What made the biggest difference by far is whether my recruits had the drive to contribute, whether they could collaborate with their colleagues, whether they would come up with new ideas, whether they would raise their hands when they had made a mistake, whether they would say no or yes to something they could not do, whether they would tell me when I was saying something stupid.
Behaviours and attitudes are by far the main causes of success or failure of new hires. In this article Gregoire Lemaitre and I lay out a simple process to help you get your recruitment right more often.
3 steps to improving your recruitment accuracy by focusing on behaviours.
My colleague, Greg, and I got talking recently about how to improve recruitment accuracy. We’ve both recruited 100’s of people in our careers and feel strongly about what causes mis-hires. We found, though, that there is little research material on this topic. This in itself is surprising when you realise that 46% of new recruits typically fail in their first 18 months – one in every two hires that are made.
We decided to dig further and our ensuing investigation confirmed our initial beliefs, leading us to feel compelled to share a recruitment strategy and process to address the issue.
In our investigation we asked the following questions:
- What is the recruitment failure rate?
- What is the cost?
- What is the root-cause?
- How can hiring managers do a better job?
Although the cause didn’t surprise us, the answers to the other questions did.
The size of the problem greatly exceeded our expectations
When we talk about failing, we mean either the contract being terminated, the employee receiving poor performance reviews or them making their own decision to leave.
In either case, it is wasted investment in the recruitment process. This includes the time spent to interview the candidate, to on-board her/him, recruitment fees and more importantly the negative impact these new recruits had on the business and their colleagues. This excludes the opportunity costs.
The research we found suggests the cost to a business of a mis-hire is 3-18 times the salary of the person. We won’t go into the details of the calculation here, but we invite you to have a look at this financial model to help you assess the cost of mis-hiring based on your own business metrics: typically this will range between 5% and 30% of your profit.
What surprised us even more was the importance behaviours played in this issue.
In 89% of the cases, behaviours and attitudes were stated as the reason for the new hires to fail. This compares with only 11% for technical abilities. This does not mean that technical abilities are not important in your recruitment process, nor that the failure is only the candidate’s fault, of course organisations and hiring managers bear some of the responsibility too.
What the results tell us is that hiring managers typically do a good job of identifying technical abilities, however, they fail in identifying the right behaviours or developing them.
In the rest of this article we will share strategies to firstly assess useful behaviours and attitudes in candidates and then to develop them as they join your organisation.
To do this with the highest success rate, we propose a 3-step process.
- Define the behaviours needed for the role
- Probe for these during the recruitment process
- Reinforce these behaviours whilst on-boarding
Step 1- Define the behaviours needed for the role
In most cases, hiring managers will define clearly the hard skills required for the job and leave the assessment of behaviours for the interview, without being clear of what they are looking for. This exposes their judgement to multiple bias risks. This, in large part, explains why behaviours are the reason for recruitment failure in nine out of 10 cases.
We argue that hiring managers should define the behaviours needed upfront. This is a key step: it is complicated and may undermine the rest of the recruitment process if not done correctly.
To increase your chances of success, we suggest that you define two or three of the desired behaviour traits at three levels: first the organisation, second the team and third the role. The organisational level is particularly important if you hire a senior person or large numbers of people as they will strongly influence your organisation.
Let’s look at an example.
The CEO of a software company is hiring a new Chief Revenue Officer (CRO). He knows that collaboration across teams needs to improve, therefore, he will look for someone who is highly collaborative and vulnerable. The CRO will be part of the executive team which needs more ownership-taking and honesty to address issues candidly. Leading 25 remote sales staff, it will be helpful for the sales leader to have high levels of empathy to identify the needs of the team and individuals. Empathy will also help create deeper customer relationships.
We end up then with 5 traits that the CEO can now probe in the second step.
Step 2 – Probe for the behaviours during the recruitment process
The second step is to prepare how you will observe and test for these behaviours during the recruitment process.
Of course, interviews and questioning within interviews is key. You can go a long way to understanding someone’s behaviours whilst interviewing, but hiring managers seem to revert quickly to asking questions about technical ability and tend not to focus on behaviours as they should.
That said, as much as you can ask behavioural related questions, the answers to these questions could be quite different to what someone is like in reality.
So, to counter this, we suggest that you use the whole process as a test for behaviour – and we are essentially referring to everything that happens outside of the formal interview.
By observing what happens with interactions outside of interviews you get a true sense of what someone is like. This could be the tone of emails and calls around interview logistics; it will most certainly be first impressions. You might like to take note of how they deal with other members of staff outside of decision makers – for example, the person on reception and the external recruiter.
