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Methods of Hiring

Far too many companies focus their energies on the what – strategies, products, and processes that drive their business. Although important, what truly determines whether or not a company will thrive is the who – the people equipped and designated to make the what decisions. Although who mistakes are costly and prevalent, they are fortunately also preventable.

In Who, Geoff Smart and Randy Street give readers the tools and strategies necessary to avoid these who mistakes and capture the right talent for their organizations. Specifically, the authors use their “ghSMART A Method for Hiring,” as a framework for helping readers identify a team of A Players that can significantly enhance their organizational functioning.

YOUR #1 PROBLEM

In an October 2006 story, The Economist reported that finding the right employees is the biggest problem facing businesses today. Unfortunately, managers almost universally struggle with this issue. One factor contributing to this issue is the use of faulty hiring practices that plague many organizations. Smart and Street – who are amazed at how tenaciously some managers cling to these strategies despite plentiful evidence against their effectiveness – refer to these ten practices as “voodoo hiring methods”:

  1. The Art Critic–“Gut instinct” is an inaccurate approach to making hiring decisions.

  2. The Sponge–When managers let multiple parties interview a candidate in hopes that they will all soak up information like a sponge, ill coordination of efforts often results in the same superficial types of information gathered by everyone involved.

  3. The Prosecutor–Although an aggressive questioning approach might land the most knowledgeable candidate, knowledge is not synonymous with the ability to perform the job duties effectively.

  4. The Suitor–Some managers devote all their time and energy to impressing the applicant and selling them on the opportunity, neglecting to listen well enough to ensure the candidate is actually a good fit for the position.

  5. The Trickster–Using gimmicks to test behaviors (i.e., observing how the candidate interacts with others at a party) may lead to awkward situations or erroneous conclusions about potential job performance.

  6. The Animal Lover–Questions such as “What type of animal would you be?” not only lack relevance but also fail to predict future performance.

  7. The Chatterbox–Although it may be enjoyable, spending too much time engaged in friendly small talk does not facilitate an effective hiring decision.

  8. The Psychological and Personality Tester–Using such tests to select candidates is risky because responses often fail to predict job success and candidates can manipulate their answers.

  9. The Aptitude Tester–Although using tests to assess if a person has aptitude for a certain position may be used in the screening process, these tests should never be used in isolation to make hiring decisions.

  10. The Fortune-Teller–Asking hypothetical questions about future situations garners how a candidate thinks they might handle a situation, but thinking and doing are two different things.

Because they are based on the faulty assumption that it is easy to assess a person using the right gimmicks, reliance on these ten methods often results in hiring mistakes. Fortunately, there are tested methods for avoiding such costly mistakes. These tested methods help identify A Players, talented individuals who can perform the necessary job. More specifically, Smart and Street define an A Player as, “a candidate who has at least a 90 percent chance of achieving a set of outcomes that only the top 10 percent of possible candidates could achieve.”

Although identifying and hiring A Players can be an arduous process, it is nonetheless essential. Companies that hire C players always lose, those who hire B Players might survive, while those who hire A Players will certainly thrive. So what is needed to get the who right by creating a quality team of A Players? Smart and Street utilize the “ghSMART A Method for Hiring,” also known as the “A Method.” There are four steps to this method, each of which can be visualized as one of the four lines in A:

  1. Scorecard–Create a document describing the specific outcomes and competencies that define the position and providing a clear picture of what the candidate must be able to accomplish.

  2. Source–Search for prospective employees in systematic ways before a position opens ensures high quality candidates will be available when they are needed.

  3. Select–Conduct a series of structured interviews to help rate a candidate against the scorecard, make informed hiring decisions, and avoid voodoo hiring practices.

  4. Sell–After identifying the perfect candidate, persuade them to join your team.

The A Method is straightforward and simple to understand. Although it requires notable upfront effort to implement, the payoff justifies this investment.

SCORECARD: A BLUEPRINT FOR SUCCESS

Far too often, organizations fail to define what they really want before they hire someone for a position. One member of a hiring team may have a vague idea about what they want and another member may have their own vague conceptualization, but these notions fail to coincide. A scorecard serves as a blueprint for success, minimizing the costly consequences of hiring the wrong person due to a failure to adequately define what is desired from that person. As Smart and Street describe, scorecards, “…take the theoretical definition of an A Player and put it in practical terms for the position you need to fill.” Scorecards are comprised of three parts, 1) the job’s mission, 2) outcomes, and 3) competencies, which together describe A performance in the role.

