Businesses have never recruited as much as they do today. They spend more time doing it and invest more money to get it done. But why do so many businesses get it wrong? What is the true cost of their mistakes? And is the increased emphasis on personality conceding ground to competence?
David Bernard, CEO of the innovative recruitment technology firm AssessFirst, believes that businesses can improve both their profits and personality-led cultures by modernising the recruitment process.
The traditional hiring process follows a pattern that most of us are familiar with and have experienced. It goes something like this: HR determines what the tasks of the vacancy are with hiring managers and outline the attributes required to fill it. Job adverts are posted and applicants apply. An interview is arranged. The winning candidate is offered the job.
That process has undergone some change over the years, but the essential structure has remained the same. The problem with this model is that we don’t know how successful it is. Most companies can tell you how much they spend in pursuit of the ideal candidate. But far too few of them can explain the true cost per hire.
What we do know is that the traditional recruitment process is broken. I often put my head in my hands when I read the myriad of HR reports that reveal the prevalence of bad hiring. The 2020 Career Builder report offered little reassurance. It stated that 74% of employers hired the wrong person last year. This came at an average cost of £10,843. This is madness.
Productivity ought to be a key consideration when seeking a new candidate. Ideally, the new hire should be more productive – either through skillset, efficiency or both – so that profit opportunities can be maximised. This makes a bad hire doubly costly. Not only are businesses paying for a wasted recruitment process with inefficient training and slowed productivity, but the cost of missing a chance to improve the quality and volume of output is equally detrimental in the medium-term. Profits that could have increased, instead suffer.
Research by McKinsey & Company suggests that the top 5% of talent is 8 times more productive than average talent. Of course, every employer should aim to be recruiting from as near to that top 5% as possible. Now you might, if you are an employer or recruiter, dismiss this as impossible – ‘that’s ok for the Google’s and Apple’s of this world, but how can I find that top 5%?’ This doesn’t have to be an impossible aspiration. There are solutions that I will come to shortly, but first let’s breakdown just how a bad hire can damage profitability.
The $200,000/$50,000 formula demonstrated by HR Daily is a fantastic illustration of the problem. It outlines how an employee who brings in $200,000 in revenue would make their employer a profit margin of $80,000 on the hire. But an employee from the top 25% of the talent pool would give the business a profit margin of $130,000 because they will bring in more revenue. A bad hire therefore results in a $50,000 loss of profit.
“The first thing we look for when hiring new staff is personality. In my eyes, personality always wins over book smarts.” – Sir Richard Branson
It is a statement that divides recruiters, business owners and HR professionals.
Whilst the declaration that personality wins over ‘book smarts’ is contentious, it is inarguable that character is a vital and too-often overlooked requirement for any given job role.
Finding candidates that match the core values and culture of a company is a profitable exercise, increasing the likelihood that good candidates can be retained. It also provides the opportunity to diversify your pool of talent, bringing in people who think differently to other staff to challenge norms and existing processes.
Deciding between two or more candidates who appear to offer similar advantages is hard; the choice can be simplified with in-depth personality data. Personality is in fact a predictor of future job performance that exceeds the quality of information that you can obtain from analysing a person’s CV or qualifications.
Comprehensive personality assessments increase the chance of hiring the best people. And the best people drive healthy profitability.
At AssessFirst, our AI recruitment platform collects hundreds of data points about a candidate without the candidate having to complete long drawn-out questionnaires. This gives employers two crucial advantages in the hiring process; it provides a breakdown of a candidate’s personality type. And it helps to predict each candidate’s behaviour, revealing the tasks, projects and even teams where they will have the most impact.
Gathering objective personality data provides insight that can help to eradicate unconscious biases. All employers are susceptible to, for example, confirmation or affinity bias during the recruitment process. This bias, perhaps more than any other factor, contributes to bad hires.
Those continuing to recruit without the benefits afforded by Artificial Intelligence are prone to being in the 74% of employers that make the wrong hire. Data-driven personality recruitment goes well beyond a simple tick-box personality test. It is a deep analytical tool that draws from behavioural science: assessing cognitive and non-cognitive patterns. This is how employers can tap into the top 5% of talent specific to their company and culture.
The recruitment model of ‘advert, application, interview’ is as antiquated a process as there is in business. AI-powered recruitment is more frequently associated with blue chip tech companies, but I think that a much larger cross section of the business community, many of whom are challenged by the uncertain post-pandemic market, cannot afford to get recruitment wrong. And it is personality metrics that will help to ensure they get it right.