6 Rules of Thumb For Hiring Better People

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DON’T LET THE LABOR MARKET SPOOK YOU

The labor market remains tight in many countries, despite a number of large firms laying people off. I'm getting a lot of messages from leaders who are having difficulty recruiting and retaining good people. You may feel as though you're struggling in this area, so I want to give you some hope that you can still hire great people, despite the labor market dynamics, if you go about it the right way.

Unfortunately, a few poorly timed or unexpected resignations can leave critical gaps in your capability, and this feels even worse when you place an advert on an online job board, expecting an influx of high quality candidates, only to hear the sound of tumbleweeds sweeping across the tundra. This can affect your mood and even your belief system.

One of the worrying side-effects is that you begin to feel as though you have to keep all of your current employees. You start to think that even a poor performer is better than having no one, and you begin to manage people differently, lowering the standards so that you don't scare any of your people off. But don't despair: you can hire and keep great people in any market, if you know what you're doing.

I'll begin this newsletter with a look at the process of hiring, and why it’s such an imprecise science. I'll then give you a window into how I use personality profiling in the recruitment and selection cycle, and I'll finish with some tips for how to give you the best chance of hiring the right person for any job.

WHY IS IT SO HARD TO HIRE THE RIGHT PEOPLE?

I'm going to start with a reference to an old podcast episode, Ep.144: The Skills Shortage - Attracting and Retaining the Best. This episode has a bunch of important fundamentals about how to differentiate your organization, so that you can attract better people. I'd highly recommend you have a listen to this one.

But let's just assume that we can get people to our front door. Why, then, is it so hard to hire the right people? Well, I'm going to give you my top half dozen reasons why it's so tough.

The first is we tend to look for skills, not behaviors. We're looking for people who have a verifiable set of skills and capabilities, and this leads us to examine the achievement of formal qualifications.

Often, these are a very poor predictor of on-the-job performance. Some of my worst hires over the years have been people with an impressive list of university degrees at masters, and even doctoral level. We often don't think about whether someone has the practical ability to apply their learnings in the real world, and we don't do enough work to verify that someone's values and behaviors are consistent with our business.

The second reason why this is tough is that we hire in our own image. We love it when someone on the other side of the table has views and experiences that coincide with, and reinforce our own views. "Wow, what a great person. They think just like me." 

But interestingly, you shouldn't be trying to replicate yourself. You should be trying to fill the gaps that you don't cover. Sure, there has to be the ability to get on, but you need to be aware of the tendency that we all have to hire in our own image.

The third reason is we let our optimism bias rule us, and this is on both sides of the interview room. The selection process is the honeymoon period. Everyone's on their best behavior and they carefully manage the impression that the other party forms of them. You may even have a highly credible recruitment consultant or executive search partner in your ear talking up the person that you're interviewing. 

We want to believe that we found a perfect person and we let our optimism get in the way of our objectivity. We dismiss key risks by telling ourselves things like, "Well, that won't be a problem. I can manage it," or, "Well, I shouldn't focus on that negative. They have a really good explanation for it."

DON’T OVERSELL IT!

The fourth reason is we don't represent the opportunity accurately. I often see leaders overselling the opportunity that a role presents, and this doesn't help anyone, it just adds to the risk of buyer's remorse once a person joins the company and finds out what it's really like. We talk about all the upside of the company, the job and the management team without really addressing the downside.

Even when we do, candidates often aren't in the space to listen. I can't count the number of times I've sat in an interview room, at pains to explain the difficulties of the role to an incoming leader. I can tell from the looks on their faces that they really don't get it. Sometimes, I've had leaders come to me in the first few months of their engagement and say, "Oh, Marty, I know you told me about the difficulties before I joined, but I didn't think it'd be like this."

The fifth reason we find it hard to hire great people is that 7s hire 5s. This is a great principle that Jeffrey J. Fox explains in his book How to Become a Great Boss: Rules for Getting and Keeping the Best Employees. You shouldn't let weak leaders hire anyone else, because they just make your capability problem worse.

A weak leader is someone who rates 7/ 10 or less: and that's weak in terms of results, attitude, capability, motivation, all of those markers. 7s hire 5s because they aren't threatening. They're cheap and they're plentiful. 7s are scared of 9s and 10s, because they instinctively fear competence. 7s hire 5s, and 5s hire 3s… and there goes your capability. 

9s and 10s only want to hire 10s. They only want to work with other A-players. They don't fear competence, they fear mediocrity. Don't let poor performing leaders replicate themselves and weaken the gene pool. Keep them away from any hiring decisions.