The first part of a scorecard is the mission, a summary of a position’s core purpose. The mission should be written so that everyone understands why the role exists. In addition, it should be concise, understandable, viewed as an evolving document, and reconsidered whenever the position needs refilling. A mission statement can be deemed as high-quality when diverse individuals from a team all understand what is being sought without the need to ask for clarification. A good mission statement allows a hiring team to identify individuals with competence that is consistent with the purpose of the job.

The second component of the scorecard describes the outcomes a person must accomplish in the role. Most often, positions have three to eight outcomes that are ranked based on order of importance. Outcomes must be clear and set aggressively enough to scare away B and C Players while continuing to entice A Players who thrive on challenges. Some outcomes can be easily quantified, e.g. “Grow revenue from $25 million to $50 million by the end of year three.” Others are more difficult to quantify, but should still be made as objective and observable as possible, e.g. “Create and implement a new marketing campaign within 180 days of start date.”

In addition to defining the essence of the position and its desired outcomes, a scorecard needs to define how the candidate will be expected to operate within the context of the position in order to achieve the outcomes. This is where the final component of the scorecard – competencies – becomes relevant. Using a variety of rich data sources, Smart and Street developed a list of critical competencies for A Players: efficiency, honesty/integrity, organization and planning, aggressiveness, follow-through on commitments, intelligence, analytical skills, attention to detail, persistence, and proactivity. Other competencies that may be found in A Players include: flexibility, maintaining calm under pressure, strategic thinking, creativity, enthusiasm, work ethic, high standards, listening skills, openness to criticism, and communication. Although the competencies on these lists should be considered, each set of competencies should be tailored to the unique characteristics of the position of interest.

SOURCE: GENERATING A FLOW OF A PLAYERS

Unfortunately, getting the right candidates for a position is not always easy. In fact, CEOs of billion-dollar companies routinely list recruitment as one of their most important roles. Successful executives realize that recruitment is an ongoing process, not a one-time event, and are constantly sourcing for new talent to identify the who before a position even becomes available.

There are many methods of sourcing that produce a large flow of candidates, but not the right candidates. According to Smart and Street, the most effective method for sourcing is to ask for referrals within professional and personal networks. In fact, 77 percent of the industry leaders interviewed for the book cited referrals as their top technique for generating the right candidates for a position. Unfortunately, this technique is also the approach to sourcing least utilized by the average manager.

There are several potential sources for referrals. First, consider outside referrals. When meeting someone new, ask the person to name the most talented people they know. After capturing these referrals on a list, call a few each week to establish connections. Additionally, in-house referrals can be very powerful because current employees know the needs and culture of the organization better than anyone else. Recruiters can also be utilized, although they are most valuable as a source for talent when they fully understand the culture, workings, and needs of the organization. Other potential sources for referrals include deputizing friends of the firm (i.e., offering a “referral bounty”), and hiring recruiting researchers.

SELECT: THE FOUR INTERVIEWS FOR SPOTTING A PLAYERS

Once candidates for a position have been identified through sourcing, the next step involves narrowing the pool to the A Players. Based on a review of thousands of studies, Smart and Street explain that traditional interviewing techniques are simply not predictive of actual job performance. Instead, they contend the best way to identify A Players is through a series of four interviews that together provide the information needed to rate a candidate against the scorecard that has been developed for the position: 1) the screening interview, 2) the Topgrading Interview®, 3) the focused interview, and 4) the reference interview.

The Screening Interview

The purpose of this brief, phone interview is to eliminate B and C Players from further consideration. Specifically, this interview saves time by quickly and efficiently eliminating candidates from the interview process who are clearly not suitable for the position. Screening interviews, which should last no more than 30 minutes, should follow a systematic approach using a common set of questions that is asked of every candidate. Smart and Street propose four essential questions for screening interviews: 1) What are your career goals? 2) What are you really good at professionally? 3) What are you not good at or not interested in doing professionally? and 4) Who were your last five bosses, and how will they each rate your performance on a 1-10 scale when we talk to them?

