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The Difference Between Recruiters and Business Psychologists

Gary Duamis Recruiters and Business Psychologists

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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The Costs of Bad Hires; getting senior leadership to take action

Rising costs of a bad hire by Gary Dumais

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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