Want to be a hero? Achieving and managing 'quality of hire'

A "basic"  model of hiring for quality of hire management?  Yes, why not just jump right in with sarcasm.  If it were easy, to have a quality of hire program that really worked, wouldn't everyone have it?  When I use "basic," I actually mean a model which is both meaningful and measurable.  It is more doable than you may think, but does require opening up some paradigms, some possible realignment of function, but the end result is well worth it....could be a hero in the making.

Honest question:  CEO, hiring manager, HR leader, talent acquisition professional… who is it that really has the most vested interest in a hire being an A-player?  What is it that drives each role?  What are the real metrics that matter most in the end?  Cost per hire?  Time to fill?  Vacancy/turnover management?  How incredibly deceptive and organizationally dilutive those can be.  The least common denominator which should have the biggest spotlight: quality of hire.  Beyond the use of metrics, the field of analytics is quickly finding its rise.  Why?  Because metrics can be indicators, but aren’t qualifiers.  Yes, information/data helps make better informed decisions, but how meaningful the information is should matter more than the amount of information generated.  Measuring the quality of a hire is retroactive.  A lot of effort and resources can be put into making more predictively good hires.  While there are initiatives which can show improvement, understanding and utilizing analytics with behavioral science effectively can be the catalyst that helps transition from good to better to best.   They can help give us hindsight as our foresight today that we all wish we had.  (Ok, I’m really not trying to make your brain a pretzel…but it does make you stop and think…..did that make sense?  It’s that kind of “stop and think” which is a prerequisite.  Think of it like stretching the hamstring of your brain before we go run a 5K. I don’t want any neuron’s blowing out on my watch.)

Aside:  As you soak this in, don’t make the mistake of confusing hiring process efficiency with quality of hire; apples vs. oranges.

The quality of each hire is going to have different impact based on role and level within the organization.  You have to start somewhere. Find the greatest impact points; which roles and what level of the organization.  Research shows the more complex the role and/or the more personality traits are correlated to success in a role, the greater the variability of performance between individuals.  Computer programmers and sales people are two good working examples of these.  If looking at organizational level, sphere of influence, vs. functional role, leadership becomes your most important starting point.  The #1 correlation of turnover is the relationship one has with their boss.  Organizational culture is a top-down thing.  Having the right leaders with mature competencies is the greatest way to recruit and retain top talent.  Mediocre breeds more mediocrity.  A-players don’t go to work for B or C players.  If they do, they’ll discover and leave.  So don’t go hiring the best quality people just to see them walk away.

If you’re familiar with “Topgrading” it starts where?  Zig Ziglar is known for what phrase?  “See you at the ______?”  (“Hotdog stand for a chili-cheese coney” is NOT the right answer btw.)  If I left you with just this,  there’s a nugget of value, not just a migraine in the making.  Stick with me and we’ll make “quality of hire” or value hiring more tangible to ascertain sooner vs. later.

What constitutes a quality hire?  Tenure, production, likability?  I’m going to go naysayer here and debunk all of those, or at least qualify them more accurately.

Tenure:  Turnover, as a general measurement of effective human capital management….sucks.  (Ok, I could fluff it up, but you wouldn’t get the impact.)  You can have low turnover and be keeping all the ineffective people.  You may never be recruiting and hiring the most effective people.  Initially, you may actually want higher turnover.  If you are keeping the wrong people or losing the wrong people…you have a problem, but it doesn’t show up in turnover stats.  Ideally, you hire the right people in the right roles who are able to be most effective, culturally support them, and they stay with the organization.

Production:  Ah…..you think you have me stumped here, don’t you?  Individual very important, right? What if your most productive computer programmer or salesperson also has a caustic personality and runs off other good people in the organization or is a deterrent to others ever joining?  Yes, production is very important.  However, what is the value of the variance in production between two people? That’s going to depend on the role and sphere of influence.  Research has shown, roles with higher complexity have higher output variability between individuals; a bigger potential gap in value of the quality of hire than roles with low variability.  For instance, if Bill’s job is to sit on assembly line and put a widget into a thingamadoodle, and the conveyor belt moves at a fixed rate, (assuming the widget into thingamadoodle is a simple task), the variability of Bill vs. a trained ape may not be much.  Therefore other factors are going to weigh heavier in making quality of hire distinctions.  If coding software or conceptual/relationship sales is the role, there can be much greater performance variability between individuals.  (Valuing the variance….that’s cool and powerful stuff….now you have information from which you can make meaningful decisions, but that’s getting ahead of myself…..or a teaser.)

Likability:  How good looking, friendly, funny, popular/trendy someone is, how much like us they are, how we think they’ll “fit” with us can be important.  In some places and roles it is very important, others it just isn’t.  If you have a group of people in your supply/demand reality are in low supply, make a high impact, in high demand, and you aren’t attuned to the social culture of the organization or social sub-cultures…..shame on you.  You can have a manager who is pseudo inept from a working skill set, but has good leadership competencies, manages a group of programmers who like working for him/her; they make it fun, push when needed, but the right way, still holds people accountable and they want to work for the person……that can be an A-player manager as its defined by your specific needs.  You could have a person with the best technical skills, or outsells everyone else, who gets promoted but ticks everyone off, leaving them to returning calls from recruiters on the drive home, leaving you with big issues.

By now I’m sure you already understand, it takes an adaptive and analytical approach to each role, each level, each organization and its dynamics, to be able to truly answer the question: “What is a quality hire or best value hire?”