Before conducting a screening interview, it is important to review the scorecard. Upon initiating the conversation, you should set expectations for the interview with the candidate. If early on in the interview it becomes apparent that the candidate is not well-suited for the position, abbreviate the call by accelerating the questions. At the conclusion of the call, it is important to offer the candidate the opportunity to ask questions about the position and/or organization. Finally, after ending the interview, analyze 1) the degree to which the candidate’s strengths match the scorecard for the position, 2) whether their weaknesses are manageable, and 3) whether the thought of bringing the candidate in for an interview is exciting. If there is any hesitation, or if the candidate does not match the scorecard well, terminate the interview process at this stage.

The Topgrading Interview®

Ideally, you will have identified two to five candidates in the screening process to progress to the next stage of the interviewing process: the Topgrading Interview®. This interview is designed to uncover patterns in a candidate’s career history which can increase your confidence and accuracy in decision making. Essentially, it is a chronological walk-through of a candidate’s professional experience. After asking about the highs and lows of the candidate’s educational background, this interview involves asking five questions on each position the candidate has held over the past 15 years: 1) What were you hired to do? 2) What accomplishments are you most proud of? 3) What were some low points during that job? 4) Who were the people you worked with? and 5) Why did you leave that job? Within each question, Smart and Street provide additional queries as well as red flag responses.

On average, the Topgrading Interview® takes approximately three hours to conduct, although the duration could range from ninety minutes to five hours depending on the length and complexity of a candidate’s career history. Although this significant time investment may initially seem daunting, it is important to consider the hundreds of hours that will be saved by not having to deal with C Players. Smart and Street recommend that the hiring manager conduct this interview along with a colleague (e.g., someone from Human Resources or a member of their team), so that the responsibilities of asking questions and taking notes can be shared.

In order to maximize the effectiveness and feasibility of the Topgrading Interview®, there are several tactics to consider. One tactic is to interrupt the candidate (in a positive way) to ensure a focus on relevant information. Also, to determine the value of an accomplishment that is revealed through the interview, use a set of questions called the three P’s: 1) How did your performance compare to the previous year’s performance? 2) How did your performance compare to the plan? and 3) How did your performance compare to that of peers? Other tactics include using questions to determine if a person was pulled or pushed out of previous jobs; creating a detailed picture of a candidate’s strengths and weaknesses using follow up questioning and probes; and examining body language and inconsistencies.

The Focused Interview

Although it is possible to land a great hire using data from the Tograding Interview® alone, the focused interview allows the gathering of more specific information about the candidates to enhance the odds of selecting the right A Player for the position. While similar to a standard behavioral interview, the focused interview differs in its focus on the outcomes and competencies specified on the scorecard rather than merely on a hiring manager’s vague description of the position. For each outcome or competency on the scorecard, the candidate is asked to discuss their biggest accomplishments in the area as well as their biggest mistakes and lessons learned in the area.

Focused interviews take approximately forty-five minutes to one hour to conduct, depending on how many outcomes and competencies are addressed. When conducting a focused interview, consider assigning three members of a hiring team to participate, with each team member being delegated responsibility for predetermined outcomes or competencies.

The Reference Interview

By this point in the interview process, the perfect candidate for the position has probably been determined. Although it may be tempting to offer the job immediately rather than taking the time to check the candidate’s references, it is important to resist this temptation! When done correctly, invaluable information can be gathered from reference interviews.

To have a successful reference interview, it is important to consider three issues. First, it is essential to pick the right references to interview based on insights or questions emerging from the Topgrading Interview®. Also, in order to maximize the chance of actually talking with a reference, it may help to have the candidate contact the reference to schedule the call. Finally, it is recommended to conduct seven reference interviews (sharing this responsibility with a colleague): three past bosses, two peers or customers, and two subordinates. Questions to ask during each reference interview include: 1) In what context did you work with this person? 2) What were the person’s biggest strengths? 3) What were the person’s biggest areas for improvement back then? 4) How would you rate their overall performance in that job on a 1-10 scale? What about their performance causes you to give that rating? and 5) The person mentioned that they struggled with _____ in that job. Can you tell me more about this?