Finally, reason number six, we often just don't do our due diligence. We simply aren't serious enough about the process. For example, we don't treat reference checking with the respect it deserves. Sometimes we delegate it to a third party. We may just see it as a formality. I know leaders who make offers prior to even reference checking the individual. This is like missing one of the legs off a four-legged stool.

We must bear in mind the context of a reference check. The candidate nominates their referees, so the deck's already stacked. Do you think they're going to nominate anyone who doesn't have a strongly positive impression of them? Well, of course not. If you really do your homework, you can also see people who have a bunch of movements in their career profiles going from company to company every one or two years.

Sometimes, we're slow to park our optimism bias and read the play. Don't believe everything you hear in the interview room, and definitely don't be afraid to drill into this stuff.

DOES PERSONALITY PROFILING HELP?

Before I talk about how to nail the testing process for potential employees, I want to start with an article I came across in Aero Magazine by Laith Al-Shawaf, who's an associate professor of psychology at the University of Colorado. The article was titled, Should You Trust the Myers-Briggs Personality Test?

For those of you who aren't familiar with it, Myers-Briggs was all the rage in the 1990s and 2000s, and I'm sure many companies still use it to this day. In many organizations, it became part of their business lexicon. Every employee was required to take the test, work out what their personality type was, and declare it to the team in forced therapy sessions under the guise of team building exercises.

Myers-Briggs gives you a binary assessment of your personality across four dimensions: 

1. How you see the world: that's either Extrovert or Introvert;
2. How you interpret information: it's either Sensing or iNtuition;
3. How you make decisions: Thinking or Feeling; and
4. How you structure inputs: Judging or Perceiving.

You end up getting assigned a letter from each of those four categories and it results in one of 16 potential personality types (that's two to the power of four). You get the picture--you end up with a label.

When I was first tested, I was an ENTJ, but I was very close to the line on two of the dimensions that were assessed, and 30 years later, look, I'm probably a different type altogether. But on our team we had INFPs and ESTPs, of course.

The labeling itself can be quite destructive. I've heard people say things in meetings like, "Well, you would say that, typical ISFJ." Some consultants who make their living off the back of this test gave snappier names to these four letter assignments resulting in 16 distinct personality types. They used descriptors like architect, adventurer, mediator, debater, entrepreneur, and so forth.

In his article, Al-Shawaf (quite rightly) hammers the MBTI instrument. According to his analysis, it's a poor predictor of real world outcomes, and it also suffers from many other problems. He says, "Human behavior can't be described in discreet categories, and every facet of personality is actually on a continuum. It's misleading because it implies that there are huge differences between types, but minimal differences within types."

On the upside, it does get people to think about individual differences. Not everyone thinks like you do, but Al-Shawaf asks a critical question, "Is an MBTI test actually better than nothing?" Well, as many people believe, the illusion of knowledge is more insidious than a lack of knowledge, and it's harder to overcome.

There's an incredibly important lesson here. Don't just follow the latest trends, even when they're presented by a well-meaning HR director as ‘the answer’. Make sure you ask the right questions to understand exactly how any testing is going to be used and play out in your context.

TESTING, DONE RIGHT… 

Even though there are some traps for young players in the personality profiling space, it can form a crucial part of the screening process when you’re hiring. In fact, in my last dozen or so years in senior corporate roles, I came to rely heavily on an extensive battery of tests, which I'd put any potential executive hires through: and a big shout-out to Frances Avenell, the Brisbane-based psychologist who's managed to turn this science into an art form.

I used this testing to provide a critical data point, which I'd consider along with all the other available data: like verifiable results from previous roles, their resume, interviews, reference checks, and so forth. There were five distinct components to this testing:

The first was intellectual aptitude: verbal, numerical, and abstract reasoning. These are standardized tests with time limits to determine your level of proficiency with numbers, words, and patterns.

They're compared to a large population of respondents to give you a sense of where you fit in the world, in percentile terms. Abstract reasoning is a critical indicator of someone’s ability to handle next level assignments. It's all about pattern recognition, dealing with complexity, and your ability to apply previously learned information to new contexts. 

Many people who are otherwise quite intelligent and have a high level of ambition sometimes fail because they lack the abstract reasoning capability required to handle the demands of the highest level roles… and they haven't worked out how to lead others to use their capability as a proxy. Often, they turn to politics instead.

The second component of the testing is critical thinking, and this is broken into three separate capabilities: the ability to recognize assumptions; the ability to evaluate arguments; and the ability to draw conclusions. This speaks to how well you can solve problems, and how quickly you can solve them. It's a critical skill for any leader.

