Every company wants to make hiring top talent more predictable. Some even go as far as putting a Six Sigma task force together to begin the process. Yet they’re all unlikely to succeed. Six Sigma is about process improvement. Unfortunately, you can’t implement process improvement until you have a process to improve. Using Six Sigma approaches to improve the hiring process are doomed to failure ó unless you first get a One Sigma process implemented. This is far tougher than it seems, and yet it is the key step necessary to making hiring top talent a systematic business process. Unfortunately, too many companies ignore this vital first step. A One Sigma process has the following primary characteristic: everybody hires the same way. Even if it’s bad, everybody does the same thing. There are some rules behind it, and forms to fill in, and people get penalized for not following it. This is the type of basic process you need before you can have process improvement. For hiring, the rules need to involve how requisitions are approved, how candidates are interviewed, how they’re selected, and how offers are negotiated and put together. While simple and obvious, few companies have such a system that everyone uses. Worse yet, most companies think they do. How does your company measure up on this standard? Just having something in place that everybody uses is more important than having a process in place that works. While this sounds counterintuitive, I think this is why there have been few major improvements in the hiring process in the last 30 years. The hard part in any change implementation program is getting 100% user adoption. Consider your ATS as an example. A low user adoption rate is the biggest inherent problem with most applicant tracking systems. Great features combined with low utilization is a big time and money waster! Some examples are in order to prove the case for process adoption over effectiveness. From my experience, the hiring process at all companies is far less rigorous than the capital investment process; in most companies it is far simpler than getting reimbursed for travel expenses. Both of these basic business processes offer guidance on how and why a basic One Sigma hiring and selection process is all that’s needed to get hiring under control. In most companies, a $250,000 capital expenditure requires some type of rigorous cost benefit analysis coupled with an ROI calculation. At a minimum, this takes a few hours to complete and includes a description of the cost savings, an analysis of options, and some type of implementation plan. The cost of a bad or weak hire is at least $100,000 even for a $50,000 person, and this is every year whether the person stays or is replaced. So it seems pretty easy to justify the need for an equally rigorous hiring and selection process. In the case of a capital investment, the process adoption and effectiveness collectively lead to good business decisions. This is the benefit of having a good process in place that everyone uses. Consider travel expense reimbursement as an example at the other extreme. Getting paid for travel expenses requires detailed reporting, accurate tracking of expenses, and a written form to be submitted with itemized receipts. On top of this, there is an audit team in place, tracking accuracy and insuring compliance. I’m sure we all have examples of how this has been taken to extremes. Here’s mine. On one recent project with a major company, I had to spend at least an hour and a half trying to reconcile the difference between a $66 parking receipt and the $44 I charged to the company. One of the days was charged to another project, but the company accounting department wouldn’t pay any amount other than the one on the receipt, and my attempt to just forgo reimbursement rather than get a new receipt was met with three follow-up calls. If nothing else, high adoption rates coupled with a bureaucratic process at least prevent fraudulent charges. The underlying principle here is that, in order to implement change, there needs to be a standardized process with some type of policing mechanism to make sure that everyone follows the rules. This basic concept has somehow been overlooked when implementing hiring process changes. From my observations, at most companies each individual manager and each recruiter hires and selects candidates using different techniques. Job descriptions range from useless to “I’ll know the person when I see him,” so even though the req approval process is the most rigorous, it’s still based on an arbitrary measurement criteria. Adding competency models and behavioral interviewing helps a bit, but if few managers use the tools the same way, the process must be considered out of control. For comparative purposes, Six Sigma process control means fewer than one error in 100 thousand steps. For most companies, hiring is about 50/50 ó that’s about .2 Sigma! One Sigma process control would equate to 68% accuracy. So to me, that’s a pretty good target. Here is my idea for a practical hiring process that’s not too bureaucratic. If you could obtain 100% user adoption, hiring errors would be reduced dramatically. Steps Needed to Make Hiring Top Talent a One Sigma Process
- Develop some type of formal structured hiring system. At a minimum, this consists of a few basic requirements:
- More representative job descriptions that describe the projects and challenges in the job, in combination with basic skills and experiences.
- A structured interview that allows candidates to describe how their behaviors, skills and competencies were used to achieve major accomplishments. Even a basic behavioral interview that everyone uses will help.
- A formal assessment process with forms requiring all interviewers to document their assessment rationale. This will be more accurate if it is done in a formal group debriefing session, where superficial reasons are discounted.
- Get everyone to use it. 100% utilization is the primary goal. Every manager, interviewer and recruiter needs to be following the same rules. Even bad rules will help minimize hiring mistakes by adding some level of structure. Most hiring errors are made because emotions and gut feelings override objectivity. I estimate that over 50% of the One Sigma target will be achieved by getting everyone to use some type of basic structured interview and assessment system. Too many companies overlook the importance of achieving 100% adoption. This is the hardest part of any change management process.
- Develop a measurement system to track adoption rates. This is key. You have to know who isn’t using the system and who is. This allows you to go after the bad guys. If you can get managers to passively accept the fact that they must use the process with some type of simple report, you can increase adoption rates at low cost.
- Develop an audit function to police the process. Knowing that managers will be audited at some time in the future helps insure compliance. Some common examples of activities that include some type of overseeing include all accounting activities, expense reimbursement as described in the example, Sarbanes-Oxley, and the IRS. Not surprisingly, compliance drops when the auditing is reduced, so don’t ignore this important component.
- Create some penalty for failure to comply. Performance reviews should include quality of hire as part of the process for all managers. At a minimum, managers should get dinged for not following procedures. For one thing, don’t give hiring approval until all the forms are completed properly.
- Determine if the hiring process actually improves hiring accuracy. This is the real key. A stupid, bureaucratic process that doesn’t work is not the objective here. A structured, disciplined process that actually helps minimize hiring mistakes is the goal. To determine this, some type of tracking system with metrics is required. Measuring turnover will help. Some type of performance assessment will help even more. While space does not permit much discussion on this topic, it’s pretty clear for sales positions that the percent of new hires achieving quota would be a good way to assess hiring effectiveness. There are measures like this for all positions, but they take more digging to figure them out and track them. Regardless, the point here is to start measuring the reductions in hiring mistakes and the improvements in candidate performance as part of implementing a One Sigma hiring process.
- Modify the process until everyone uses and it improves hiring accuracy. Once you have a One Sigma hiring process system in place with some type of policing and measurement system, you’re ready for true process improvement. This is where Six Sigma methodology can help.
Walk before you run. That’s the key here. Getting 100% user adoption with some basic system in place is more important than having a better system with low utilization. This alone will eliminate the most common cause of all hiring errors ó emotional and intuitive decisions made in the first 30 minutes of the interview. Using some type of rigorous assessment approach will make the process even more effective. This can easily be justified. Hiring a person is at least as important as making any investment. Process control and process improvement are critical steps in making hiring top talent a more systematic, business-like process. It’s starts by first putting a process in place. Without the process, you’re just mistaking activity for progress.