Bringing in the right human resources can make or break the success of an organization. Making good hiring choices increases productivity, and improves a company’s bottom line. Making poor hiring choices can lead to costly mistakes, high turnover, and a damaged professional reputation. With such high stakes, is it surprising that so many organizations continue to make hiring decisions based on informal interviews and “gut feelings.” Using objective data points in the hiring process has been proven to help companies make better hiring decisions (Schmidt and Hunter, 1998). Here we discuss six ways you can incorporate data to improve your hiring process.
1. Measure Your Recruitment Effectiveness
Do you know your applicant-to-hire ratio? How about the diversity of your applicant sample? Monitoring the selection process from the time an application first arrives, to offer acceptance, will help you understand how your recruitment process is functioning. Consider the following diagram:
*From Cascio, W. F. & Aguinis, H. (2011). Applied Psychology in Human Resource Management. Upper Saddle River, NJ: Prentice Hall.
While this diagram focuses on the number of candidates necessary to get from a lead to a hire, this model can be used to measure applicant diversity, recruitment source, and many other recruitment statistics. Understanding your recruitment yield pyramid will help you identify gaps and develop strategies to recruit the right number and right kind of candidate.
2. Choose The Right Assessments
Incorporating a testing phase into your hiring process provides objective data useful for comparing candidates based on their qualification and fit for a job. However, not all tests are created equal, and they will not all be equally effective in all situations. Use data about the organization and the job to choose the right test. A job analysis, the scientific process of defining a job, will allow you to identify the duties, requirements, and critical competencies for a specific job or group of jobs. This information can be used to choose assessments that best match job requirements and will be predictive of later job performance.
3. Measure The Whole Person
It’s tempting to think that if you hire the smartest person or the one with the highest GPA, that person will turn out to be the best employee. However, there are many aspects of a person that create success. Just because someone excels in statistics does not mean that person will be able to present work to clients, and just because someone can negotiate deals does not mean that person excels in identifying problems and building solutions. Measuring a plethora of important qualities will help you understand candidates from a more complete perspective, and allow you to differentiate between many potentially strong candidates to find the best fit for the job.
4. Monitor The Effectiveness Of Your Selection Program
After you implement a hiring process, don’t “set it and forget it.” Track and adjust your process over time based on data. Gather data on hired employees including performance, sales, and turnover, and other job-relevant metrics. Combine this outcome data with predictor data like test and interview scores to adjust the scoring on your hiring process over time. This will allow you to maximize the number of qualified hires and minimize the number of unqualified hires.
5. Measure ROI
The cost of a bad hire is high. Lost productivity, mistakes, and the cost to recruit, onboard, and train a new hire can far surpass an employee’s annual salary. The Society for Human Resource Management created this worksheet to help organizations quantify exactly how quickly these costs add up. Designing an effective hiring process may have an up-front investment, but that investment is small compared to the return of a strong hiring program. By comparing hiring data to critical metrics for success, you can demonstrate the financial impact of a good hire. Consider the following example:
By implementing a test designed to predict sales performance (choosing the test based on relevant data) and comparing test scores to sales over the course of one year, you can objectively measure the financial impact of the testing process to the company’s bottom line. The positive effects of a data-backed hiring process can far surpass the set-up investment.
6. Create Development Programs Post-Hire
For many selection measures, the results can be used to inform future training and development. This is particularly true for the use of work-focused personality tests, which give insight into traits like ambition, persistence, social-boldness, flexibility, teamwork. This information can give managers a head start to understand the strengths and weaknesses of new employees, and incorporate that information into development plans from the start.
Together, these strategies create a hiring process incorporating data at all points from application through hire. Using data to support and inform hiring will help you identify gaps, hone in on ways to hire and develop the right people, and give you the ability to show the impact of a strong process to the company’s bottom line. These six strategies provide a start to using data during the hiring process, and can open the possibility of using data throughout the employee lifecycle.
About the Author: Erin Wood works as a Talent Measurement Consultant at Performance Assessment Network (pan), where she focuses on developing, implementing, and validating programs for employment purposes. She holds a master’s degree in I-O Psychology from Indiana University – Purdue University Indianapolis.
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