Traditions are good to have and most of us look forward to Christmas and other holidays. But not all traditions are equally healthy and as Danish author Leif Panduro once wrote “rend mig i traditionerne” or in Danglish "kiss my traditions". You as a business leader from time to time have to look at whether the traditions that are in the company are still appropriate in terms of ensuring competitiveness and ongoing renewal. This sounds obvious and honestly also very Business Insider ish, but...
One of the traditions that needs a tremendous renewal is recruiting. Most companies today recruit in the same way they did many years ago. And yes, there have been a few new questions added to the frame, but otherwise it follows the standard procedure with a job post, recruitment deadline, skimming resumes and letters, selection for interview, maybe an extra interview, a test and a few references - a conservative process that, somewhat harshly written, is finding itself stuck in a mud pile.
More and more industries today are being hit by break ups. This, therefore, also applies to recruiting talent. You can either get really annoyed about it in the same way as Lars Ulrich from Metallica when Napster launched - or you can see the possibilities in it and adapt to a new business model as Jimmy Iovine and Dr. Dre did. Something is not working in our favor, so let’s change that.
Some have already begun but it is far from enough - we’re just scratching the surface. Thus, there are companies that just need a CV and not an application - they can obviously read it all from a CV. For some odd reason it’s become enough to look at historical data and from that calculate an accuracy in future performance - very brave indeed!
But to be honest, a completely new approach is needed. The real cost of losing an employee should be a complete epiphany to this argument. The employee replacement cost is estimated by The Society for Human Resource Management (SHRM) to be around 6-9 months salary on average.
That’s even a low put estimate. Think of all the extra sneaky costs involved in hiring, onboarding and training. We are also thinking of time as a resource. It all adds up. Even if you’re not experienced within HR this should be very easy to comprehend.
Hiring the right people for your organization is crucial for business success. But if it is so crucial, then why is it that we are still hiring like biased neanderthals? The world is changing and our recruiting methods must be adapted to the development - not the other way around.
First off, there are some clear trends that provide completely new opportunities for accuracy in recruitment. It is a trend where one connects humans and artificial intelligence (AI). Those who have an iPhone know Siri, many know Alexa who is a home assistant, Watson who makes diagnoses, Ross who arranges law, Maya who is used in insurance cases and possible fraud. The list is long and it keeps getting longer.
Next up, our work becomes more and more knowledge intensive and thereby the complexity of the work increases. The value of the right recruitment is therefore aggressively increasing and according to McKinsey & Co. productivity is up to 800 times greater in a top performer than in an average performer with very complicated work. If the average earnings a year you make off an average performer in sales are 1 million bananas it is thus 8 million bananas from a top performer - who would you rather have hired? Finally, there is a huge benefit in combining data with people.
We humans are, after all, opinion-forming and filled with both good and less good beliefs and assumptions about how the world and candidates are all screwed together. We are therefore not the rational decision-maker we typically convince ourselves we are.
Therefore, we can benefit enormously from improving our decisions and we do so not by trying to change people, but rather by reconsidering the methods and tools we use in the recruitment process. Which is definitely about to be the right time.
There are many new 'business proven' methods in recruitment that can improve your starting point for finding better talent and true top performers as a startup with limited resources. But if you are in a tough and demanding competitive situation, you can not just improve your starting point - you need to create an entire new and powerful foundation from where you can recruit the best of the best. And the best part about it is that you don't specifically need an HR expert or department by your side.
But how? It has always been the great conservative challenge that something is done about the problem only when the problem knocks on your doorstep. Statistics studied from McKinsey & Co. show a crazy 82% of companies don’t believe that they are hiring highly talented people, and only 7% of which think so, don’t know how to retain them. If so many companies feel they are not hiring the right people for the job, then it must surprise some of us that our gut feelings might not be as accurate as we so superstitiously lean on. It's time for us to acknowledge that our decision making needs help.
A simple method like some of the big players, which i.e. Goldman Sachs, has begun to take advantage of its search for talent from all universities. Previously, it was a criterion for the candidate to be educated from the elite universities, the so-called Ivy League Schools, and that as a minimum for consideration you must have the top-impossible grades. The epiphany that Goldman Sachs has now experienced is that they can no longer equate titles on the resume with top performance. It has a clear connection with industries that are in disintegration and that you can not get stuck in the mindset of the good old days anymore. The consequences are too great for companies. The costs are simply too high. The only thing companies actually manage is to exclude the candidates who would potentially be the perfect fit for the organization. We strangely forget that the company is not better than its employees and that it is the employee who does the work and not a piece of paper. For startups and scaleups, this couldn’t be any truer. The people you bring in to build your company will also help define it. This is where the equal sign must be put.
