Having talented and dedicated people engaged in their roles and aligned with the goals of the organization is arguably the difference between a company’s success and failure. We know, from both the scholarly literature and popular press, that top performers best their peers by a significant and measurable degree. In fact – with top performers generating an average of 40% - 67% greater value than their counterparts – the difference between top performers and the rest of the pack isn't even close.
Traits Tied to Success are Hard to Teach
Another thing we know is that many of the most important qualities a person can bring to the table – integrity, work ethic, empathy, receptivity to feedback, and intellectual horsepower, cannot be taught – you have to hire for them. Yet most organizations’ selection processes are inherently flawed, relying on outdated processes that provide little value.
Resumes, unstructured interviews, background checks, and other time-honored traditions predict virtually nothing (Schmidt & Hunter, 1998; Schmidt, Oh, & Shaffer, 2016). Instead, these methods are highly counterproductive, stifling diversity and driving a 46% failure rate among new hires.
When you measure the costs of poor hiring processes that companies currently endure, the numbers are enormous. Turnover in the call center industry costs companies more than $5 billion a year and over 40% of their profitability. In retail, turnover costs exceed $20 billion and eliminate upwards of 50% of their profitability (Nextera, 2005). Hiring people who are slow to get up to speed costs companies tremendous amounts, as well. A recent study in the banking industry, found that large banks lose an average of more than $100 million a year in pure profit from the learning curve alone (MIT, 2005).
When you look at the resulting impact that quality of hire has across virtually all businesses, the results are staggering. For example: in 2020, the average car salesperson generated $5.4 million in sales, while top performers averaged $9.0 million (Selling Power, 2020). Clearly, an extra $3.6 million in revenue would help any dealership. However, when you multiply that across the 10-20 salespeople working at any given location (and consider that $70M is the average revenue generated by an entire dealership), selling an extra $36M to $72M can mean the difference between being the top performing location or going out of business (National Automotive Dealers Association, 2022).
The bottom line? Making good hiring decisions – by hiring people who get up to speed faster, perform better, and stay longer – has an enormous and measurable impact on your business. And the impact of making bad hiring decisions? It can crush you.
Effective Hiring Doesn't Have to Be Difficult
Fortunately, if you use the right tools, you’ll identify top performers among your candidate pool and hire them quickly and efficiently – before they accept offers from your competitors. The key is leveraging online testing and structured interviewing.
Testing (as one datapoint alongside human judgment) can be used to narrow the candidate pool to those applicants with the greatest potential for success on the job. Candidates who score well on these assessments are advanced to the interview, where hiring managers can delve deeper into their ability to perform effectively in the target position. In terms of what tests to use, usually a broad measure of cognitive ability and a personality assessment are most appropriate.
Cognitive assessments are among the strongest predictors of job performance available (Schmidt & Hunter, 1998), while personality assessments provide insight into core characteristics of each candidate. These include traits like work ethic, empathy, and integrity, as well as job specific qualities, such as sales ability and persuasiveness, customer service orientation, and the ability to coach and develop others (Ones & Viswesvaran, 2004).
Structured interviewing – assessing the competencies most important to the target job using behaviorally-based questions – adds an important layer to your selection process, empowering you to gain powerful insight into candidates’ ability to excel in their role, and optimizing the overall prediction of your selection process (Sackett, 2022).
Testing for hard skills, such as the ability to program in Java or C++, or even basic computer literacy, can be critically important to given roles, and should be looked at where it makes sense. However, it’s also valuable to realize that computer languages evolve. Plus, the ability and desire to learn them is based on cognitive ability, motivation, achievement orientation, learning ability, receptivity to feedback, and other softer skills. So while hiring candidates with hard skills can add value, ensuring you hire candidates who excel at critical soft skills is what often matters most.
Better Hiring Choices Lead to a Stronger Bottom Line
What kind of results can you expect when you capitalize on this hiring approach?
In our experience, we’ve helped clients identify and hire candidates who generate 7.5 times the revenue of their peers, stay on the job 4 times longer, are 3 times more likely to get promoted, 3 times more likely to be considered top performers on the job, 57% more likely to fix equipment right the first time, and (given the fairness of the predictive selection process) increase diversity among new hires by more than 50%.
Using cognitive and personality assessments along with structured interviews empowers organizations like yours to identify and hire the best talent. These are new hires who get up to speed faster, perform better, and stay longer. Remember: top performers generate an average of 40% to 67% greater value than their peers.
When considering the number of people you hire each year, the bottom line impact of making better hiring decisions to your business is massive. Streamlining your selection process is easy to implement, reduces your administrative burden, enhances the fairness of your selection process, meaningfully increases your ability to hire the best talent, engages your candidates, and presents your business as a leading edge employer of choice.
When’s the best time to get started? Right now.