Recently, I did commit a few hiring mistakes, which got me thinking on how to reduce these enforced errors.
Couple of my mistakes
I re-hired an individual whom I knew had some flaws (retrospectively, I consider this as one of my dumbest mistakes).
Hired someone for the leadership role. I made the decision based on a Zoom call and a couple of reference checks.
Over the years when you have hired a lot of people, a sense of confidence develops that you are good at it, and you tend to override the process & objectivity with intuition/gut.
So can this be fixed? Let me take you through some of my thoughts, learnings & ideas here.
Hiring Junior vs Senior hiring
Cost of hiring a wrong senior person is more expensive than a junior person. We all know this, so are the entry gates much more difficult for the seniors compared to juniors? Ironically, not.
When we interview juniors, we ask them to go through some sort of objective test, aptitude or coding (in the IT industry). The answers to these questions are not subjective, it is not open to the interviewer’s interpretation, hence less error prone.
And then we have a discussion to figure out if the candidate’s communication is fine, attitude seems good etc. I believe 60% of the hiring risk is eliminated with the test, another 20% with the discussion round, so for junior level candidates, the risk of going wrong is around 20%. For intermediate roles, I would attribute 30% hiring risk, because the interviews drift towards subjective format.
For senior roles, there is hardly any objective test (more so for functional and management roles), of course you can have some objective style question in your discussion round, but our minds are not good enough to keep track of all those and sum up accurately at the end, so what we end up with is a feel good score. Here, we are operating at a 50% risk of wrong hire or even higher.
50% hiring risk — what should one do?
Example: If you are hiring a HR head, we usually ask
- How would you measure the effectiveness of the training department?
- What is the process you follow for recruitment?
- What are some of the challenges you face while hiring?
- How much you know about statutory compliance?
- How do you do performance management?
These questions will only tell you how much they know theoretically about the subject, but will not tell you if they can execute well. Also these won’t tell you, if they are apolitical, high on integrity, have great leadership and judgment skills.
Here are some questions which can help you fill some of the gaps
- 3 big decisions you made which went wrong (or right) and why?
- Describe 5 projects you have successfully executed, on-time within budget.
- Convince me that as a leader you take accountability of your work?
- Tell me about a time when you disagreed with something, but had to do it anyway?
- Tell me about the last person you sacked?
- You are 6 months into a project as a project manager, and you figure out there is a technical glitch in the product design, who is responsible, yourself or technical architect?
Pick-up a few of their responses and ask them follow-on questions (as many as possible), get to the details and to figure if they are speaking out of their own experience or if it is superficial. The key is getting into the details.
Apart from these questions, get the Personality Profiler test done, it is not a silver bullet but can help to some degree. Also try interviewing the candidate at least twice, once in formal setup, another informal, coffee shop or a restaurant. You should also have one of your colleagues do the interview.
Do independent background checks, don’t get the reference contacts from the candidate, instead find out his/her ex-boss details, connect with them to understand more about the candidate. This type of reference works much better.
Should one use gut/intuition for hiring?
Well, if you have selected someone objectively, but you have a nagging feeling that something is not right, then don’t hire. If you have objectively rejected someone, then gut has no role to play anyways.
What is the cost of a bad hire?
Our minds usually think in terms of what we pay to the candidate, but there is a lot more to it. Here is an incomplete list
- Agency fee / Internal cost of hire
- Hiring manager time
- Training & on-ramping time
- Internal communication/negative impact on existing team
- Management overhead time
- Customer relationship impact when you get a wrong person on-board
- Opportunity cost (had you got the right candidate the very first time)
- Bad hires can be expensive from a branding & reputation standpoint
- Litigation fees if any — This is usually very high in developed countries
On the lower end, the cost of bad hire is usually at 2 to 3x of the CTC paid, but if you add up opportunity cost, this could be much higher. Example a talented sales hire can get you $250k in 6 months, that is a big opportunity cost to pay against a bad hire, who gets you zero dollars.
Similarly a good tech lead can enhance quality, CSAT (customer satisfaction score), revenue, but getting a wrong candidate, can lead to revenue leakage and poor CSAT .
I don’t think we will ever reach a point where hiring mistakes can be fully eliminated. But if the interview is done objectively (without getting carried away by past experience or emotions or candidate’s pleasing personality), with independent background checks on integrity, leadership & execution skills (especially for senior roles) mistakes can be reduced significantly.