SELECTION MATTERS

What References Won't Tell You ... Can Hurt You!

What will references (almost) never tell you about a candidate? Only the most important information you need to avoid bad hires!

According to SHRM’s 2004 Reference and Background Checking Report, HR professionals giving traditional references (by phone or letter) are poor sources of critical data on current or former employees.  About half of respondents say they “always” provide information about, dates of employment (big deal!).  How much will they disclose that could help you to avoid hiring incompetents, the "ethically challenged" or lunatics? Virtually nil.

Here are some kinds of information about candidates that are essential to making low-risk selection decisions… and the percentage of HR professionals who say they “Never” or “Rarely” disclose such information:

	Never	Rarely	Total
Interpersonal Skills	74%	10%	84%
Work Ethic	75%	7%	82%
Personality Traits	78%	12%	90%
Violent or Bizarre Behavior	76%	9%	85%
Malpractice/Professional Disciplinary Action	82%	9%	91%
Job Performance	72%	9%	81%

Why not? For 64 % of HR professionals in large companies, it’s fear of legal action, such as defamation claims.  But as the report explains, not providing such information can actually prove dangerous to organizations trying to protect themselves - and if you're hiring, not managing to access it can also be dangerous.

Want to know the average annual number of Defamation Claims based on references given to potential employers?  99!!  That's right - only 99 in the entire US! (Compare this with 45 million people hired.)

Here’s the really interesting part.  According to SHRM, “policies put in place to prevent this liability by providing little or no employment information have begun to backfire… [About 100 organizations a year] are accused of being liable for not providing adequate warning about the threat posed by a former employee who went on to commit a crime at a future employer.”   Furthermore, about the same number face “accusations of negligent hiring for hiring an individual who goes on to harm another employee or customer or commits another crime as an employee.”  So providing adequate information doesn’t only protect you, it protects the next guy too.

Even though 40 states have enacted laws shielding reference providers from legal liability “if the reference was given in good faith (i.e. complete and accurate to the extent of the individual’s knowledge),” corporate legal departments have been very slow to react to this changed landscape.   The result? Bad hiring decisions, enormous annual turnover (30%) and billions of dollars in costs.

Given the pace of change in most legal departments, the prospects for getting fuller disclosure appear dim.  But there’s one bright spot - HR people (according to SHRM) are much more forthcoming if a candidate executes a waiver of liability. My organization, SkillSurvey, has been able to get a high volume of excellent information by giving reference providers a confidential and anonymous method of reporting on candidates’ competencies, past behavior and job qualifications via web-based surveys – that includes just such a candidate waiver.

There are other innovative methods available to secure the information we need to hire top performers and avoid getting stuck with losers.  While waiting for the legal glaciers to move, why not use them?

46% of US hires fail in the first 18 months on the job!!

Leadership IQ conducted a 3-year study of 5247 hiring managers from 312 companies as they hired over 20,000 employees.  Here's what the study disclosed:

• 46% of new hires failed in their first 18 months, i.e:
  • Were terminated
  • Left under pressure
  • Received significantly negative performance reviews
  • Received official disciplinary action
• Only 19% achieved unequivocal success
• Early failure is conclusive evidence that most of the fault was in the selection process. The cost is staggering - most companies monetize the cost of “bad hires” at a minimum of 2x salary.

But why are so many new hires failing? What are we missing?   Leadership IQ reports that “The study tracked new hires’ behaviors, performance and personality and interviewed all 5,247 hiring managers.  The top reasons for failure (and what recruiters and hiring managers were consistently missing) turn out to be lack of:

• Coachability (26%): ability to accept and implement feedback from bosses, colleagues, customers etc
• Emotional Intelligence (23%): ability to understand and manage one’s emotions, and accurately assess others’ emotions
• Motivation (17%): Sufficient drive to achieve one’s full potential and excel in the job
• Temperament(15%): Attitude and personality suited to the particular job and work environment
• Technical Competence (11%): Functional or technical skills required to do the job

And what can we do to correct the problem? I have four recommendations - It won’t be easy but it needs to be done!

1. Monetize the problem- put hard numbers to it in our own companies.
2. Measure and manage the problem as part of the corporate risk management process - consider it “operating risk."
3. Change the measurement/compensation system for recruiters and hiring managers. Stop rewarding recruiters for “selling loser candidates to hiring managers. Hold hiring managers accountable for selecting losers and not coaching/training them well enough to succeed.
4. Make sure everyone uses the best available tools for selection and candidate quality assurance:
   • Don’t just “train” people in behavioral interviewing - make everyone a “master." Develop techniques to allow interviewers to better investigate the areas most likely to be problems.
   • Consider using simulations of the work environment and more “trial marriages” for new employees.
   • Get input on candidates’ coachability, emotional IQ, ethics, reliability, effort level, etc. etc., directly from people who have managed, worked with or been customers of the candidate. Do thorough and effective reference checking before making the offer. There are new books, new techniques, new tools and new legal protections that can make getting information on the candidate “from the horse’s mouth” a lot more effective than it was a few years ago.

Clearly, Leadership IQ has pointed the way to some thing of great importance for all of our companies.  We need to heed this particular call to action NOW!

Do Personality Tests Really Help Companies Make Better Hiring Decisions?