After conducting each of these interviews, selecting a candidate to hire should be a relatively straightforward process. First, take out the scorecards completed on each candidate. Next, ensure that all candidates have been rated on the scorecard using an A, B, or C grade. If there are no As, return to the sourcing phase of the process. If there is one A, offer the position to that candidate. Finally, if there are multiple A grades, rank them and decide who is the best hire among them.

SELL: THE TOP FIVE WAYS TO SEAL THE DEAL

Once the desired candidate has been identified, the next step is to sell the candidate so that they want to take the position. It is important to remember that the hiring process is not over until the candidate actually becomes an employee! When trying to sell a candidate, address five areas, called the five F’s of selling:

  1. Fit–Candidates want a position where they can be A Players and where their goals and talents fit with the company’s strategy and culture.

  2. Family–It is helpful to sell a candidate’s family by showing them around the area, having a real-estate broker give them a tour, taking them to dinner, introducing them to families in the area, and answering any questions they may have.

  3. Freedom–Because A Players are looking for positions where they have freedom to excel without micromanagement, it is important to show them how your environment will support this desire.

  4. Fortune–Consider linking variable compensation to an employee’s performance against the scorecard outcomes to ensure top pay for top performance.

  5. Fun–Demonstrate how the corporate culture is fun and exciting as well as how the candidate will have opportunities to do what they love doing.

It is important to recognize that although selling is presented as a separate and final phase in the hiring process, it ideally should occur in waves across the process. For example, selling can be integrated into sourcing, interviewing, the time between the offer and the candidate’s acceptance, the time between the candidate’s acceptance and their first day, and the candidate’s first one hundred days on the job.

YOUR GREATEST OPPORTUNITY

Based on interviews with more than 400 successful business leaders, Smart and Street made the following conclusion: “Collectively, their [the business leader’s] message couldn’t be clearer. Get the talent side of the equation wrong, and you will always face rough waters. You’ll spend all of your time dealing with an endless torrent of what issues. Get it right, and you’ll have clear skies, smooth seas, and easy sailing. The right who will take care of all of those issues.”

Obviously, identifying the right who is critical, and a method for doing so is the A Method. How can the A Method be integrated into hiring processes? Smart and Street provide ten recommendations:

  1. Make people a top priority

  2. Follow the A Method yourself

  3. Build support among your executive team or peers

  4. Cast a clear vision for the organization and reinforce it through every communication with the broader team

  5. Train your team on best practices

  6. Remove barriers that impede success

  7. Implement new policies that support the change

  8. Recognize and reward those who use the method and achieve results

  9. Remove managers who are not on board

  10. Celebrate wins and plan for more change

Smart and Street have observed many CEOs achieve outstanding results using the A Method. However, it is important to note that it is not necessary to be a CEO to use the process. The A Method may be used within any sphere of influence and serve as an inspiration for others in the organization to emulate.

FEATURES OF THE BOOK

Reading Time: 6-8 hours, 188 pages

Consider the following scenario. A position becomes available and a manager needs to fill it as soon as possible. However, the manager has no potential candidates in mind. Working with HR, the manager becomes frustrated that months have elapsed before a pool of candidates is identified. After progressing through a set of inconsistent and unstructured interviews relying on unproven techniques, the manager selects a candidate and offers the job. After several weeks on the job, the manager realizes that the candidate was not well-suited for the position.

Sound familiar? Unfortunately, far too many managers rely on such a passive and haphazard approach to hiring, resulting in such poor hiring decisions. These hiring decisions can be extremely costly. In Who, authors Geoff Smart and Randy Street reveal that the average hiring mistake costs fifteen times an employee’s base salary in hard costs and productivity loss! Is there a way to prevent such costs? Smart and Street would respond to this question with a resounding, “Yes!” In fact, their book is designed to provide readers with the tools and strategies necessary to do so. In particular, the “ghSMART A Method for Hiring,” is used as a proactive framework for identifying A Players and avoiding costly hiring mistakes.

Who is a must-read for anyone involved in hiring decisions, from CEOs to middle managers to front-line supervisors. Each of these groups will likely find value in the simple and evidence-based techniques for capturing top talent for any position. The book is practical and user-friendly, with techniques that can immediately be applied within an organization. In addition, the techniques are based on a plethora of research including more than 1,300 hours of interviews with CEOs, other top business leaders, and management experts.

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