Why hiring decisions are the worst management decisions and what to do about it

I believe that hiring decisions are the worst ones in comparison to all decisions that managers make. I will explain why and how you can change this.

Tõnis Arro

Co-founder, Wisnio and Executive Lab

The board is discussing marketing activities in a neighboring country. The CEO points out that marketing expenditure is budgeted and asks about the plan.

The CMO describes the process he wants to initiate: it involves one of the two top agencies to develop a couple of ideas for the campaign, organise focus groups, and A/B-test a few pre-selected messages and visuals. 

She also says there has been a delay, as the leading agency she prefers is finishing a major campaign with another client and can only start after a few weeks. The CEO is not happy with what he hears: 

CEO: “Why not announce a tender and just take someone to jump in and do the work?” 

CMO: What do you mean, just put the tender out without an idea of what we want to achieve? 

CEO: Yes, just get it done!

CMO: But what? 

CEO: We will see what they suggest and take the one that looks better. Are you saying you can not recognise great ideas and decline stupid ones? So let’s not waste time and move forward.

The story sounds absurd, but what if you replace "marketing decision" with "hiring decision"? Unfortunately, hiring decisions based on arbitrary data and gut feeling are common.

Executives ≠ hiring professionals

Executives are not hiring professionals. They are good at something else; that’s why they keep their jobs. But, from time to time, they have to make hiring decisions, the most important management decisions of all. 

Often, to save time, they rely on dysfunctional management folklore. Things like “hire fast, fire fast” or myths about great leaders who recognise the right person immediately if they see one.

In fact, just the opposite is true. One should never make a hiring decision quickly - this is not a decision to go for a date! It is more like a decision to marry! Reasonable people wouldn’t make the latter after a few hours of superficial chat.

Often, the problems start from the very beginning. Executives describe the role they are hiring for with vague descriptions and big words.

For example, this is how one executive described a new position to an HR Business Partner:

“I want someone who can get the work done. This person has to be a great leader, team player, and good at cooperating with other departments and units. Not a big director but someone who makes his hands dirty and gets things done.

Generally a highly motivated and trustworthy person. Definitely also self-driven and independent. I don’t want anyone who needs daily guidance and orders: an independent person, leader and doer.

I would assume the person has a degree in business or economics; I think we need someone who has worked in an international environment. And as we are a matrix organisation, this experience is absolutely essential. Also, as we use SAP, a person who has used the same software would be preferred.”

Based on this input, the HR Business Partner put together a job ad and started the advertised search process. The job ad included all the buzzwords like a great leader, team player, get things done, highly motivated, etc.

An option for a direct search by a dedicated headhunter was discussed but deemed “too expensive” by the CEO.

When the candidates were presented after a month, the CEO and other board members had meetings with the candidates. The meetings were called interviews but as usual, these were just free-floating conversations without any structure or plan.

Finally, a few finalists took a personality test, and the CEO made his decision after a discussion with the board. "I had a good feeling about this guy from the beginning," the CEO explained. The other board members agreed. 

Like and feel decisions

As I said earlier, hiring is no different than the arbitrary decision-making showcased in the marketing example above. In both cases, a decision was based on like and feel, sometimes called intuition or gut feeling.

Wait, but they did the tests? Oh yes, but so what? Usually, the decision is already taken by the time any testing takes place. 

It makes everybody feel better (we did everything we could!),  but the decision-makers can not explain how they used the test results in most cases. "The tests were also ok" or "the tests didn't bring out any objections" are quite usual things one might hear. 

The hiring process was doomed from the very beginning. There was no real position analysis or even an understanding of the specifics of the role. It followed that the candidates were not the best possible, but the best from the ones that happened to apply, and the candidate chosen was the one that the CEO liked best. 

It just so happens that they also had the same type of yacht and knew each other from some golf tournaments. No one would ever admit that these things have something to do with the decision, but, on the other hand - “chemistry is important - isn’t it?” 

A different way to hire

It’s clear that the usual way of hiring described above more often than not does bring results. So what can you do to hire in a better way? 

1. Understand who you’re looking for

Having a clear understanding of the role is perhaps the most important part of hiring. Understanding what you want the person to achieve is a good place to start. 

For example, three things the new employee should achieve during their first year. Don't describe a superman, but think about the deliverables.

If you don’t know the specifics of the job you are hiring for, talk to someone who does. Find a few high performers in a similar role and invite them to lunch.

Try to understand what they do and what makes them successful, and then make up your mind about what the company needs right now - you are the only person who can decide this.

2. Define the hiring criteria

Consider the hard criteria a candidate needs to fulfil to be considered for the role. The requirements need to be easily verifiable and exclude anything that can be learned in a few days or weeks. 

These requirements could include being fluent in a language or experience of leading a multinational team, etc. These are all examples of reasonable requirements.

An MBA is rarely a must - you wouldn’t want to decline a version of Mark Zuckerberg or Bill Gates, would you? But a proven track record with similar job responsibilities is a reasonable criterion. 

Example position requirement for a Head of Sales role.

3. Differentiate candidates

Find a method to differentiate between candidates you consider and the one that you want to make an offer to. This is the most complicated part of thinking. Best practice suggests using competencies - these are the clusters of personality and behavioural traits that people need to succeed in the role and the team.  

Consider using a competency-modelling framework that helps you think about the "must-have" characteristics that differentiate a potential candidate from the best one. At Wisnio, we use a library of 20 competencies based on research by Spencer and Spencer.

4. Have a search strategy

Job ads put you in touch with many people looking for jobs, but this makes up only ~10-15% of potentially eligible prospects. You might occasionally find a few great candidates among them, but most of the latter would never apply to ads.

So think twice before going for an “open search”, and consider doing a direct search with a dedicated professional, building a list of quality prospects, and then cutting it down to a shortlist.

Doing your research and approaching the 70-80% “passive” prospects considerably increases the probability of hiring someone great.

5. Evaluate candidates

Think through how you will evaluate and compare candidates and how you’ll make the final hiring decision. If you are the hiring manager, don’t think you can avoid the hard decision or disseminate the responsibility. 

Use a structured process and evaluate based on the hiring criteria and the identified competencies. Ask for expert advice for criteria you cannot evaluate yourself, and finally, summarise the findings.

In the end, although others can be involved in the process, the end decision is yours. You don’t need to exclude your intuition or gut feeling entirely, but use the available data first. Then, sleep with this knowledge and make your decision.  

Example competency-based interview questions and evaluation on the Wisnio platform.

Conclusions

Executive hiring is an area that is ripe for ego, biases, and gut feeling to take over the process. Most executives believe they are good at hiring and can recognise the right person when they meet them.

This is dangerous thinking that often leads to costly hiring mistakes. Luckily, small changes can lead to much improved outcomes. A good starting point is to follow the process outlined above:

1. Understand who you’re looking for
2. Define the hiring criteria
3. Differentiate candidates
4. Have a search strategy
5. Use structured evaluation