In Laszlo Bock’s book Work Rules!, the man who built Google’s HR operation had a stark warning about the way we hire. “Most of us,” he wrote, “aren’t as good at it as we think.”
Obviously this matters. Recruitment is vital and there’s a big difference between a great hire and an average hire. It’s especially important given the complexity and fast-paced nature of the challenges that organisations are facing. And it’s even more significant in a board setting – small groups with big strategic responsibilities where the right appointment can make all the difference (as can the wrong appointment, for opposite reasons).
But as Bock points out – and various academic studies have proved – many organisations aren’t hiring in the most efficient or effective way. Too many hiring processes centre on an unstructured interview. These interviews, while familiar, do not allow for candidates to be properly assessed and compared.
In fact, they may actively steer organisations towards the wrong hires. Malcolm Gladwell laid out a compelling case against our assumed ability to “read people” in his book Talking to Strangers. We think that by looking someone in the eye we’re able to understand their personality traits and spot when they’re lying. In reality, our belief in this mystical power gets in the way of forming proper judgements.
So if Bock is right – and hiring methods are often ineffective – what does best practice look like? Fortunately, there is a lot of academic research which we can draw on.
Not all of these steps will feel right for every organisation. Some high-profile candidates may baulk at being asked to complete a test, for example. But in our experience, the best candidates have nothing to fear and are impressed by organisations which approach hiring with such rigour.
Define your brief
Hiring the right person starts with defining your organisation's strategy. Think about where the organisation is now, and where it wants to be in five or ten years. Think about the new opportunities that may arise, and the potential challenges that might need to be navigated. Think about the current make-up of your board, its strengths and the skills, experiences and competencies it will need to add to pursue its strategic goals.
The best way to crystallise this into a proper role description is to commit to advertising the job openly. Cornell University’s JR Keller is an expert in talent acquisition and management. He studied 11,000 internal hires at a Fortune 100 firm and found that writing a proper role spec focused decision-makers’ minds on the relevant information. As Keller explains, “The mechanics of posting” – i.e. opening up a role to applications – “require a manager to create a formal job description, which in turn establishes a set of criteria against which to evaluate potential candidates.”
When someone is selected without a formal process, “managers informally mold the job requirements around their preferred candidate rather than evaluating the candidate against the requirements of the job.” Conversely, a more formal, open process encourages managers “to rely on objective information." This approach carries through the rest of the hiring process too. The defined brief provides a clear set of criteria against which candidates can be scored in a more reliable way.
Cast the net wider
Keller also found clear evidence that open hiring processes are more effective. He looked at roles that were filled through a company-wide advertisement inviting anyone to apply, and compared them to hires selected by managers in a closed process. The "open hire" candidates outperformed the "closed hire" candidates, “on nearly every conceivable dimension of quality.” They were also 20% less likely to quit or be fired.
A wider candidate funnel leads to better applicants. Competition is more intense and standards are raised – typically, the five tallest people in a city of one million people will be taller than the five tallest people in a city of 10,000 people. This then shapes the selection ratio, i.e. the proportion of applicants who are hired.
As Frank Schmidt and John Hunter wrote in their 1998 study into different hiring methods, “At one extreme, if an organization must hire all who apply for the job, no hiring procedure has any practical value At the other extreme, if the organization has the luxury of hiring only the top scoring 1%, the practical value of gains from selection per person hired will be extremely large.”
Work specific tests
Schmidt and Hunter analysed 85 years of research into different hiring methods. They looked at studies into 19 different approaches – from intelligence tests to handwriting analysis – and ranked them on their ability to predict how someone would perform in a role.
At the top, they found that work sample tests were the most effective, able to explain 29% of future performance potential. This makes sense, as they give the hiring organisation direct insight into a candidate’s approach to the sort of tasks they would be expected to take on. These tests also provide a clear basis for comparison with other candidates.
