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Are you damaging your organisation !

By Sim Bock San & Nasser Ismail

 

“……the right people are your greatest assets.”      Jim Collins

 

Unstructured interviews can result in 80% of your hiring decision to be wrong.”

Findings of the British Psychological Society

 

The above quotations may sound alarming but managers who are directly responsible for the hiring and promotion of staff should take heed. In today’s competitive business environment organisations cannot afford to make mistakes when it comes to selecting and managing talent.
Although many business leaders believe that it is the talent within their organisations that creates a competitive advantage and can be a real differential, many are still struggling with the implementation. A recent Towers Watson report indicated that the average staff turnover rate in Malaysia had risen 15% in 2011 compared to 2010 with top management level turnover as high as 25% [1] .
In America, studies have shown that the average public listed company loses half its employees every four years.[2]
In his bestselling book   Good to Great, Jim Collins highlights that a key element that differentiates good companies from great companies is that they have the right kind of people on board. For the purpose of this discussion we will define the “right people”, as those who have the knowledge, skills and behaviour that will allow them to excel in their jobs. This is where the challenge lies, how do you know if the people you hire or promote are the right people?
Most organisations rely heavily on traditional (unstructured) interviews as the primary tool for Recruitment [3] despite the fact that the success rate of unstructured interviews in selecting candidates was inconsistent and they also did not help to predict which candidates would be high performers.
Part of the problem is that many of the people conducting the interviews do not have any formal training on how to conduct structured interviews that can reliably identify the skills, knowledge and behaviours a particular job requires. Even more alarming is the research that has shown among untrained interviewers, 93% are confident in their interviewing ability [4] !
Unstructured interviews also give space for biases to creep in. This could be in the form of  appearance bias that favours how applicants look or what they wear. There is also evidence that shows interviewers are more influenced by negative information   twice as much as by positive information. In fact, unstructured interviewing has sometimes been labelled as a “search for negative evidence” [5]

 

Cost implications of hiring or promoting the wrong people and failing to retain talent

Illustration by Geralt
Illustration by Geralt
The cost of a bad hire or promotion can be very high for an organisation. There are many costs both tangible and intangible which result from poor selection and promotion decisions. Firstly is the cost of the compensation of the employee who is terminated after failing to meet the expectations of the organisation. This is despite the early promise shown during the recruitment interview.
Next is the cost of advertising for the job. In a large organisation which has a large number of staff and a high level of turnover, this can be a significant cost.
For senior positions which utilise the services of head hunters, the costs may be significantly higher due to the fees charged by such firms which can reach into the 6 figure range. There are also costs related to retraining existing staff or new staff to replace the employee who was dismissed or who chose to leave. Again if the organisation is large and the turnover is high, this can be a major cost item.
When people are a poor fit for a job, they will take significantly more time to adapt and assimilate into
the new position and organisation. It will take a longer time for them to reach the stage where they start contributing positively to the organisation. On the other hand, the right talent will learn much faster, the processes, systems, cultures and structures within the organisation. A good hire with the right set of competencies will very quickly hit the ground running and create more value than what they are paid.
For sales and marketing staff, often the accounts follow the employee, as people buy from people who they are comfortable with. Relationships that have been developed over years will need to be rebuilt and this can be costly. The accumulated knowledge and skill that resides with the talent is also not transferable and leaves with the talent. Each talent that departs diminishes the organisation talent pool, and this negatively impacts business sustainability.
Investments made in the training and development of the talent who leaves is a sunk cost and cannot be recovered.
High levels of turnover will also negatively impact staff morale as they will wonder why people keep leaving and start looking for greener pastures. This creates an atmosphere of uncertainty and anxiety which can result in lower productivity. Organisations that have a high rate of employee turnover also tend to have a low public image. These organisations are viewed negatively by prospective talent who will be wondering if there is something fundamentally wrong with the organisation. This creates a vicious cycle that makes it even more difficult to attract talent to join the organisation.

If you don’t know what to look for you won’t find it.

Imagine yourself at the fruit section of your favourite hypermarket or supermarket and you are looking for some oranges. What would be the indicators of a good orange that  you would be looking for? Among them may be good colour, firmness and no visible blemishes on the oranges. Now that you have identified the qualities you are looking for, do you screen in or do you screen out? There is a subtle difference, when you know what you want you will quickly choose the right fruit. However, when you do not know what to look for you will tend to screen out what you think is the bad fruit. Similarly when you are interviewing candidates, knowing what to look for will help you identify the right people for the right job.
The key is to clearly identifying the requirements that will ensure success for the job we are trying to fill.
These requirements are knowledge, skills and behaviour  that will allow them to excel in their jobs, which are also known as competencies.  The ability to identify competencies is critical to the selection of talent for two reasons. Firstly, these competencies determine whether the candidate will be able to perform the job as required and be successful. Secondly, these competencies will act as targets (what you will be looking for) during the job interview. Only if we are equipped with this information, will we be able to effectively screen in the right candidates. The figure below illustrates some suggested competencies for some common job functions.

Examples of Competencies

 

Reference:

[1] Towers Watson 2012 Financial Service Total Rewards

[2] Bernthal,P.R. &Wellins, R.S. (2001) Leadership forecast 2001: A benchmarking study (p.11)

[3] Judge, Higgins & Cable (2000) The Employment Interview: A Review Of Recent Research and Recommendations For Future Research – Human Resource Management Review

[4] Howard. Erker & Bruce (2007), Slugging Through The War for Talent

[5] Rowe, P. M. (1989). Unfavourable information and interview decisions.

 

About the Authors:

Sim Bock San

Sim has more than 20 years’ experience in Leadership and Talent Assessment, Needs Analysis, Training and Development using Assessment Centre (AC) methodology, Simulations, Competency Based Interviewing tools and approaches.  He has extensive experience and exposure in the field of human performance, developing and implementing human resource development systems for local and global MNCs including some of the leading Fortune 500 companies.

Sim is a DDI-certified Master Trainer for Targeted Selection (Selection and Assessment), Skills for an Empowered Workforce (Leadership Development and Workforce Effectiveness Training) and Maximizing Performance (Performance Management). He is the co-author of 3 publications and articles on topics such as Recruitment & Selection, Performance Management, Leadership Bench-marking and has presented similar topics at several conferences and seminars, locally and regionally. Sim holds a B.Commerce (with a double major in Finance & Economics) from the University of Toronto, Canada.

If you have any questions, please email Sim at sim@simconsulting.biz

 

Nasser Bin Ismail

The former Senior Vice President of Strategic Communications at the Iskandar Regional Development Authority (IRDA). He was one of the pioneer member responsible for setting up the IRDA Strategic Communications Division.

He has 15 years of extensive experience in the communication profession.  As a firm believer in “every manager is a HR manager”,  he is a trained CBI interviewer and Performance Management System (PMS) practitioner with experience in its implementation in both the private and public sector. As a member of the International Association of Business Communicators (IABC), he sits on the board of the Malaysian chapter of the IABC

Nasser Ismail is an economics graduate of the London School of Economics and also holds a Master’s Degree in International Business.

If you have any questions, please email Nasser at nasser@nasserismail.com

 

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© 2015, Monde Journal.

 

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