Here Are the Best (and Worst) Predictors of Quality of Hire

In the last few years, we’ve run a survey asking how recently hired people found their jobs and how active or passive they were when they heard about the job. With the help of a curious Harvard undergrad, we recently looked back through the results to see if we could determine what are the best predictors of quality of hire.

Based on our data, we were able to come up with a list of key predictors of both job success and failure:

A new survey we are running this year will enable us to figure out how these factors need to be weighed when making the yes/no hiring decision along with why people accept jobs and why they thrive in some jobs and not others. (send this survey link to everyone you know who has changed jobs in the past few years).

For example, offering someone with heavy skills and experience might be satisfying in the short run but it could also result in excluding some very talented people who are looking for stretch assignments. In fact, these candidates might be stronger in both the short and long run. (Don’t hesitate to reach out to me if you’d like to learn more about how this information can be used to make better long-term hiring decisions.)

Why source of hire (and networking in particular) is a top predictor of quality of hire

As we were putting the above chart together, the data and my years of recruiting experience showed that one of these predictors was particularly important for recruiters. And that’s the source of hire. It turns out that when we tracked the source of hire across passive and active candidates, we concluded that those who found their jobs via networking were far more satisfied with their jobs today and were more likely to still be in the same job one year later.

To illustrate what I am talking about, here is the survey data:

The percentages at the top of the graph categorize 3100+ survey respondents by job hunting status. The percentages indicate the size of the talent market. The spread represents different job levels. The bar chart summarizes how these people actually got their jobs.

It’s expected that those people who were actively looking for a job would respond to a job posting, but even these people were also aggressively networking. In fact, about 45% of these people found a new job via networking vs. 40% via the job post route. (This is the sum of the two active job seeker charts on the left of the graph.)

Not unexpectedly, for those who are less active (Tiptoers are people who are casually looking for another job), networking trumps applying directly for a job by a factor of 3:1. For the true passive candidates, the ratio of networking to applying is a whopping 7:1.

Fish where the big fish hang out

While networking is the obvious first choice for finding the best talent, comparing the size of the active, Tiptoer and passive candidate talent market reinforces this point. Since less than 20% of people looking for professional staff or mid-management positions found their current job by applying directly to a posting, it suggests companies should not spend more than 20% of their budget doing this.

While this information was extracted from last year’s survey, it was not unexpected. The same results were found in a joint research project we conducted with LinkedIn a few years ago. This survey revealed that active candidates represent around 5-20% of the total talent market, Tiptoers about 15-20% and passive candidates about 65-75%. The ranges reflect different job levels with fewer active candidates available for high demand positions.

Given this data, it’s pretty clear that finding candidates needs to emphasize networking.

Recognize that LinkedIn is a network of 500 million people, not just a database of them

If you’re trying to hire a top person, don’t use processes designed to weed out the weak ones. Part of this is not posting jobs that are at best ill-defined lateral transfers. Instead, write compelling postings and emails that capture your ideal candidate’s intrinsic motivators. Here’s a great example for a tough job in a remote area that attracted passive candidates within hours. Note the absence of any skills.

Bottom line, you need to emphasize networking and offering compelling career growth opportunities if you want to improve quality of hire. Practically speaking, you don’t need any survey data to prove this, just ask some hiring managers how they found their best people. But it would still be nice to have the survey data to confirm what we think we know.

The Two Questions You Must Ask Every Job Candidate

You might recall that the first most important interview question of all time is, “Can you describe your most significant career accomplishment?” I suggest spending about 10-15 minutes on this question, gaining insight into the results achieved, the competencies and skills used, the environment and culture, and the process used to achieve the results. If there's a fit with the job, this same question needs to be repeated multiple times digging deep into the person’s major accomplishment for each past job. Then connect the dots. The trend line reveals consistency, growth and potential.

The most significant accomplishment question is a great foundational question I’ve used in more than 5,000 interviews over the past 40 years (no typo). However, my favorite question is something completely different. It takes this understanding of performance to another level. It reveals job-specific problem-solving, insight, intelligence, potential, vision, and leadership. The question goes something like this:

"One of the biggest challenges in this job is (provide short description). If you were to get the job, how would you go about solving it?”

For example, if you're hiring a sales manager, the form of the question might be, "How would you go about ensuring the team met quota every month?" For an engineer, it might be, "How would you design and test this product to ensure it's in production by next March?"

A few years ago I asked this question for a Director of Tax candidate long before the new 2017 tax law was approved: "Given the current U.S. tax rules on inversions how would you modify the company’s current global tax strategy?” I then spent the next 15 minutes in a give-and-take discussion making sure the candidate understood the problem, had a logical approach for developing a solution and could explain it to a cynical lay person.

