First thing first: does the process need improving? Take a look at the stats below from a variety of sources and decide for yourself.
- 70% dissatisfied — 70% of the external customers (applicants) and 28% of the internal customers (hiring managers) indicate they are dissatisfied with the hiring process (Source: Staffing.org).
- 50% customer regret — 50% of the processes users (both managers and new hires) later regret their “buying” decision (Source: The Recruiting Roundtable). In addition, 25% of new hires later regret taking their new job within one year (Source: Challenger, Gray)
- 46% turnover — 46% of new hires leave their jobs within the first year (Source: eBullpen, LLC) and 50% of current employees are actively seeking or are planning to seek a new job (Source: Deloitte).
- 46% failure rate — 46% of new hires must be classified as failures within their first 18 months (fired, pressured to quit, required disciplinary action, etc.) (Source: Leadership IQ). In addition, 58% of the highest-priority hires, new executives hired from the outside, fail in their new position within 18 months (Source: Michael Watkins).
- Only a 19% success rate — only one out of five of the process output can be classified as unequivocal successes (Source: Leadership IQ).
I think the evidence is compelling: the hiring process needs some work!
Before you start improving anything, get an accurate picture of the current situation. When I ask heads of recruitment about how effective their hiring process is, I’m bombarded with statistics about cost per hire, interview to offer ratios and offer to acceptance statistics. Cost per hire is a particularly meaningless number in my view; surely the quality of hire is of some relevance here rather than how cheap it was to acquire them?
The point is none of this helps an employer measure how successful that particular hire is. You need to define some parameters for what constitutes success. A place to start is to measure whether the hire is still with the organisation 18 months on. However, in my experience, very few organisations record or analyse this, therefore they don’t know what their failure rate is and don’t know how any change to the hiring process impacts results. Part of the problem is that 18 months is a long time to wait to find out if the hiring processes delivered a successful outcome. Interim measurement at 3, 6, 9 and 12 months will provide more immediate indications and it should not be too difficult to gather retrospective data, e.g. looking at the hires made 18-24 months ago and what number are still with the company.
Does that mean once you have some useful data about how successful or unsuccessful your hiring process is, you can start looking at the process and find ways to improve it? Well in theory yes but in practice…, mostly no. Why..? because often the process is not standard, particularly for executive and senior hires. Hiring managers have very often been doing their own thing, and there is no systematic approach to hiring. It now becomes pretty much impossible to make any correlation between successful hires and the process employed to get them on board. You might find out that one hiring manager has a better track record than another but perhaps his ‘gut instinct’ about people is just better than others or more likely he just got lucky!
The single biggest reason for hiring failure is the lack of a systematic approach, a standard, repeatable process or set of processes that are applied for each and every hire. At LBA we have developed the LBA Hiring Management System™ which is proven to deliver substantially better results. The system is not perfect (86% success when last measured) but it delivers results well above the average and it is something that we can improve upon. We can take a business process management approach to improving the system.
I would be fascinated to know what a business process management or six sigma consultant would make or the typical hiring process. Perhaps it’s time to find out or alternatively you could talk to us about implement the LBA Hiring Management System™ – we would be glad to help.
