Achieving Hiring Excellence - Step 1: Understanding the Problem in Hiring

Hiring is one of the most important things an organization does. Hire well, and you build teams that can accomplish anything. Make mistakes and the results can be painful.

While the hard costs are significant (more than $100k in many cases), the real impact is in lost opportunity and damaged morale. Imagine your best employee (we’ll call her Tess) and the value Tess delivers. Imagine every new hire you make delivers like Tess. That’s what we call a high-performance team, one that studies show can deliver 400% more productivity than an average team.

Now imagine the opposite. Some of your new hires aren’t performing and your top people start getting frustrated. Eventually, Tess leaves because she can’t stand the bad hires she’s working with.

Unfortunately, with nearly half of all new hires failing within 18 months, the latter is a common scenario. Root cause? Research shows that cognitive biases are the top reason for hiring mistakes.  

What are cognitive biases?

Most simply, cognitive biases are errors in judgement. We’re just beginning to understand the myriad causes and effects but the little we do know is that the list of biases is long and they affect most aspects of our interpersonal lives. This is especially true in hiring where our  biases often cause us to make inaccurate judgements based on irrational correlations.  

For example, I recently had a CTO of a startup tell me they would never again hire “self-taught” software engineers. Why? Bad experiences. His sample size was 2.   

Diving deeper, I learned that the bad experiences this CTO had with self-taught engineers were related to a very specific technical skill set. However instead of attributing it as a knowledge gap, an overgeneralization was created that limited the future candidate pool based on criteria that may or may not be relevant to a candidate’s actual potential.

Snap judgements like the example above happen all the time. In fact 33% of hiring managers claim that they know if a candidate is right for a role within 90 seconds of an interview. This is a classic setup for confirmation bias and no doubt has led to many hiring mistakes.  

Considering that a bad hire often costs more than $100K, destroys morale, and is unpleasant for the new hire who fails, it’s in everyone’s best interest to combat our cognitive biases when making hiring decisions. Top companies recognize this and invest heavily in their hiring processes. Amazon and Google are just two examples of hiring processes designed to combat cognitive bias. So how can you improve your hiring process and combat cognitive biases?

Step 1: Identify the problem

The first step to improving any process is understanding what’s not working. Unfortunately when it comes to hiring, most the metrics we see measure throughput and output, not the quality of the process itself. Time to hire, sourcing channel, offer acceptance %, retention, etc. are all great metrics but not very helpful when it comes to measuring the quality of your hiring decisions.

The first step to improving your hiring process is to really understand the mechanics of how individuals on your team are conducting interviews, evaluating candidates, and making decisions.

You can do this with an internal focus group, by hiring consultants, creating an internal survey, or using a diagnostic instrument like Hiring Insights. No matter which method you use, start by identifying the differences in how people approach the hiring process. The answers to these three questions will be illuminating:

  1. What do you look for in a candidate? How is it evidenced in an interview?
  2. What’s the most important characteristic to hire for?
  3. How do you decide you’re inclined to hire someone?

If you get many different responses than it’s likely your hiring process has serious problems. In later posts we’ll explore how you can address specific problems but for now, go talk to your team. You might be surprised at how much bias subconsciously exists.


About the Author:

Joe Shao is a co-founder at Perfect Loop who loves tackling big problems and eating good food.