Asked properly this question uncovers a critical ability of all top performers: job-related problem-solving skills. The best candidates I've met in my 35 years in executive search all have the ability to anticipate the needs of the job before starting it. They can figure out very quickly what's wrong or what's necessary to accomplish a task, what they need to do to implement a solution, and what resources they need to do it. Even better, they “see” the problem, the solution, and the steps needed to get there. They also know what they don’t know and are confident enough to tell you how they’ll get this information.

When you ask this problem-solving question it’s important to turn off the spotlights and shift the conversation into a more natural give-and-take discussion about real job needs. This way the meeting is no longer an interview but a business-like discussion with a team member trying to work together to figure out a solution to a real problem. Once you get comfortable with this style of interviewing, you’ll be able to assess the following four dimensions of thinking skills.

The Four Dimensions of Thinking and Problem-solving

Depth. Determine if the reasoning is complex, advanced or superficial. The best candidates demonstrate a good understanding of the cause and effect of a problem and can determine how to find the root cause. Superficial reasoning is evidenced by a bunch of seemingly unrelated or more generic ideas. Reasoning is more advanced if the ideas logically link together.

Focus. Is the focus technical, tactical, or strategic? Candidates with a pure technical focus get into process or concept details. Those with a tactical bent address the results and outcomes more. A strategic focus is represented by a longer time horizon with consideration to the implications and the unintended consequences.

Team or individual emphasis. Understand if the candidate's ideas and approaches involve others or if the person is more individual or self-focused. This is an important consideration if the person will be managing others or involved in a number of team projects.

Functional or multifunctional perspective. The best candidates understand the implications of their job on other people and other functions. Listen for this as the candidate plans out his or her tasks and asks questions.

The Caveat: Make Sure the Person Can Walk the Talk

There is a caveat to this type of questioning: to ensure the person isn’t just a good talker, thinker and planner, but can also deliver results, use the most significant accomplishment question by asking, “Now can you tell me about something you’ve accomplished that’s most related to what we need done?”

I refer to this two-question combination as the Anchor and Visualize approach. A track record of past performance and the ability to visualize the future is a great indicator of ability. When combined with a clear understanding of real job needs using a performance-based job description, the problem-solving question might soon become your favorite question, too.

You Never Need to Compromise Quality, Speed or Cost of Hire – Here is How to Win at All Three

A few weeks ago I was talking to the CEO of a $250 million business looking for a CFO. He started the meeting complaining that the recruiters he’s used in the past always try to talk him into compromising on the quality of candidates they present. I met this CEO through the head of a private equity firm where I’m now helping them interview CEO candidates for a major new company. The Chairman of the group also complained that the quality of the candidates they had been seeing from a major executive search firm were all over the map.

So when I read a post on this blog advising recruiters to discuss with hiring managers the trade offs between quality, speed, and cost in the candidate search process – I had to take a pause. I have been recruiting 40+ years and I am a firm believer that there don’t need to be any trade offs between these core metrics. It is possible for a good recruiter to achieve all three given the right strategy. Here is how it’s done:

Maximize quality of hire by redefining success

Of course, the root cause problem is that recruiting top tier candidates is not possible using traditional job descriptions. So you need to convince hiring managers to put these aside during the intake meeting. It’s common knowledge that skills, experiences and competencies have been shown to be weak predictors of on-the-job performance. If you know a top performer who has been promoted, you have all of the proof you need to agree on this point. The reason people are promoted has little to do with their skills and experiences and all to do with their successful performance and ability to learn. So rather than use a “pick two out of three” approach, it’s better to redefine how performance is measured.

For example, for the CFO project the CEO began our initial meeting showing me the traditional list of “must have” skills, required experience and perfect personality traits. I said this wasn’t a job description but a person description, so let’s parking lot this for a minute. He didn’t argue. Then I asked him what the person needs to do in the CFO role to be considered very successful during the first year. We came up with six performance objectives that focused on improving margins by 5-10 points, implementing a companywide planning and budgeting system and developing an ROI-based decision making process used at every level in the company.

He instantly agreed this was the right way to measure performance.

Minimize time-to-fill by implementing a “small batch, high touch” process

There’s no need to compromise on speed. The key is to only spend time with candidates who are a strong fit for your job rather than wasting your time weeding through skills-qualified people and hoping someone reasonably good will be interested. In this case a strong fit is defined as someone who is performance qualified (meaning he/she can do the work described above), possesses the Achiever Pattern (the person is consistently in the top 30-40% of his/her peer group) and the person would naturally see your opening as a career move.

