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3 critical steps to improve hiring

It is critically important to ensure you think carefully about key performance criteria for different roles in order to avoid costly hiring mistakes at scale.
3 critical steps to improve hiring

A national sales organization approached McKinsey with a talent problem. With record low unemployment and higher rates of attrition among its sales people, the organization was struggling to maintain its desired pace of growth while still making high-quality hires. While many organizations often find it quicker and easier to simply add more assessments to the hiring process, the client here wanted a more objective and data-driven approach—one that begins with a clear definition and measure of job performance.

Encouraging the client to start with the end state in mind (i.e., a clear definition of job performance) before adding more assessments may go against instincts to make quick and decisive talent decisions. However, it is critically important to ensure you think carefully about key performance criteria for different roles in order to avoid costly hiring mistakes at scale. The results from this approach are clear: The client realized a 40 percent increase in the quality of hires and a 12 percent decrease in first year attrition after they became more thoughtful and data-driven about hiring.

The client realized a 40 percent increase in the quality of hires and a 12 percent decrease in first year attrition after they became more thoughtful and data-driven about hiring.

This second part of our three-part series dives deeper into three specific steps organizations should take to be more thoughtful about hiring. In the process, we provide solutions to address two common hiring problems we identified in our previous post: the difficulty of measuring performance and the ill-defined view of what success looks like in different roles.

1. Capture both the ‘what’s and ‘how’s of performance

Job performance seems like a simple concept, but it’s surprisingly hard to define and measure for many roles. To help frame the discussion, it’s helpful to think about the ‘what’s and ‘how’s of performance.

The ‘what’s, more formally described as task performance, capture the core technical aspects of a role. For example, for an HR professional, task performance may encompass resolving employee relations issues, designing and executing new hire orientations, and organizing recruiting activities.

The ‘how’s, or contextual performance, refer to the fashion in which technical work is executed. This may include maintaining a positive attitude, volunteering for non-role tasks, and helping and supporting others. While the ‘what’s are role-specific, the ‘how’s will likely be consistent across the organization and should reflect core values and unique means of “getting things done.”

It’s important to consider a holistic view of performance that accounts for both ‘what’s and ‘how’s that drive distinctive value for the organization. For instance, maybe Joe, a sales manager, has the best sales numbers in the company (‘what’s), but he also fails to mentor new salespeople and actually has pushed people to quit based on his toxic behavior (‘how’s). In getting more concrete about performance, organizations need to think carefully about the ‘what’s and ‘how’s of performance and the trade-offs that may exist between them.

2. Find the right performance data

In today’s organizations, the challenge is rarely finding performance data—we have far more data than ever—but rather in identifying the “right data” for a given role that accurately captures an individual’s unique contribution to the achievement of organizational goals. Any single measure of performance is likely to be flawed in some way. For this reason, we recommend trying to acquire and combine several different data sources to prove someone is a high performer.

For example, it is well known that sales revenue numbers are significantly impacted by a salesperson’s assigned region. Overreliance on revenue numbers alone would therefore create a potentially biased, erroneous view of who the best salesperson is. When combined with data also showing that this salesperson makes 10 percent more cold calls to generate leads than colleagues, we solidify our view that this person is indeed a high performer.

3. Get systematic about connecting performance and assessment results

The business landscape is constantly changing; what works today will not necessarily work one year from now. For that reason, it’s crucial for organizations to continually track and measure all new hires’ performance alongside their hiring assessment results to ensure that the criteria that predicted performance last year continues to do so. If not, it may be time to start back at step one—but this decision can only be made based on accurate, up-to-date data. In the case of the sales organization, not only were we able to reinvent their hiring approach based on a deeper understanding of high performers, but we also created the data and analytics infrastructure to allow for ongoing monitoring and optimization that will serve them well for years to come.

This second part of our blog series has made the case for being thoughtful about defining performance and capturing what success means for a given role. In the final post of this series, we’ll tackle the practical issue of how to select assessments that drive lasting value.

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