According to the Corporate Leadership Council, hiring the wrong executive can cost an organisation three times their annual salary.
Another study by Columbia University states that replacing a professional will cost the organisation between 1.5 to three times his annual salary and replacing an executive can cost up to five times his annual salary.
To avoid hiring mistakes, consider using competency-based interviewing (CBI). CBI can also reduce the costs associated with hiring mistakes and high turnover and help you make the best selection decisions.
I have used CBI techniques over the last 20 years and still find this approach the best means to select top talent. It has been proven by workforce trends expert Ira Wolfe that CBI has been identified as the most effective approach in selecting the best candidates, with more than a 77 per cent success rate, while unstructured interview techniques results in only 57 per cent success.
CBI is a highly structured interview which uses behavioural or evidence-based questions to assess candidates based on critical competencies identified for the position.
The traditional interview focuses on the candidate’s beliefs and tends to be a poor predictor of performance in the job. On the other hand, competency-based questions require candidates to recall specific details about their past experiences and is a good predictor for job performance.
Your five-step guide
Step 1: Competency requirements
Decide what competencies are required for the job. Include both behavioural and technical competencies, such as technical competence or professional knowledge, leadership, teamwork, communication, innovation, risk taking and integrity, organisational awareness and initiative.
Step 2: Competency questions
Define competency questions based on examples and past experiences which will give evidence on how competent a person is for the job. For example, “Describe a time when you created an innovative solution to a problem”, “Give me an example when you had to deal with a difficult staff situation” or “Tell me about a situation when you had to make a critical decision for the business”.
Competency questions not only ask the candidate to go back to a specific time, they are also open, which invites a more elaborated response than closed questions that will result in a “yes” or “no” response.
Closed questions start with “can you” or “did you”. For example, asking “Can you deal with difficult staff?” will result in very little evidence about how the candidate deals with difficult staff.
Step 3: Probe for information
Interviewing candidates to understand their performance, skills and capabilities is like playing the role of a detective. You have to probe for information. After asking broad, open questions such as, “Describe a time when...”, ask more specific questions using the funnel technique (see chart).
Step 4: Get specific
Encourage the candidate to give you as much specific information as possible, so that you can objectively evaluate his level of competence.
Step 5: Weight and rate
By asking the same set of competency-based questions to each candidate, you can consistently weigh each candidate’s answers to the competencies and objectively rate his suitability for the role.
CBI allows hiring managers and employees to become fully conversant in the use of competencies. Competencies can become ingrained in your organisational culture and will lead to an enhancement in employee skills and motivation.
Your hiring managers will become more skilled at interviewing and, as a result, will be better interviewers. This will give them a better chance to develop their careers internally and will lead to retaining talent. By retaining talent, you will reduce the costs of high turnover and hiring mistakes, which will ultimately result in a high-performing organisation.