Many companies have been relying on personality profiles to help figure out whether job candidates have what it takes to succeed. Use of these instruments increased dramatically when lawyers began telling companies to stop disclosing meaningful data about employees to prospective employers.

Although most staffing experts agree that there is no substitute for knowing how a candidate actually performed and behaved in past work situations, companies felt they no longer could get reliable data from business references.

But the validity of personality tests has always been questionable:

1. Many I/O psychologists, noting they were designed for coaching and counseling, caution against using these tests for selection

2. Nearly 50% of those taking the tests for selection purposes admit to cheating / putting down answers they think will get them hired

3. Some managers –anxious to fill jobs-simply give their favorite candidates the answers in advance

4. Validation Studies –usually conducted by the test vendors, often don’t meet strict scientific standards –e.g. –“reliability” and fail to account for the “self-fulfilling prophesy” effect

And now the cat is really out of the bag!

Dr Edward Hoffman’s book “Ace the Corporate Personality Test”(McGraw Hill) reveals there are actually only a few basic tests (with numerous variations).There are always right answers, and by knowing how the tests are constructed, what answers the test developers are looking for, and practicing (using sample tests provided) ,any candidate can “ace” any test out there.

As the cover states, this book "reveals the secret to making the grade and getting the job", shows you how to out-smart and psyche-out the personality tests required by the corporate world  '' and dramatically improve your score and frame your answers to fit the position you are seeking".

I have read it and I believe it works.  If you are a recruiter or a staffing manager you should read it too. Then ask yourself, “What happens if a significant percent of your candidates are using this book (and maybe at some point a website) to beat your test and get hired?” Alternatives? Maybe it’s time to re-look at some other selection tools. Reference checking  perhaps? There have been recent legal and technological breakthroughs  which are helping this former “gold standard” for employee selection regain its lost luster.

"Recruiting Is Sales" - Now There’s a Scary Thought!

"Recruiting is Sales"? I know it’s a popular idea and it’s generating a lot of press - but just think about it.  Right now:

• 46% of all new US hires fail in the first 18 months on the job--- because of bad hiring decisions  (according to Leadership IQ)

• A bad hire costs companies at least 2 times annual salary (according to Right Management)

And pundits in our field are publishing articles and posting blogs right and left telling us that "recruiting IS sales," and that the primary job of recruiters is to “sell” the candidates to hiring managers. So what happens when hiring managers have concerns about a candidate’s...

• technical skills

• relevant experience

• interpersonal skills

• leadership abilities

• or fit with the work environment?

According to these guys, the recruiter simply needs to shift into intense sales mode - “overcome objections” and “defend your candidate” - because chances are the hiring manager is just being cranky or has “weak assessment skills."  And remember that "you win!" when you sell the candidate to the hiring manager!

Let's face a basic fact:  we have a major candidate quality problem. Way too many "loser" candidates are being hired, only to be almost immediately flushed out of the system - because the selection system is badly broken and nobody will admit it or do anything about it.  But we must fix it – and soon!

I don’t mean to be too rough on recruiters, who after all are trying to do their jobs as currently defined, or the pundits who are simply trying to help them be more successful. But I strongly believe we have been defining success and the relationship between recruiter and hiring manager in a counterproductive way.  They need to be business partners – each with a stake in the candidate’s success for a year or more. 

We should begin looking at the recruiting/hiring process not as a sales transaction, but as an ongoing long term commitment - analogous to what happens when an insurance underwriter writes a piece of business: there is always a “tail.” Success is measured not when the business is written but on how it turns out later.  And the only thing worse than not writing business is writing BAD business.

We clearly need new and better tools and techniques for telling good candidates from bad ones, and for assessing the "quality of hire" in the mid- and long-term.  We must do whatever it takes to ensure that the "revolving talent door" stops spinning and that our corporations stop bleeding billions... over a preventable problem!                                 

Would Your Reference Checking Process Catch a Serial Killer?

Nurse Charles Cullen is in prison (for 397 years) for killing 40 patients in the 10 healthcare facilities where he worked over a span of 16 years.  In all those years, he never got a bad reference or background check - in spite of the fact that at seven of those hospitals he was either fired, placed under investigation, or forced to resign.

How could such a thing happen? And how could it happen with at least 5 other serial killers we know of with similar profiles? And especially – how could it happen when almost everyone Cullen worked with found him "scary" or "creepy" and suspected him of crimes ranging from drug theft to murder?

That’s right – when prospective employers called Cullen’s prior employers (and some didn’t bother to call) they were told nothing more than his dates of employment ... and because he had never been convicted of any crime, his background checks came back clean.

Investigators who have weighed in on this issue agree that it was fear of being sued for “defamation” that led hospitals’ attorneys to tell their clients not to share negative - but truthful - information about Cullen.

But how real is the defamation “bogeyman” that has created a “see no evil-speak no evil” policy in over 50% of US corporations?

Many organizations – like SHRM, and the 38 state legislatures that have passed laws protecting companies that give truthful but negative references - think the “defamation bogeyman” is just that: a myth that is doing a lot of harm and should go away.

In fact, on average there are less than 100 such cases brought in the US each year.

Every year, twice as many actions are brought for “negligent hire” where an employer has failed in their responsibility to look into a candidate's background and not hire them if there is something that would put the public or other employees at risk

What is your company’s policy? Does it facilitate large numbers of unqualified, unethical (or worse) job applicants being hired every year?

Nurse Cullen would like that