Managing Economic Risk: Hiring for Success

13 Dec 2012

(Part 1 of 3 – Managing Economic Risk: Hiring for Success; Why Leadership Development is not Discretionary Spending in Economically Challenging Times; Mastering the Challenge of Keeping your Best People)

Managing economic risk is an important skill and responsibility for health and public sector leaders. From a workforce perspective the cost of poor hiring, poor retention and the absence of capable and flexible leadership with the right skills will cost the organisation dearly. Getting it wrong is an avoidable waste of scarce dollars for cash strapped systems.

The cost of a new hire in dollar terms is estimated to be between 30% and 200% of annual salary. We all know that the ‘soft’ costs of a poor hire in relation to time, impact on team and organisation, damage to reputation and progress of strategic or critical projects. Impact on the judgment and credibility of leadership, although difficult to quantify in dollar terms, is also high. So how can leadership minimise the risk and avoid wasting precious dollars that can be directed where it should be – toward delivering better health and wellbeing to the communities they serve.

It is the responsibility of leadership to manage the hiring process skillfully.  Whether this is done entirely in-house, in partnership with a recruitment firm or through a Recruitment Process Outsourcing (RPO) arrangement, understanding four key aspects of candidate fit and framing questions to elicit responses that connect with the person behind the interviewee facade is important.

By the time senior and executive candidates get to interview, their “technical” skills and career experience are unlikely to be the real issue. Their careers have progressed to this level because they are smart, articulate and are driven by the desire to succeed. They have also been on the other side of the interview process and will have been thorough in their preparation and anticipation of questions. They will have plenty of experience to draw on too.

So what is important?  Getting behind the candidate “front” and connecting with the real person. The way they think, their values and how they are likely to behave in the job.

Tony Hseih, CEO of Zappos*, says he prefers to use a number of approaches when hiring senior leaders, including changing the environment by having them home for a barbecue to meet other members of the team for a more casual interaction, and asking open ended and indirect questions at interview. Translating organisational values into competencies and turning them into questions is his trademark in interview questioning. One of the things he likes to do is ask executives to describe themselves as others see them. A favoured question is – “What do you imagine is a misperception others may have of you?” He then asks, “what is the difference between misperception and perception?”

Vision, mission and values are tangible elements of organisational culture and translating values into specific competencies, asking questions against values and hiring for culture will go a long way to ensuring a successful “fit”.

Mixing carefully constructed technical and behavioural questions along with open-ended questions about your business and how the candidate would deal with a particular scenario will determine results. Questions that are open-ended and “left field” will disclose more: for example, “What qualities do you admire most in people?” and “How would you turn a $20M budget deficit in our business to a balanced result?”

The Person / Job Fit has four key elements:

Getting the balance right with person fit and fit with the organisation will depend on the position priorities. The need for organisational vs. job fit and managing the risk of early resignation through job fit are aspects of “fit” for consideration.

The Job Fit

This element is about matching knowledge and skills to the requirements of the job. What are their core capabilities? Check out their track record of performance, successes and failures from their CV and get answers prior to short listing. You need to understand what they personally took responsibility for leading and managing and how well they did it.

Check the pattern of where the candidate’s leadership strengths are most comfortably aligned and how that matches with the job needs e.g. does their CV demonstrate a pattern of high level skills being applied to longer term system improvement, innovative thinking, system or service restructuring, fixing major organisational headaches and moving to the next challenge or staying to build the workforce and deliver on longer term vision? What does the job need?

Person/job fit has a strong correlation with job satisfaction, organisational engagement and early resignation when it goes wrong. It is the aspect of fit that is about personal qualities and job compatibility and the focus is much broader than the immediate job. Structuring questions that elicit the applicant’s ideas on the interconnectedness of the job to the job’s broader context will give you an idea of their fit for the role.

It is important to remember that job fit is not just about now, it’s about where you plan for the organisation to be in five years time. It’s about future strategy and challenge. Candidates need to know the full picture so that they can make an informed choice. If the job today isn’t what you plan for it to look like 3 – 5 years from now, then it’s important to articulate that when marketing the role and before they consider applying.