Does all this rhetoric have a destination or is this a case of caterpillars following each other in circles?  That depends too….if you jump ship now, yes.  If you read on, no….I’m going to bring it together with some meaningful value.  (Yes, that’s going to be subjective, but I’d like to go ahead and think so.)

To establish “quality of hire” and get the predictive value, you must have quality information.  If you can’t measure it, how can you really manage it?  As you cook on that for a second, you’ll realize how simple, but real that is.  A light bulb may have just gone off….or is about to.  If you can’t measure it, how can you manage it?  Not just metrics.  I hope you already understand metrics can be indicators and quantify things, but are not the best predictors or most meaningful data.  Easiest example:  a typical accountant extracts, organizes, and reports the numbers (doesn’t impact/change in P & L).  A financial analyst looks at variables and relationships between things…how the numbers got where they did, how variables effect outcomes and how they can be maximized.    One reports inventory in the pantry, the other is the chef.  We use information or data to create metrics, metrics to analyze or use in analytics, which can give us more meaningful information from which to make better decisions.  Here is a basic process:

  1.  Measure who you have.  Establish the metrics, variables you are going to measure.  This can be very few or multiple variables, objective and even subjective, if done right.

  2. Once measured, we’re going to map the results.  Visualize a bell curve.

  3. Value the variance.  For this group of people, what is the value between different levels of output?   If Bob and Sally, once you know this, you have a sense of what it’s worth to have more people like Sally at the 75 percentile vs. Bob at the 50th.

 

You could stop here and have established who your quality hires have been and what their comparative value is.  You would even be ahead of most, having an edge on others with this executive decision support tool (accounting).  You can use this as a performance measurement tool, even as a motivational tool.  However, if you want to get down with making good better, and better-best, take a walk on the wild side with me.  Venturing into deeper waters is the essence of what I’m calling “H.e.R.O.” (Human empirical Resource Optimization).

  1. Topgrading.  Once you have the “map” you know the value of the variance between individual’s output, and the ability to make intelligent decisions.  Who are your A, B, and C players?

  2. Characterizing the ideal.  Here’s where this gets cool.  By the wonders of the behavioral sciences, we can take the group, analyze it up one side and down the other with an array of methods and tools, draw out what characteristics, dynamics, experiences, competencies, etc. distinguish the Sallys from the Bobs.

  3. Predictive Hiring Integration:  We take that information and integrate it into the selection process.  We establish our baseline standard and decide not to hire anyone who with new fandango customized predictive success model (H.e.R.O.), doesn’t score above a certain percentile compared to who we currently have.

 

What you may not realize this, but  H.e.R.O. just created a model by which, every time you have turnover below your cutoff line, the organization is scientifically forced to become better.  How?  When you continually “re-map” you’ll find the mean of your curve has shifted to the right.  Example:  if your selection line is at the 60th percentile, and in a 50 person sales team you replace 10 in a year and grow by another 5 to a group of 55, and re-map the curve, instead of having 40% of your sales force at the 60%, our “basis line” we have 64%.  (Using these basic assumptions: the 10 you lost were under the basis line, the 15 you add are above it. There are a million “what if’s”….just keeping it simple for now.) If the mean of those above the 6oth percentile generates $100,000 more in sales revenue than the mean below it, instead of having 30 below + 20 above, you now have 20 below + 35 above. Your 20 above x $100K = $2M of sales more than the below.  Now you have 35 above x $100K = $3.5M for a crude value difference of $1.5M.

Is that not the bomb?  Now you have a model that not only distinguishes and quantifies the quality of a hire, but also gives you predictive capability vs. hindsight in maximizing your human capital strategies.

 

An example of executive decision support use:

  • Is it worth paying sales people 20K a year more who produce above the initial base line?

  • What is the cost of keeping anyone who is below it?

    • What’s the turnover cost, the hit on our culture, reputation, etc.

    • Could be better to let attrition take care of itself or take action.

  • How much of your performance management and employee feedback do you want to make this system?  You can have very objective metrics, or create objective ways to score subjective things….like employee satisfaction, customer satisfaction, etc.  You can create different maps, or composites.

 

I want to assert here that though the cognitive part of this model is a wiz-bang thing, how it is conducted, communicated, implemented, etc. will have effect on both the organizational and social culture.  All are meaningful facets which factor into your ability to recruit and retain people.  If you decide to do something like this Attila-the-Hun style, and lose 50% of the top performers along with the 10 below (example above), perhaps because number of vacancies, and a scarcity supply/demand individual skill set, you may have to adjust, realizing lower performance is better than no performance.

One other consideration.  What if this whole framework ended up hiring people and your mean never changed.  However, it was able to pinpoint and virtually eliminate those “trouble hires” that spoof your previous interview/selection system?  What do those people cost you?  Just think of avoidance as a secondary value.

 

Key things to be aware of:

  • The human system is synergistically sensitive.  When you change one variable, there are multiple secondary effects of any primary action.

  • Depending on the overall organizational foundation of safety, support, value of people etc., you may find it hyper-sensitive, or very forgiving.

  • Be very careful about jumping on a compartmental program (or cookie cutter approach) without understanding how it will affect the whole train.

  • A program or initiative may have worked for one company or one industry because of dynamics unrelated to your business climate.

  • Think beyond the moment.  Many people save $5 today just to spend $15 tomorrow under the auspice they are saving the company money and doing a good job.

  • Just because everybody else is doing it…..is exactly the reason to second guess it.

  • Don’t be afraid to think.

  • Don’t be afraid to believe in something.

 

Choose to make it a great day!

Don

Subscribe for Updates