By observing all touch points, you begin to build the holistic view you need to make an informed decision about behaviour. If you have decided that empathy is important, you need to know whether the candidate has been curious about how others in the process are feeling and whether they have used this to build rapport and trust with decision makers. The candidates’ actions outside of the formal setting give important clues into their psyche and behaviour. Know too that candidates will subconsciously be using your whole process as a test – so be sure to run a process that reflects the true nature of your organisation. If you are respectful, you will be sure to get feedback to candidates quickly and fairly.
Step 3 – Reinforce the behaviours whilst on-boarding
Congratulations: you have found the candidate that meets your technical and behavioural requirements and she has signed! Now is the time to set her up for success.
On-boarding goes a long way. Studies show that companies with a standard on-boarding process have 54% greater new hire productivity and 50% greater retention. Imagine the impact of having a standard AND behaviour-focused on-boarding process! To do this, consider the three phases of the on-boarding.
First, engage early. Explain which behaviours you probed during the recruitment process. Share the on-boarding plan. Invite her to team events and share high-level information about the business and the team. Have a short call with her prior to her first day.
Second, make her feel welcome on her first day. Sending introductions at least to all the people she will interact with. Avoid logistics issues. We keep hearing stories of people being dropped into teams they are supposed to manage – remotely! This does not set anybody up for success.
Third, continue the on-boarding process until at least the end of the probation period. Salesforce.com, for example, has a 6-month on-boarding process. Make yours long-lasting too. Avoid the avalanche of information and meetings; provide clarity by giving feedback and course correcting early; help her create personal connections, this helps foster a team spirit which in turn drives performance; create a safe environment – this will help her share her weaknesses and issues, ultimately promoting honesty and innovation. (For more on the importance of psychological safety, see this study.)
Finally make it safe to quit. This may sound counter-intuitive after all of this hard work, but the inevitable truth is that you will hire the wrong person once in a while. You may not know it, but the new recruit will. In this case, from day one, tell the person that she can go with no hard feelings if she feels she is not in the right place. You may even incentivise her to leave early by paying her probation period.
We hope this has helped you to understand better what critical factors to consider when recruiting, hiring and onboarding.
If you use the recruitment opportunity to develop, improve and better align culture in your organisation, work out the behaviours you need when recruiting new people into your business and use the whole recruitment process as a test and onboard new recruits thoughtfully and with purpose, you will be sure to increase employee retention and satisfaction.
And your profits will likely increase too!
Sales leadership sees a significant jump when revenue responsibility moves from sub £75m into the £75m to £100m range. At this level, building and executing a strategy is often done by one person and can be highly complex and taxing. Base then tapers off when revenue responsibility rises above £100m. We think this is because there are more leaders involved and the focus is purely on execution. Although there may be more revenue responsibility, the role is less complex.
The trend for general management, on the other hand, is a steady increase in base to the £100m revenue mark, beyond which it starts to flatten out. We did, though, see a significant jump in the variable reward and non-cash items.
Increasing base salary
We all know there are two fundamental ways an employee can go about increasing their base salary: negotiate a pay rise from their current employer or find a new job paying more. This is important when thinking about attracting and retaining talent.
We looked at all the searches we had run over the last 12 months and found that those moving from a job increased their base on average by 16%. We know that when running a search, we expect to have to present something more than 20% overall to get someone genuinely interested.
At a time when there might be more people between jobs on the market, it is also worth noting that those moving from no job had their base decrease by 13% from their most recent role.
The conversation about variable
Variable and non-cash items depend a lot on circumstances, which makes like-for-like comparison difficult.
That said, we can say that variable rewards at senior level tends to be between 50-100% of base. For general management, this is more likely to be 50%-80% and for sales, 100% – although 100% in software and 40-100% in content and data sales is more common.
LTIP’s, stock and shares seem to come in where the base is around £150k+ or where a company is at early stage. We plan to do more work on producing insights on variable compensation later this year.
So, in summary, if you are thinking about recruiting to senior positions in the months ahead…
- Base salary might be more important than you think
- Revenue responsibility has the biggest impact on base salary
- Attracting talent from an existing role will likely need an increase in base of 16%+
- Non-cash items and variable reward only become swaying factors when base is in excess of £150,000
This is just some of the information that we can share on attracting and retaining a high-performing team. In a future webinar and post, we will be looking at how to hire and develop people with the right behaviours, which we know is the biggest downfall when it comes to leadership retention.
Please let us know via the contact page if you’d like to join.