Module: The Importance of Structured Interviews
The Importance of Structured Interviews
So why is hiring and interviewing so critical? Every business leader knows that having the best talent is how you succeed as an organization and one of the best ways to have top talent is to create a well-structured interview process that allows you to identify and hire high performing individuals. The purpose of this module is to help you understand how important it is to approach the interview process with the same rigor that you approach the other aspects of your job — and the risks associated with not getting it right!
The Core Reasons
Let’s start by talking about the core reasons why structured interviewing techniques are so important today. First, hiring success rates are historically very low. According to a 3 year study conducted by Leadership IQ, only 46% of newly-hired employees are considered successful in their new roles. And the reason is mainly due to a faulty interviewing process that has too much focus on technical skills and not enough on interpersonal skills, behaviors and motivations.
Another reason proper interviewing is necessary is that an unstructured interview process can lead to legal and HR compliance concerns. Governing bodies that regulate the hiring process at your company, such as the Office of Federal Contract Compliance Programs and the Equal Employment Opportunity Commission can review your interview process to ensure that you have a fair and consistent way of assessing talent, especially if a complaint is raised against your company. They will look for structure, documentation, and consistency, among other things. If you can’t show that you have a well thought out process with the documentation to support your hiring decisions, you could find yourself paying fines in the hundreds of thousands to even millions of dollars.
And on the topic of money. Probably the most critical reason why interviewing skills are so important is that hiring mistakes are incredibly expensive. Poor hiring decisions can cost three to four times a person’s annual salary, according to The Society for Human Resources. To put it into perspective, imagine hiring a $50,0000 per year employee who turns out to be a low performer. To go through the time and trouble that it takes replace that person, it will end up costing your organization at least 3X their salary or $150,000. And that’s on the low end. Now consider that same calculation for higher paying positions like your executive roles or high impact sales positions. And you can quickly see that number approaching the high six figures or even millions of dollars.
Now the reason why most companies don’t pay attention to the high cost of turnover is because a lot of the costs are hidden.
The Cost of a Bad Hire
Let’s take a look at some of these costs in more detail. Now some of these costs are considered visible, meaning you can actually see and feel these dollars impacting your budget or your bottom line. Costs such as adverting, job boards, sourcing software; and interview expenses, such as flying a candidate in from another state are great examples of visible costs. Other visible costs include the cost of onboarding a new hire. Giving them a new laptop, software, office space and benefits. And then even more costs occur when you’re off boarding someone and paying severance, absorbing legal fees and paying unemployment claims.
Now hidden costs can actually have a greater impact because the dollar amounts are higher and, at times, unmeasurable. For example, Interviewer time is an important hidden cost. To illustrate, let’s say you have four interviewers interviewing three candidates for sixty minutes each, at a rate of $50 an hour for each of those managers, when you multiple 4 interviewers times $50 per hour times 3 candidates plus the time and cost of the recruiting team who brought you the candidates, the hidden costs can add up really fast. And that’s just for one job opening.
You also have lost productivity caused by a low performer who isn’t doing their job properly. You may also experience costly errors, lost customers and depending on what type of position they’re in, lost opportunities that can result from the employee not taking advantage of sales opportunities or cost reduction efforts for example.
Two other costs that might not seem as obvious but do impact the productivity of the organization are adjacent employee impact and manager impact. Adjacent employee impact occurs when you have an employee on board who is not a good fit for the company or can’t do the job as assigned. In this case, the employees around that person suffer by being asked to do more work, clean up mistakes or just work around someone who doesn’t add value to the culture. Managers suffer as well because they have to spend time monitoring the low performer and invest time, energy, and effort in that person which takes away from the time that they could be spending on their good employees so they don’t have even more turnover.
The good news is, much of this can be prevented if you hone your interviewing skills.
Structured vs Unstructured Interviews
Now we’ve mentioned the terms structured and unstructured interviews a couple times in this course already so it’s only fair if we explain the differences.
A structured interview can be thought of in general as a well thought out and planned execution of an interview process in which everyone is on the same page and using the same tools.
For example, during structured interviews all candidates for a particular job will be asked the same interview questions to ensure that they’re being assessed on the same criteria. This is why the use of Interview Guides is so important, a topic that we’ll cover later in this course.
Another hallmark of a structured interview is that the candidates are evaluated using a common rating scale, which in most cases is numerical. In addition, in a structured interview all of the interviewers will agree on what they’re looking for and what constitutes an acceptable answer to the key interview questions. And finally, all structured interviews should involve a formal post-interview debrief in which all of the interviewers discuss their feedback and make a final hiring decision together.
During unstructured interviews on the other hand, you will find that candidates may be asked different interview questions some of which are not job-related, often times standard interview guides are not used and therefore, a common rating scale is not used to properly evaluate candidate responses. In an unstructured interview, the hiring team will also not be aligned on the requirements of the job nor will they agree on what constitutes acceptable answers to certain questions. And finally, an unstructured process typically ends with interviewers using a more casual approach to making a hiring decision by emailing each other feedback or discussing a hiring decision over some chat tool or in the hallway on the way to their next meeting.
While the merits of different interviewing tactics have been debated for many years, researchers do agree on one thing…that a structured interview is the most effective method for arriving at an accurate hiring decision. And this concept forms the basis for the content in this course.
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