But is that enough? Certainly it is a big step for the individual, but a far too small step for the company and the bigger picture. The diamond only becomes apparent when we discuss the opportunities that digitalization has brought us. We all say yes when asked whether or not we've heard of Big Data, but how many actually know all the use cases for it and how to deal with the actual execution?
Data has never been as important to decision-making as it is today - and we're still just getting started. On all parameters, data proves to be our most reliable indicator. Look at social media and the power Instagram has gained in marketing and sales. We know almost everything about our consumer based on data. And hold on tight - what if it also applied to our talent and job candidates?
Here, many raise the question of how to then use that data. But in fact, the question should be how to obtain the right data. The answer is pretty straightforward. Because it is not about finding data on whether the candidate is male or female. But whether the candidate can perform the job in the best way and on fair terms. By digitizing your recruitment process and using screening methods designed for data collection, you can begin to build more accurate predictions about your candidates, which provides significantly greater certainty in motives and decisions - while combating human bias and supporting diversity.
That sounds almost too good to be true doesn't it? The way you can design your screening is by focusing on measurable tests such as: case assignments or multiple choice tests rather than the typical cognitive / personality tests etc. It gives you a sincere insight into the candidate's competencies and abilities and can as a unique tool even reveal how a candidate thinks in given work situations, dilemmas etc. On the bottom line, get a more relevant sense of the candidates. The same can be applied to evaluate cultural fit.
Logical tests and cognitive tests also no longer prove to be qualified predictive methods. Because they can not measure whether a person is smart or not smart. This is another myth we must kill. There are many ways to measure intelligence today and we can no longer live in a black and white approach that only shows us one side of the coin. The reality we live in is far more colorful.
Combining an open approach, focus on competencies and data in recruitment, you significantly increase your chances of finding hidden talents through an inclusive and more qualified candidate pool. In addition, you also contribute to your employer branding by creating better candidate experiences, where the candidate gets much better insight into the job itself and the organization.
So there are really many benefits to be gained and if it sounds like a longer time-consuming process, then fortunately there is speed on digital automation, among other things within recruitment and a lot of expertise to seek advice from, which can help with quick implementation and on-boarding. So there are no more excuses anymore. We owe these positive changes in recruitment both to our organization, but especially to our applicant job candidates.
Now you might be thinking that with all that talk about data, we forget the human being in the process and that it should not just be about data. Totally agree. Data should not make the decision for us, but act as an accurate indicator and create greater certainty in the selection of candidates and serve as a basis for a more qualified dialogue in the interview phase. Because yes, personality has a big impact on whether a partnership will play out optimally.
Both the cultural fit, the chemistry among employees and relationships with employers have a lot to say in relation to the overall potential in performance and therefore it is important to address these factors equally. We must not be afraid that the near future will offer data and AI, which will take over our work in recruitment - because it must be implemented with control and awareness. We need to be aware of our use of data and where in the process it serves its purpose and benefits.
A really good suggestion is namely as a supplementary tool in i.a. screening and not as a judge of our character. Because with the help of data and automation, we can save time by reading unreliable piles of CVs and instead allocate our time and focus on the part of the process that really matters in recruitment. A major problem for many companies is that they have too large and unqualified candidate pools and with inaccurate methods such as CV, the chance of unqualified candidates for the interview becomes absolutely greater. Hence, you’ll end up like the rest of the 82% of companies who fail to hire top performers.
That is in fact the phase where accuracy is most important. Because it can ruin the whole recruitment and result in costly misappropriations. We can then continue to do so time and time again, like a hamster in its wheel not getting anywhere, but convincing ourselves that we do.
This article was written by Simon Gundersen, Martin Brandt Friis and Rasmus Busk Hyllemose for the Hub.
Simon is the CEO & Founder of Casefair, a HR recruitment platform that enables companies worldwide to hire diverse talent, using unbiased hiring processes. Casefair breaks down the wall of bias, and eradicates the irrelevant demands that are too often faced by candidates applying for work positions.
Martin is an independent Management Consultant who, with his vast experience within HR, contribute to developing and result-creating partnerships in a number of organizations that seek a new level of competitiveness and navigability.
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