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Reduce Hiring Guesswork

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Reduce Hiring Guesswork

Reduce Hiring Guesswork

Excerpted from Best Software’s White Paper, "Winning Strategies for Recruiting and Retaining Quality Employees"

To download a copy of the White Paper, click here. To download the PDF, you need Acrobat Reader. If you need Acrobat Reader, click here.

The estimated cost of a bad hire ranges from two to three times that person’s salary, according to Bill Trau, executive director of the IT practice at Christian & Timbers, a search firm headquartered in Cleveland, Ohio. "To replace a mid-level manager, there are costs associated with the down time that the job goes unfilled, hiring time, training time, and the time it takes to get the new person up to speed," says Trau. "An unfilled position may also adversely impact customer service and hurt business relationships."

More in-depth candidate screening

In a 1998 survey by Robert Half International, a staffing services firm specializing in finance, accounting and information technology, 1,400 chief financial officers (CFOs) were asked: "How has your firm’s hiring process for accounting and finance professionals changed compared to five years ago?" CFOs responded:

Much more in-depth


Somewhat more in-depth




Somewhat less in-depth


Much less in-depth


Don’t know/no answer




More than half of all the respondents, 54%, felt that their hiring practices were more in-depth in 1998 than they were just five years earlier.

Consequently, about 70 percent of American companies have altered their hiring and selection process over the last 10 years to stem the tide of endless bulk recruitment. What’s needed is a comprehensive system of hiring that encompasses these guidelines:

  • Look first at in-house talent. Companies trying to hire in a record-low unemployment environment often overlook qualified people within their organization. Hiring from within also sends a message to employees that they too can be promoted.

    State Farm Mutual Automobile Insurance Co., headquartered in Bloomington, Ill., boasts that the average insurance agent has been with the company for 15 years. The company has a strong promote-from-within policy. The only source the company uses for new State Farm agents is from the pool of State Farm employees who have been with the company for at least three years. Employees that apply and are accepted for agent positions go through a one-year training program before they become agents in the field. By then, they have a good understanding of the corporate culture.

  • Develop a more structured employee referral program. At the 18,000-employee TRW Systems and Information Group headquartered in Reston, Va., a business unit of TRW, the employee referral program is the single largest recruiting tool. It accounts for 35% to 40% of all new hires, according to Bob Waters, the company’s vice president of human resources.

    "Employees don’t refer people they don’t want to work with, so the referral program serves as a pre-screening process for us," says Waters. "But to make it work, you need a financial incentive. When an employee refers someone we hire, they receive a bonus from $500 to $5,000 depending on the person’s position and value. The referring employee’s name also goes into a raffle for a chance to win additional cash prizes ranging from $2,500 to $20,000."

  • Focus on the culture fit. Evaluating a candidate solely on education and experience is myopic. Find out what kind of organization they’re coming from. "A lot of companies miss the cultural side of the applicant so the fit becomes wrong," says Chris Laubitz, partner with The Caldwell Partners, a search firm based in Toronto, Ont. "If you’re a formal bureaucratic organization and the candidate comes from a free-wheeling, loosely structured environment, that person may have trouble adjusting."

  • Read resumes in teams. You’ll find that different people will focus on different aspects of a resume, whether it’s a gap in employment history or the fact that the candidate can speak more than one language. It’s a good way of getting multiple perspectives on the same story, and it also enables you to get through more resumes quickly.

  • Avoid decisions based on gut-feeling. Most people hire out of desperation. The interviewer wants to eliminate the "pain" they’re feeling about a business need not being satisfied. So they hire because they like the person’s attitude in the interview.

    "Interview behavior does not equal job performance," says Barry Shamis, principal of Selecting Winners, Inc., a recruitment and retention consulting firm in Mercer Island, Wash. "Believing how a person acts in an interview can lull you into thinking that’s how they will act on the job. That kind of thinking can force you into a higher percentage of mistakes. The best predictor of how they will do when they come to work for you is to find out how they’ve done in past situations that most closely resemble your environment."

  • Check references. Call a reference during lunch when you’re likely to reach their voice mail. Say "Sam [or Sally] Smith is a candidate for a position in our company. Your name has been given as a reference. Please call me back if you believe the candidate is outstanding." If nobody calls back, you’ve learned something.

Granted, accomplishing all those tasks can be exhausting. Fortunately, technology offers ways to reduce the amount of work required to recruit successfully. Today’s human resources (HR) software packages offer enhanced capabilities such as:

1. Applicant tracking and resume-management modules

2. Online libraries of e-mail resumes

3. Self-service applications that allow candidates to learn more about your company

4. Tracking of recruiting expenses

5. Faster, more updated information on recruiting trends in your industry

Once a resume comes into the HR department, HR software applications can store it for future reference. Later, if a manager is looking for a specific set of skills, such as a tax expert with seven years’ experience who speaks fluent Spanish and English, the software can search for candidates who meet that manager’s criteria.

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