When I tell people I’m a Business Psychologist that helps companies choose the right people for key roles, many respond with, “Oh, you’re a Recruiter”. Recruiters can play an important part in the hiring process, but what Business Psychologist do is very different.
To make a simple comparison, Recruiters are like Real Estate Agents, and Business Psychologists are like Home Inspectors:
Anyone who has searched for a home knows about Real Estate Agents. They’re adept at understanding what’s available on the market and providing properties to choose from. The best Real Estate Agents understand your needs and find homes that meet your criteria (while the worst agents are “salesy” and try to convince you that whatever homes they have are what you really need). Recruiters work in a similar way. They’re usually well-networked and provide a variety of job applicants for you to choose from.
In contrast, Home Inspectors are adept at appraising a property and evaluating if it has any problems (e.g., cracks in the foundation). They have special training, tools, and techniques for testing the home and objectively assessing its value so you can “know what you’re getting” when making a buying decision. Business Psychologists work in a similar way. They use psychological assessments, interview techniques, and other methods (e.g., Assessment Centers) to provide an objective evaluation of a candidate so you can “know what you’re getting” when making a hiring decision.
Finally, it’s important to consider the difference between how Recruiters and Business Psychologists are incentivized. Recruiters get paid for placing candidates. Just like Real Estate Agents, they get a commission for getting you to say, “Yes, I’ll take it” (sometimes equal to as much as 20% of a candidate’s starting salary). However, Business Psychologists get paid for correctly screening candidates. Just like Home Inspectors, they don’t get paid any more for swaying your decision one way or another. Rather, Business Psychologist get repeat business by being objective and providing the information you need to make wise hiring and promotion decisions.
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What’s a company’s greatest expense? Many might guess it’s the cost of producing products, research and development, or marketing and advertising. However, for most companies, their greatest expense by far is employees. Just think about the costs associated with paying salaries, benefits, etc., multiply them across all the employees in a company, and then it’s easy to understand how Human Capital is a company’s greatest investment.
With all that in mind, what’s the best way to quantify the cost of a bad hire? And how can managers and Human Resource professionals help senior leadership understand the gravity of those costs so they’ll invest in better recruiting and selection processes?
In my experience as a Business Psychologist, I’ve found the following questions to be especially helpful. First, I ask members of senior leadership teams to think about one of their best employees and one of their worst employees. Once they have people in mind, I then ask them to describe the impact those employees have had on the company. -Their responses are usually quick, passionate, and visceral. People can readily recall the sizable benefits a high-performing employee has brought to the company (e.g., increasing profits, making wise decisions, solving problems, championing change, etc.). Likewise, senior leaders can also quickly recall the damage a bad employee caused (e.g., costly mistakes, decisions that led the company down the wrong road, low morale, higher employee turnover, etc.). Recalling those first-hand experiences is often far more powerful and convincing than calculating a specific dollar value associated with the cost of a bad hire. For example, while it’s impactful to cite that $100,000 was wasted on hiring and training a manager who underperformed anyway, helping senior leadership to recall that the same manger made a decision that botched a new product launch and cost the company millions is even more impactful (and provides deeper insight into the issue).
Once senior leaders fully recognize and “feel” the costs associated with bad hires, it’s much easier for them to see the huge return on investment that can come from improving recruiting and selection processes.
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Human Resource professionals, executives, and other important decision-makers within companies are often tasked with choosing a consulting firm to help them with pressing Human Capital needs (e.g., recruiting, selecting, and developing people, etc.). Too often, I see these busy professionals using the “bigger is better” rule-of-thumb, signing expensive contracts with large consulting firms and ending-up very disappointed with the results.
With about fifteen years of Human Capital consulting experience, I have worked for small consulting firms, large consulting firms, and completely on my own. I’ve also been a Human Resource Manager responsible for choosing consulting service providers. Here’s a few lessons I’ve learned:
- Smaller consulting firms cost less. Those multiple offices around the world that big firms boast are very expensive to keep open, not to mention the huge amounts of staff, advertising, legal expenses, etc. required. And those hefty expenses get passed down to you as a consumer. Your company’s money can go farther when it’s paying for service rather than keeping an office’s lights on. Also, like many large companies, big firms have to consistently show profit increases to keep investors and other stakeholders interested. However, many smaller firms are content with making enough profit to pay their consultants fairly.
- “Boutique” consulting firms care more about you as a client. Consultants at smaller firms are more likely to feel the impact of their success and failures. -Losing a client can seriously impact their bottom line. Moreover, much of their new business comes from current customer referrals (e.g., being recommended for doing great work). With all that in mind, consultants at smaller firms are usually much more customer service oriented and willing to go the extra mile (e.g., complete urgent projects over the weekend and holidays) and ensure you’re satisfied as a client (e.g., customizing processes, giving discounts, etc.).
- You’re not getting better consultants (or better results) by “going big” and paying more. Big consulting firms subcontract work to smaller firms. That’s right, when those big firms get big contracts, they often reach out to independent consultants to help deliver the goods while saving money. So, that big firm consultant you’re paying top-dollar for may be a small firm consultant anyway. Moreover, many of the best consultants nowadays start out at large firms, learn they are effective and can do consulting work on their own, and then go off to work independently or start their own small firms.
In sum, choosing a smaller consulting firm can save your company money while getting better results.
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Strike-up a conversation with Human Resource professionals and Psychologists about best practices related to interviewing and you’ll quickly hear discussion about using behaviorally based interview techniques, asking questions about what people did do in business situations rather than what they would do, listening for behavioral anchors that align with company competency models, etc.
However, in contrast, I never hear people mention the importance of building and maintaining rapport with the person being interviewed, and that’s unfortunate because it provides the foundation for whatever interview technique you chose to use.
If you think about it, the person being interviewed has obviously been with themselves their entire life and is most likely to have deep knowledge of their strengths, weaknesses, personality characteristics, likes and dislikes, etc. With that in mind, a sizable part of being an adept interviewer or assessor is simply making people feel comfortable about speaking about themselves. While I have nearly a decade of experience working with high-level managers and executives, I am often described as a soft-spoken, introverted, “nice guy”. While some have suggested that I work on being more assertive, outspoken, or “edgy”, I reserve that kind of approach for instances that truly call for it (e.g., when advocating for adherence to ethical practices). Otherwise, my gentle and soft-spoken approach makes it easy for people to feel comfortable speaking with me. Similarly, I act on opportunities to show I’m listening intently and understanding what they are saying (e.g., by paraphrasing, empathizing, and utilizing other active-listening techniques). Moreover, I continually monitor my interaction with interviewees and adjust in real-time to maintain good rapport (e.g., by asking a person to elaborate about positive things such as their strengths if they begin to show signs of anxiety during the interview).
Bottom line: as an interviewer, it’s important to keep in mind that people tend to share the most useful information when they feel comfortable, and are more likely to become closed-off when they don’t.
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