are paying your employees at market pay levels. Why? Historically, as the labor market strengthens, organizations become vulnerable in terms of losing people. Hiring and onboarding replacement talent is not only costly to the organization, but can also cause dissension among existing employees since new hires may be getting paid more. Be sure to stay abreast of market pay levels and trends, and use the merit budget to correct disparities. Performance Management Process Organizations vary significantly in terms of the maturity of their performance management process. Closely examine your organization’s process and look for ways to improve it. If there is a perception that one management team is an ’easier grader’ than the others, the process is inherently flawed and any pay for performance program will not be viewed as credible and fair by employees. A good place to start is to get a calibration process in place and communicate broad guidelines on expected distribution ratings. Variable Pay Programs Variable pay programs (e.g. bonuses) have become increasingly more popular across all industries and career levels. These programs provide the opportunity for employees to share in the organization’s success while not adding to fixed payroll costs. Some plans have an individual performance component which can be a very effective means to recognize top performers. However, in order for this type of program to be successful, individual goals and targets must be well documented and communicated. Again, this is largely based on the maturity of the organization’s performance management process which takes time to evolve. What are the best steps to avoid wreaking havoc on your pay for performance process? First ensure your pay levels are keeping pace with the market Continue to evolve your performance programs with calibration among managers and a rigorous goal setting process Promote variable pay plans to reward high performers without adding to fixed pay roll costs It’s not always an easy journey but, in the end, it’s best to use a measured approach that is based on business needs and a realistic assessment of your current programs and processes.

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