The third area is emotional intelligence. We use the Mayer-Salovey-Caruso Emotional Intelligence Test. This test measures a person's capacity to identify emotions in others, to use emotions to facilitate thought, to understand emotional vocabulary and meanings, and to know how to manage emotions. This is a surprisingly accurate indicator of someone's EQ. 

And, in case you're wondering, a high EQ is a prerequisite in any leadership role.

The fourth part of this testing we use is personal characteristics. This is the NEO Personality inventory. It looks at people orientation, team orientation, customer and commercial focus, conscientiousness, work style, resilience, and so forth.

The final and most important part about this testing is the interpretation. It's critical that you have a professional who understands how to interpret the relationships between all of these elements, and they can tell you what you're really looking at. 

They'll match the person's characteristics to the role you're hiring for: Where is this person likely to be strong and where are they likely to be weak?; If you do hire them, how should you manage them to get the best out of them? Having said this, testing's only one set of data points, but I did learn to rely on it quite heavily.

The reports that Fran used to prepare for me were uncannily accurate. On one occasion, she warned me that I shouldn't hire someone for a role because he simply wasn't smart enough for the level of role I was hiring him at. I tested this with his referees, and I did some DD on his previous accomplishments that he'd claimed at the interview. It all seemed to stack up, so I hired him, against Fran's advice. Needless to say, he didn’t last long.

Remember, despite all the information that the testing generates, it's still only one data point. It has to be weighted with many other observations and, ultimately, none of this is foolproof.

HIRING BETTER PEOPLE

The objective of the exercise is to know how to hire great people… to not be afraid to stretch the people you have… and to set high standards for performance, because you’re confident about your ability to replace them with a better person if you need to. Here are my top six rules of thumb for hiring better people:

1. What's in it for me? 

When you write a job ad or position description, don't just talk about what you need. This is actually a marketing document. You’re trying to attract an excellent person who's a great fit for the role. What's in it for them? Why would they join your company? Why would they want to work for you? Without this, hiring is an even more fickle process.

2. Use everything at your disposal and weigh it all carefully.

Do the hard work that's going to help you to reduce the risk of making a bad hire. Don't skimp in the hiring cycle. If you think that spending a few thousand dollars on due diligence is too much, then think about the cost of dealing with a bad hire. 

For example: it's worth putting everyone who works for your company through some basic form of testing. At Your CEO Mentor, we're just a micro business, but we still wouldn't dream of hiring anyone without basic aptitude and personality testing.

3. Represent the opportunity accurately.

It's great if you can develop an employee value proposition statement, because this can help answer the "What's in it for me?" question. Resist the temptation to talk up the opportunity more than is actually warranted… it may help you to hire someone, but they won't become a great performer if they aren't a good fit or if they feel like they were duped.

4. Eliminate bias to the greatest extent possible. 

I produced an episode a little while back called Eliminating Selection Bias (Ep. 202). In that episode, I discuss a number of techniques, and you'll probably need some help from others if you want to get this right. It's almost impossible for a single individual to remain completely impartial. If you have a diverse selection panel, even if it's only one other person, it will help to cure your myopia.

5. Be diligent in reference checking. 

When I do reference checks, I always do them myself. I never delegate them, and I always insist on talking to the person's last two direct managers. If they won't offer these up, that's a red flag. I drill down into any question marks that we may have picked up at the interview. 

But I never cease to be amazed at people who've worked for me who I had to let go because of their inability to perform, and they turn up in another senior role somewhere else… working for someone who knows me, no less, but hasn't bothered to call me to ask about that person. There's no excuse for laziness here, and it can be incredibly costly.

6. Be patient. 

Don't hire someone just for the sake of it. I learned to be really patient in the hiring cycle, particularly when I got to the much more senior levels. Executive search firms generate huge profits from their involvement in the hiring cycle. I was never afraid to send them back to the drawing board if I didn't find what I thought I needed on their first pass of the market.

DON’T GET SUCKED IN BY A TOUGH LABOR MARKET

There’s no doubt that the job market is tough right now, but that shouldn't put you off running your team the way you always have. Don't drop your standards just because you see some people leave and you see some gaps developing in your team. If you use all the tools available, you can be really confident that you'll get the right person eventually.

Remember this saying, because it's as true today as it ever was: An empty house is better than a bad tenant.

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The above article is from Episode 237 of the No Bullsh!t Leadership podcast. Each week, I share the secrets of high performance leadership; the career accelerators that you can’t learn in business school, and your boss is unlikely to share with you. Listen now on Apple Podcasts, Spotify, or on your favorite podcast player.