DDI’s latest Global Selection Forecast examines how—and how effectively—organizations are hiring.
Despite a global recession and an altered economic landscape, the number-one challenge for organizations has remained unchanged in the five years since DDI’s last Global Selection Forecast: Whom to hire? Businesses, fortified with lessons learned and leaner and meaner operations, understand better than ever that talent decisions are the toughest and most critical to future success. Another constant: Knowing more and guessing less about your candidates is the key to effective hiring.
In fact, Know More. Guess Less. is the title of the Global Selection Forecast 2012 report, and as it shows, there is still a lot of room for improvement in many selection processes. Although companies have years of hiring experience and benefit from established, formalized human resource systems, most have trouble identifying qualified candidates and employing the right tools to ensure they hire the right people.
For the Global Selection Forecast 2012, which was co-sponsored by Oracle, more than 250 staffing directors and more than 2,000 new hires from 28 countries provided their perspectives on their organization’s selection processes. Staffing directors offered insights into what selection systems look like today; meanwhile, new hires provided an unprecedented view of how those systems are perceived. The new hires also shared their post-hire experiences. Organizations of all sizes are represented in the 2012 Global Selection Forecast, with the majority being multinational. For-profit organizations span 33 industries.
The findings included in the report comprise three main sections that align with the different steps of the evaluation process: 1) the current state of the selection strategy and system, 2) the effectiveness and opportunities for improvement, and 3) the post-hiring leveraging of data collected during the selection process.
The state of selection systems today
Staffing directors must not only bring in high-quality talent to meet today’s needs, but also make selections based on future needs. So how are the selection systems stacking up?
When asked to rate the effectiveness of their selection systems, nearly three out of four (72 percent) staffing directors rate them as effective or very effective. At the same time, only 19 percent of organizations have a talent acquisition strategy designed to hire the very best talent. How can both statistics be accurate? We believe the answer is that organizations tend to be overly optimistic when rating their selection systems because they don’t have the right criteria to define effectiveness. Currently, most use process efficiency metrics (e.g., time to fill), combined with turnover rate and hiring manager satisfaction to evaluate success (Figure 1). Unfortunately, these standards do not address several key questions, including whether new hires are of better quality and/or more likely to grow within the organization.
Figure 1: How staffing directors evaluate their selection systems
Hiring better by hiring from within
When we looked at organizations that were more successful at matching candidates to jobs, we noticed that the more senior the position, the less likely it was to be filled from the outside (Figure 2). For leadership positions, companies making better hires tend to promote internally and rely less on external candidates. If a major role of management is to support strategy and meet organizational goals, then internal candidates are attractive because of their familiarity with the organization’s inner workings.
These companies also tend to look outside when hiring for lower-level positions. This enables them to bring in new talent, while providing necessary time for grooming and training.
Figure 2: External hiring rates for organizations successful at hiring
Making the best hiring decisions
DDI research finds that overreliance on the manager’s evaluation is the biggest contributor to hiring mistakes (Figure 3). Reliance on candidates’ self-promotion is also a factor and another indication that organizations are missing critical information for making better talent decisions.
Figure 3: Reasons for hiring mistakes
As this research confirms, staffing directors are woefully ill-equipped to make effective hiring decisions. Companies must identify what they’re looking for, in a systematic way, and then use a variety of diagnostic tools to assess candidates on those factors. Hiring the best involves knowing what it takes to be successful in a particular position, and making sure the candidate has what it takes to succeed.
What do new hires think?
Only half of new employees are confident that they made the right decision when they accepted their job. This is evidence of a clear disconnect between the hiring process and the employee’s expectations, and the reality of the day-to-day.
Our study found that those organizations that do a better job of providing a realistic picture of the job before employment had more hires who were confident in their decision, were highly engaged, and were not looking to leave the organization (Figure 4). Specifically, when new hires said they did not receive an accurate picture of the job during the hiring process, only 14 percent reported being highly engaged and just 12 percent were not looking for another job.
Figure 4: Quality of interviews related to on-the-job sentiments
Clearly, when employers don’t provide a realistic job preview, they miss a valuable opportunity to help ensure that a new hire is the right fit with the job. Another missed opportunity is failing to capitalize on data gathered during the selection process. This data is a source of rich information about the new hire’s relative strengths and development areas. Unfortunately, only 24 percent of hiring managers say that this data is leveraged to inform or accelerate the new hires’ development. When used during on-boarding, the data reinforces the value of the selection process and reminds employees that their new bosses are invested in their success. It also inspires new-hire confidence (Figure 5).
In addition, the analysis of selection data can help the organization refine and improve its selection strategy in order to employ talent that performs better, is more engaged, and less likely to turn over.
Figure 5: Using hiring information to inform development inspires new-hire confidence
This article is adapted from the Know More. Guess Less. report. In addition to providing a complete overview of the Global Selection Forecast 2012 findings, the report offers guidance on the use of analytics and a “Get Ahead” strategy for improving organizational performance through better hiring.
Jazmine Boatman, Ph.D., is manager of DDI’s Center for Applied Behavioral Research.
Scott Erker, Ph.D., is senior vice president, selection solutions, for DDI.