Reasons Why Organizations Make Poor Recruitment Decisions

Hiring better people according to a rigorous and formal process leads to concrete improvements in your company's operational and financial processes.

December 17, 2018A leading fast food chain had a problem. Customers were dissatisfied with the service they received from front-line staff; service was slow and painful. Customers began withdrawing their money elsewhere, resulting in declining revenues.

Fortunately, there is a happy ending to this story. McKinsey's People Analytics team quickly realized that the core of the problem lay with its employees. By using insights into what makes good employees tick, they were able to make their hiring process more focused and efficient. After introducing this new hiring process (along with updated training and incentive systems), the results were dramatic. Customers received their food 30 percent faster and sales increased by 5 percent in all stores. This example illustrates an important point: employees are your company's most valuable asset. Recruiting better employees according to a strict and formal process leads to concrete improvements in your company's operational and financial indicators.

Employees are your company's most valuable asset

Despite this fact, many organizations still hire employees in suboptimal ways. From recruitment to interviews, companies all too often underestimate the value created by a rigorous hiring process in which the characteristics for which they are selected are scientifically determined and then evaluated in a formal, data-driven process.

If improved hiring practices and better people create so much value, why do companies consistently adopt an unscientific, informal approach? We have identified three different reasons why we believe talent decisions are often handled with less care than other decisions of similar value:

Employee performance is inherently difficult to measure

It is well understood what a 15 percent ROI versus 10 percent means. But what is the difference between someone rated 3.7 out of 5 and a 3.2? The nebulous nature of performance evaluations and the difficulty of establishing objective measures makes it difficult to determine the quality of a hiring decision.
Conclusive hiring results appear years after hiring decisions have been made, and, what is worse, the criteria for success often remain undefined. It can take two months for someone to start working after they are hired, another month for formal induction, and then at least a year to keep up with organizational norms and processes. That is almost 18 months between the decision to hire someone and the moment when the consequences of the decision are fully felt. In addition, we find that organizations are not always clear about how they define successful hiring and what knowledge, skills, abilities and experience they need. All of this makes it an arduous struggle to figure out - much less experiment - which hiring tools and processes work best.

A sea of attitude assessments is growing

The talent assessment landscape is fragmented and characterized by a large and growing number of approaches, methods and providers. Worse, the lack of enforced professional standards in this area means that any nightly operation can create an assessment and stamp it as valid. It is not surprising that it is difficult for clients to identify the best assessment tools.
So what can be done to meet these challenges? Aside from recognizing the massive impact and investment that hiring decisions entail, the next two parts of this blog series of three articles will provide a useful framework and practical guidance to refine and optimize your hiring practices and decisions.

By clearly defining the reasons why it is so difficult to hire good people, and by highlighting concrete practices that can immediately set the needle in motion in improving hiring decisions, companies will be able to unlock a goldmine of value that they may not even have known about.