I am a big fan of Dr. Steve Hunt. One of the most fascinating and wide ranging discussions I ever had about the world of talent was with Steve as we traveled to a lunch together. Steve is very bright and a deep thinker about most things near and dear to my heart.
So I read Steve’s article this morning over at ERE with great interest. I generally agree with his basic assertion that “hiring the wrong person is worse than hiring no person at all” (depending on whether the position is efficiency or effectiveness focused). But I am still left with the most fundamental question: what does the wrong person mean?
As I have discussed before, “good” and “bad” are terms that reference quality. (If you have a spare moment, read Zen and the Art of Motorcycle Maintenance and then read the Wikipedia entry on quality for two different takes on this fascinating topic.) Quality is defined by the scope and frequency of variation to a specification. So I have to assume that when people talk about a “bad hire” they are saying “I hired against a specific description and the person ended up not meeting that specification.”
If you have worked in a company for any length of time you know that the truth is more often “we really didn’t know what we needed, so we hired the perfect person, but not for this job.” Most bad hiring decisions have little to do with candidate misrepresentation or salesmanship, nor do bad assessments generally lead to bad hires. The problem is almost always a bad specification. And that means that Steve should be saying “Not knowing what the hell you want is worse than making any hiring decision whatsoever, right or wrong.”
“Back that up!” you say in alarm. Love to.
The Corporate Leadership Council conducted an extensive study of the hiring of executives. Executive hiring is instructive because most companies will wait to hire the right executive rather than just fill the seat and hope the investors look the other way when it goes wrong. There can be little dispute that more time and effort goes into the average executive hire (either an outside or inside placement) than the average mid or junior level position.
The CLC survey covered member companies such as HP, First Data, Nestle, Pepsico and RBC Financial: all companies known to think more progressively about HR practices than your run-of-the-mill company. So how did companies such as those feel about executive hiring? 59% of the survey respondents said that “Failure of externally hired executives” was a “significant problem”, with another 17% saying it was a “moderate problem.” Only 24% of the respondents said it wasn’t a problem at all.
So much for external hiring. What about internal promotion as an alternative? 50% of the respondents said that “failure of internally promoted executives” was a “significant problem”, with another 25% saying it was a “moderate problem.”
Later in the same study there is a quote that drives it home. A VP of HR for a manufacturing firm, commenting on the efficacy of their internal high potential program says:
We select our high-potential employees based on performance out of practicality—it’s the only measure that our managers trust. But it’s not sufficient. The success rate of our HIPOs might be 50% at best. Managers are beginning to recognize that the link between performance and potential is incomplete, but until we find something with greater accuracy managers will continue to use it.”
In other words – pick anybody and flip a coin. You’re success rate will be roughly the same as wasting everyone’s time and a lot of money ensuring that you get the “right” candidate. We can’t seem to reliably pick external candidates even when the vetting process is exhaustive and we are willing to spend a lot of money to get the right person. We can’t seem to reliably pick internal candidates even after we have watched them work in the same culture, in the same company, as the new opportunity.
For all the process work and lean staffing and other initiatives which make valid claims to reduce waste in the talent supply-chain, the dirty little secret is that we have bad specifications. And given that our spec is wrong, talking about good and bad hires is largely an exercise in futility. We need better specifications.
(I hope that Steve will still let me buy him a drink when I see him in Boston in a couple of weeks.)
(Quote and data from “Realizing the Full Potential of Rising Talent (Volume 1): A Quantitative Analysis of the Identification and Development of High-Potential Employees” published by the Corporate Leadership Council in 2005)
Comments