"We respect people". "Our team is like our family", “people are our most important asset”. If that were true, companies would rigorously introspect their own hiring and retention practices, to ensure that they are indeed recruiting the best people and taking care of them. Remarkably, many fail miserably at this task. Only a third of global companies check whether their recruitment process produces good employees. Most of the organizations feel people can be easily replaced and hence focus on retention is not that great.
When companies are asked why they do not monitor the effectiveness of hiring, the most common response is that measuring employee performance is too difficult. Given that recruitment costs are the single biggest expense item at many companies, this is an eye-opening admission. , there are some simple things employers could do: check how long newly hired workers stay at the company or ask a supervisor whether they regret the hiring decision.
This failure of monitoring is strange given the effort that companies expend on recruiting outside their ranks. By logic, companies should know more about the abilities of their own workers than they do about those of outsiders. But they still opt for the latter, even though research suggests that outside hires take three years longer to perform as well as internal candidates in the same job. The salary given to the outside employees is far more than the existing employees.
Companies often seem to jumble up effectiveness active and passive candidates and they don’t prefer to hire someone who is actively looking for work. Employers seem to operate on the principle that there must be something wrong with someone who is unhappy with their current job. Instead, they aim to prize away passive candidates who have shown no sign of wanting to move. Inevitably, this is time-consuming and also the conversion ratio is pretty questionable as well.
In turn, the hiring process becomes tedious and thus higher costs are incurred. Employees happy with their current job are likely to need a strong reason and motive to make a move. There is no evidence to suggest that hiring outsiders is more cost-effective than hiring other workers, or that passive candidates make better employees.
Methods employes by companies to hire vacant positions leave a lot to be desired. Employment agencies offer creative tests, checking things like body language, facial expressions, and word usage, but it is far from clear how effective these actually are at picking good candidates. Testing the abilities of applicants at the skills required for the job is probably the best approach.
Alas, even when these tests are conducted, hiring managers often ignore the results. Instead, companies have doubled the amount of time spent on the interview process in the last 10 years. Because of hiring number pressure they tend to make exceptions on the results of these tests.
The best interview strategy is to ask all applicants the same set of defined questions. Those answers can be fairly compared. Managers though are looking for workers who will be a cultural fit, will come up with questions like “what would you do if you are in middle of a calamity?” This technique is subject to the biases of the interviewers, who then tend to recruit people most like themselves which is "similar to me" problem in hiring. Automated hiring algorithms reproduce this effect if they are trained on the characteristics of existing employees.
The Way forward
So how can companies improve? The best way is to firms post all job openings internally, check how many positions are filled from within, and make a substantial effort to see how outside hires perform. But everyone should worry that companies are less rigorous about evaluating the performance of their people than about the quality of the external hires. Improving productivity is generally agreed to be the best way to achieve faster company growth and better Results.