It’s good to make these tests as “real” as possible to optimise their value. Choose actual scenarios that your board has faced (or is facing). For example, you could ask candidates to review part of a board presentation from a previous meeting and present their observations and challenges. It's good to set a time limit on tests like these, and you can use an NDA to protect sensitive information.
Cognitive testing is sometimes known as General Mental Ability (GMA) or intelligence testing. It came in second in Schmidt and Hunter’s study with a score of 26%. But the researchers believe cognitive testing has “special status” given its versatility and its unparalleled value when combined with other methods (most hiring processes will use at least two or three stages).
For Bock, these tests are so valuable because – like the defined brief – they put the hiring process on a more objective footing. “In contrast to case interviews and brainteasers, these are actual tests with defined right and wrong answers,” he wrote. Crucially, they don’t just measure how clever a candidate is, but also how well they learn. “The combination of raw intelligence and learning ability will make most people successful in most jobs,” Bock explains.
However, there’s an important caveat to add. Research shows that women and people of colour routinely perform less well than white men on these tests. Intelligence is culturally specific, so in white- and male-dominated societies, IQ tests can have intrinsic biases. It’s important to factor this into your thinking, especially given most boards’ desire to diversify.
Not all interviews are equal. Academics differentiate between structured and unstructured interviews. Schmidt and Hunter explain the difference like this:
Unstructured interviews have no fixed format or set of questions to be answered. In fact, the same interviewer often asks different applicants different questions. Nor is there a fixed procedure for scoring responses; in fact, responses to individual questions are usually not scored, and only an overall evaluation (or rating) is given to each applicant, based on summary impressions and judgments.
Structured interviews are exactly the opposite on all counts. In addition, the questions to be asked are usually determined by a careful analysis of the job in question.
Structured interviews (26%) are nearly twice as good at predicting how well a candidate will contribute to an organisation, compared to unstructured interviews (14%).
Bock describes two types of structured interview – behavioral and situational. In either set-up, the interviewer should try and understand the thought process behind each answer. Behavioral interviews ask candidates to describe prior achievements and match those to what is required in the current job (i.e., “Tell me about a time . . . ?”). Situational interviews present a job-related hypothetical situation (i.e., “What would you do if . . . ?”)It’s important that answers are scored against a pre-agreed rubric, with levels of performance clearly defined – i.e. what constitutes “good evidence” of a desired skill, as opposed to “excellent evidence”?
Once again, the reason structured interviews work so well is that they give organisations a consistent way to compare candidates. As Bock explains, “It distills messy, vague, and complicated work situations down to measurable, comparable results.”Of the 19 hiring methods that Schmidt and Hunter ranked in their study, unstructured interviews came in 9th in terms of their predictive qualities. Despite this, unstructured interviews remain the go-to – and very often only hiring process – in many organisations. It takes more time and effort to design, conduct and review a structured interview, but that will pay off in the long run.
Referencing is often seen as the final formality in a hiring process. But if you approach it as a box-ticking exercise, you risk confirmation bias kicking in and only hearing what you want to hear. There are three key things to consider when taking references:
What do you want to find out? Speak with everyone on your team who took part in the interview process and identify any key concerns or areas which require more context. Use this feedback to structure the reference conversation.
Who should you speak to? Work with the candidate to draw up the list of referees. This should be collaborative – think about who you want to speak to as well as who the candidate is suggesting. If you really want to speak with someone and the candidate is adamant you shouldn’t, then you should probably ask why.
How should you take a good reference? Take your time – a good reference can’t be done in five minutes. Try not to lead the conversation towards your own opinions – “We think X would be very good at Y.” Ask specific questions and request real examples of a skill or behaviour rather than relying on general impressions.
Nurole provides best-in-class hiring for forward-thinking boards. We blend the power and reach of technology with a very human understanding that every role, every organisation and every candidate is different. Contact us to discuss your next hire or find out more about becoming a member here.