Hiring Employees: If Not Interviews, Then What?

According to the Harvard Business Review, 80% of turnover is caused by bad hiring decisions. This is really important when you think about the time and money you invest in training a new employee about your business, your products, and your customers. In a small business, the entrepreneur often selects new employees, especially the first employees, because of his or her gut reaction during an interview.

"Seems like a really nice guy," is a common reaction after the interview. "I think he can help me." Poof, the new employee is selected. Bad move.

In his Guide to Pre-Employment Testing, Work.com Editor Daniel Kehrer suggests that putting pre-employment checking to work for you can make you less dependent on your gut reaction to candidates. In Recruiting and Selection Tips, David Meyer, Ph.D. suggests that job analysis will help you match the right person to your job. And developing a large candidate pool gives you more potential employees to select.

Maggie Rauch makes key points about the importance of background checking in her Guide to Checking Backgrounds Before Hiring. So does  W. Eric Martin in his Guide to Checking Job References. You would be amazed at how many employers don't do these background checks.

A large study conducted by John and Rhonda Hunter at the University of Michigan on the predictors of job performance found that a typical job interview increased the likelihood of choosing the best candidate by less than 2%. Bad hiring decisions can be avoided. If the interview is not golden, what is?

(Source Study:  John & Rhonda Hunter, "Validity and Utility of Alternative Predictors of Job Performance", Psychological Bulletin, July 1984, p. 90.)

Note from Shara: Susan Heathfield, Work.com Employee community leader, is a management and organization consultant who specializes in the people side of business, and is the owner of Heathfield Consulting Associates in Williamston, MI.

Technorati tags: HR, employees

Comments

[Paul Heller]

Susan, I have taught an English lesson to high school students on developing resumes and maintaining a reference list for use when employers ask. I think this hits on the other side of the coin that you mention in your post - employees need to make sure they use solid references so that they get the best reviews possible when potential employers do background checks.

[Susan Heathfield]

Paul,

It is so nice to hear that students are being taught job searching skills. One fact you may want to add, if you don't teach it already, is that employers are increasingly calling the supervisors at jobs going back ten years whether or not they are on the reference list. This is because so many people supply people who are prepared to say nice things about the candidate on their reference list.

But, you are absolutely correct. A less than completely positive reference from the reference list provided would be bad news for the potential employee. And, I read somewhere recently that up to 96 percent of employers are actually checking references these days, a huge increase since 9-11-2001.

Thanks for your comment.

Susan

[melissa paxton]

At our small non-profit we work with school children, so not only do we check references, we also run background checks on all our potential employees and volunteers who will have contact with children. We've found Volunteer Select to be invaluable.

[Chris Harris]

You raise an interesting point - but I have an alternate theory on the cause & effect. Of the 80% of turnover caused by bad hiring decisions, most of those hiring decisions were made in bigger companies (simply because they're easier to poll / survey). In my experience, smaller companies have a much easier time keeping turnover lower, especially when they embrace a more subjective interview. Reference checks are a critical part of a good interview - because then you're asking for someone else's subjective opinion (which I think is more accurate than objective measures) of the person's work based on the fact that they've seen the prospect in action.

[Susan Heathfield]

Our small company certainly has little turnover except that we have had to ask people to leave in the past. But the people who were asked to leave, almost universally, in retrospect, we knew we should not have hired in the first place. I think we are in agreement on the rest of your post. Thanks for your comment.