Combined with “Clever Boolean” and an advanced recruiting technique called “Cherry Picking,” finding people like this is not difficult as long as you implement a 40-40-20 sourcing program. This means spending 40% of your time getting referrals, 40% direct sourcing and 20% writing compelling messages that are pushed to your target audience. Specialist recruiters have a distinct advantage since they’re constantly building talent-rich pools. This way finding a few hot prospects in a week or so is likely. Generalist recruiters who are proactive networkers and have a license to LinkedIn Recruiter can still deliver prospects in 5-10 days.

Reduce cost per hire by offering candidates a huge non-monetary increase

Of course, you still need to recruit and close these people but you do this by offering people a 30% non-monetary increase rather than saying you can’t afford to hire these people. This means the job must offer a combination of more stretch, more rapid growth, more impact and a mix of more satisfying work. This is a go-slow, high-touch relationship-based recruiting approach.

This has nothing to do with filtering prospects on compensation, title and location. It has all to do with making the case that your open job puts the person on a stronger long-term career trajectory. For example, for the CEO project the top candidate was willing to take a drastic reduction in compensation to lead a unique start-up. Early this year, I talked with an engineering manager who was willing to take a modest increase for the chance to lead the design efforts for a new AI-based marketing platform. And last year I got a senior HR director from a bigger company to relocate to a less desirable area in order to get a VP level title for a slightly smaller company.

So forget the two-thirds approach to recruiting. Instead redefine performance, find a few strong prospects who would see the opening as a career move and then close the deal based on what the person can become rather than what he or she receives on the start date.

When It Comes to Hiring, Start with a 3-Legged Stool

If you're a job seeker, what would you do if you could only apply to 4-5 jobs in any given month?

I suspect you'd be a lot more focused and conduct a lot more due diligence before hitting the apply button. I also suspect that recruiters would pay a lot more attention to you since they wouldn't need to pour through hundreds of resumes of people who just indiscriminately hit the apply button.

Now what would you do if you were a hiring manager and were told your new operating guideline was that you were only allowed to formally interview three candidates and you had to hire one of them? I suspect you wouldn't do what you're now doing.

In October 2017 at LinkedIn's Talent Connect 2017, four thousand people descended upon Nashville to discuss every possible hiring problem that exists and what to do about them. I pretty much told everyone it would be a great party, but unless they started completely over, things would be different but no better.

I then asked the following questions to demonstrate the point that when it comes to hiring, companies have forgotten that stools have three legs.

  • Why do recruiters need to review 150 resumes to make one decent hire but only 3-4 referred candidates to make one great hire?
  • Why do we hire people we know based on their past performance and potential but we hire strangers based on their past experience?
  • Why do hiring managers want to hire candidates who can hit the ground running but the best people who can hit the ground running want to run on different tracks?
  • While we all want to hire more diverse people, why do we expect them to have the same skills and experiences and look and sound like everyone we've already hired?
  • Why do recruiters and tech vendors get excited about doing the wrong things faster?

I attribute all of these problems to the lack of the right hiring strategy, the focus on jobs instead of career moves and the use of duct tape rather than a business process to make hiring decisions.

As far as I'm concerned, a more effective and efficient solution for hiring revolves around the three-legged stool concept of integrating strategy, people and process that's designed from the perspective of the people companies actually want to hire. This seems like Business 101 to me but when it comes to hiring it seems like an idea from an alien world.

The Strategy Leg: Supply vs. Demand Determines the Talent Strategy  

Too many companies design their hiring processes based on the assumption there's a surplus of top talent ready and willing to work for them. While a flawed assumption, the premise results in a "weed out the weak and avoid mistakes" mentality at each step, including how job descriptions are written, how candidates need to apply and how they're interviewed.

The strategic point in all of this is that you can't use a surplus of talent model when a surplus of talent doesn't exist. In a talent scarcity situation you need to attract the best in, not weed them out. This requires a high touch relationship approach offering true career growth rather than an impersonal transactional process offering people ill-defined lateral transfers.

The People Leg: Offer Career Moves, Not Lateral Transfers

Regardless of the job, the best people have no need or desire to consider ill-defined lateral transfers. Generic job postings that over-emphasize "must have" skills, experiences and competences are proof of this surplus of talent process design mindset.

Instead, jobs need to be customized to attract top talent based on the person's intrinsic motivators to excel, and the evaluation process must be slowed to demonstrate that these jobs offer true growth. This is comparable to the discovery step in solution selling where buyer and seller develop win-win solutions. As important, the decision criteria used to make an offer and the criteria used by the candidate to accept it must be aligned emphasizing long-term opportunity, not short-term convenience or compensation.

The Process Leg: Think System, Not Duct Tape

Too many hiring processes today are nothing more than a bunch of independent processes duct-taped together to form a so-called hiring process. The result is a hodgepodge of wasted activity rather than a well-tuned hiring machine. For example, at Nashville, I contended that the use of behavioral interviewing exacerbates the problem by focusing too much on avoiding hiring mistakes rather than attracting the best, which requires a mutual respect and discovery process.