Tell it as it is. I know that seems obvious but not every prospective employer gets it. We had a client who had seven people in their job over three years and despite thorough briefing and counseling the client about what their position description conveyed and what they personally communicated about the job, they simply didn’t align with what the job actually was. Of course we ended up with the first candidate resigning after a month, the second candidate threatening the same and by the time the client came back to us for a third round we said thank you but no thank you. Giving an honest assessment of the scope and constraints won’t waste time and your money.

Don’t oversell or glamorise the challenge of the role as a strategic leadership role driving vision and leading a high performance culture, if in fact you need someone who will turn it into a high performance culture or the job requires a methodical person to work in detail. It’s useful to make clear to recruitment consultants if you are outsourcing, the top 3-4 key characteristics the job demands e.g. High visibility and energy; negotiating and influencing; strategy and stakeholder relationships; verbal and written communication skills.

Organisational Fit

The focus is on personality, values and the needs of candidates and the organisation. Research indicates that getting the person/organisation fit right bears a strong alignment to overall performance, job satisfaction and engagement.

The key characteristics are about relationships within the immediate job context. Hire for capabilities to drive success in delivering strategy in the current as well as the future organisational context. Personal values that are strongly aligned with organisational values and asking interview questioning that are based on organisational values that have been translated into position competencies will help. If an organisational value is “To embrace and drive innovation,” then you might ask the question “Tell me about a nationally or internationally recognised person whose innovative leadership has impressed you. What do you and don’t you admire about that person?”

Team Fit

Recruit individual executive team members who can contribute to strategic direction setting and whose skills and characteristics build on collective collaboration. These are key to creating and driving vision, mission and culture.

Fit with the CEO

The rule applies that you never recruit a version of yourself. You recruit to compliment your strengths in order to build the collective capability quotient.  If you are outsourcing to an external recruiter and they don’t know you well, then make sure you tell them about your style so they understand the characteristics that are important to you as well as those that annoy you.

Are you irritated when people are indecisive? Or constantly providing another option and taking forever to take action? Do you find judgmental or detached people hard to work with? Do “needy” executives who require frequent recognition annoy you? Knowing the candidate’s Myers-Briggs personality type will give you a clue here.

As a recruiter, I find it useful when I am able to get feedback from direct reports about their view of the CEO’s style. In that way I build a 360 degree view of the CEO’s style which helps create a stronger partnership through better understanding their personal communication and information preferences.

Selection isn’t about personal chemistry either; it is about fit across all four areas of person/job fit. Self-motivated executives are more likely than others to require all four elements of fit to be right.

Conclusion

Whilst all of this sounds like a lot of effort, if you outsource to a recruitment firm, appreciate that these are the elements you will expect to be covered by firms who have a reputation for success in getting candidate fit right. If you are doing the recruitment in-house, it is all about short-term effort for long-term gain and responsible financial management.

Another word on recruiting overseas and interstate candidates:

You can’t get the fit right long distance. Eliminating candidates through a first line approach of telephone or video interview is not as dollar smart as you think it is. The risk is losing the real person for the job because you haven’t been able to properly assess organisational and team fit.

Examples of open ended, behavioural and indirect questions for executive candidates

• What’s the biggest mistake you have made? What did you do about it?
• What do you most dislike in organisations?
• What characteristics do you most admire in people?
• If you were to name one person in the world who you admire, who would that be? Why?
• Why do you want to work in this organisation?
• Tell me about a time you had to reduce the budget by more than xx% by year end.
• What characteristics do you most dislike in people?
• Tell me how you identify top performers in your organisation? How do you make sure you keep them?
• Tell me about your approach to doing more with the same resources?

 * Tony Hseih, CEO of Zappos and author of Delivering Happiness. In 1999, aged 24, he sold LinkExchange, the company he co-founded, to Microsoft for $265 million.  He joined zappos.com as an advisor and investor and eventually became CEO. He led the company from revenue of almost nothing to over $1 billion in annual gross sales. Zappos has made Fortune’s annual ‘100 Best Companies To Work For’ list every year since 2009.

Delivering Happiness is well worth a read. In it Hsieh demonstrates the power of corporate culture in achieving business success and happiness.