The Candidate Test Drive: How Small Companies Are Reducing Hiring Risks

Since more than three in four companies are struggling to retain talent according to a recent study by Chartered Institute of Personnel Development, organizations are rejiggering their hiring strategies. Instead of hiring solely based on resumes and three hours of interviews, companies are hiring candidates as contract employees for one week or one month to let them prove their worth, avoid bad hires and make sure that the company and candidate are a good fit.

"It’s that whole idea of ’show, don’t tell,’" Mona Bijoor, founder and chief executive of wholesale marketplace Joor, told The New York Times. "We’re giving job candidates the opportunity to show us what they’ve got."

For smaller companies, especially startups, a bad hire can be costly. A contract-to-hire position eliminates some of the risk around hiring a full-time employee. "If you are 1,000 employees, a bad hire isn’t a big deal," Jon Bischke, founder and chief executive of recruiting software company Entelo, told the Times. "But if you are a 10-person team, it can kill the company."

These candidate auditions are the new face of hiring and recruiting for small companies. Young hires may not know what to expect from a startup job such as the long hours and fast-paced environment with extreme highs and lows. Therefore, the candidate is unhappy and wants out of the position, or the company fires the employee early in his career. Bijoor found that before adopting the new trial hiring process, one in three hires worked out.

David Rusenko, chief executive and co-founder of Weebly, said that temporary work has transformed his company's hiring process because employees can see if the company has the right culture, and the company can evaluate the work completed by the candidate. "We're at about 150 employees, and just about every single one of them has gone through a trial week. It's turned into a cornerstone of our culture."

Since Weebly is testing the ability of every candidate is a relatively short time period, they don't make the process easy. Candidates are tasked with completing a three-week project in just one week with limited guidance. Weebly typically hires three out of four candidates as full-time employees, and those who aren't hired likely would have been fired. The trial process benefits the employee because no one wants to be fired, and the company because no company wants to waste time on an employee that isn't delivering and then have to fire him.

Trial-to-hire doesn't work for every position, though. Candidates for senior executive positions at Entelo and Weebly bypass this process since their work history is typically more extensive. A trial period can't be applied to sales positions either since those employees need a couple of months to build out a client base.

Increasingly, though, small companies are incorporating temp-to-perm into their hiring process because it reduces the risk of investing in a candidate for a long time. When Joor hired seven employees for a 30-day contract period with 2 days of on-the-job training, only three proved their value and have stayed on as full-time employees.

What’s your take on contract workers or trial-to-hire programs? Is this related to our slow creep out of the recession of the last few years?

H/t: The New York Times

Photo: Can Stock