I then demonstrated how Performance-based Hiring corrects for this fatal systemic flaw by designing every step in the hiring process based on how top people - both active and passive - look for and change jobs and how they make career hiring decisions.

Walking on All Three Legs: Walk the Talk

If talent is #1, then hiring managers need to be hired, measured and promoted on how well they do!

To get started walking this path, try to figure out what you'd do if you were a recruiter or hiring manager or business leader and were only given three shots at hiring someone. I suspect you'd work backwards building some type of three-legged stool. And even if it was a bit off kilter at first, you'd soon figure out what you need to do to eliminate the problem. To get started walking even faster, if the first candidate you meet is not hirable, stop everything and figure out why not, because you only have two attempts left.

The Fatal Flaw in Behavioral Interviewing

The other day a woman at a webcast I was leading asked why I didn’t think behavioral-based interviewing is effective for assessing competency, fit and motivation for a specific job. My two-minute response related to the fact that generic behaviors, like motivation and team building, are too generic to draw specific conclusions about a specific job.

For example, while most people can give excellent examples of being motivated, it doesn’t mean the person is always motivated to do any type of work in any situation. That’s why it’s important to understand what caused the motivation to determine if the person is fit for the actual job that needs to be filled. Despite this very severe weakness, a structured behavioral interview has value by increasing objectivity and, as a result, reducing hiring errors due to bias and emotional decision making. In fact, all of the validated evidence to support the use of behavioral interviewing is largely based on eliminating these types of unforced errors in hiring. There is no validation that it improves quality of hire.

In fact, it actually reduces it. The problem is that asking structured and formulistic questions is a turn-off to the highly talented, especially passive candidates, and, as a result, they often voluntarily opt-out of consideration early in the process. In my opinion, the consequences of losing good candidates due to the use of behavioral interviewing minimizes it's value even if it was a good predictor of performance, which it isn't.

Start with the task rather than the behavior.

The problem is it takes multiple behaviors to complete any task and some people complete the same task differently. Completing any project successfully typically requires a dose of technical ability, strong project management skills, the ability to persuade others and the motivation to overcome obstacles and setbacks. Asking for examples of each of these behaviors misses the big picture – can the person lead major projects with tight deadlines working with lots of different people on time and on budget? For most people, it might be better to delegate most of the work rather than doing it themselves. But from a behavioral assessment, this might be the wrong answer.

So rather than ask a person to give an example of when he/she used a specific behavior, ask the person to describe in detail a major accomplishment related to a specific job need. As part of the fact-finding to fully understand the accomplishment, ask the person to give examples of when he/she took the initiative, solved a difficult problem, coached others and had to make difficult trade-offs that affected the person’s value system. This type of performance-based question focuses on performance as the focus of the question and the behaviors as a means to achieve the objective. Making the assessment for fit is much easier using this type of question by comparing the scope, scale and complexity of the project to actual job needs.

You first need to define the real job, culture and environment to make the comparison.

While putting the behaviors under the umbrella of the accomplishment is a better means to understand how the person accomplished the task, making the comparison to the real job requires an understanding of the real job.

You can figure this out during the intake meeting with the hiring manager by first putting aside the list of skills, experiences and required competencies. Instead, ask the manager what the person needs to do to be successful. Then have the manager describe the job in terms of tasks or deliverables, the role the new hire will play (e.g., build, lead, design, audit, etc.), and some metrics of success. For example, complete the widget advertising plan in 90 days. This is much more insightful than, “Be results driven, have 3+ years of UX design experience and an MBA.”

To be sure job expectations are fully clarified ask the hiring manager how each requirement on the original job description is actually used on the job. For example, for “Strong Cultural Fit” the response might be, “Complete the XYZ product roadmap quickly with limited resources.” Often these clarifying statements can be embedded in the tasks and projects defined initially.

Without this type of job analysis and understanding of real job needs even the OD experts recognize the weaknesses in the behavioral interview.

Examine the trend of performance over time.

As shown in the graphic, you’ll gain more insight into the candidate’s fit with the job by plotting the scope and scale of the person’s accomplishments over time. You’ll also be able to observe how different behaviors and skills are used to complete critical tasks, if these are growing and improving, and if the person’s accomplishments are a strong fit with the needs of the job. None of this type of assessment is possible by asking traditional behavioral interview questions.

Raise the talent bar rather than just eliminate mistakes.

It doesn’t take much insight to agree that past performance doing comparable work in comparable situations is a far better predictor of future success than using generic behaviors to make this assessment. More important, by using past performance you’ll not only be able to attract stronger talent but you’ll be able to hire those who find the new job both intrinsically motivating and career rewarding. This is a lot better than being satisfied avoiding hiring mistakes.