By Mel Kleiman, CSP
What do you think is the most important buying decision you’ll ever make to ensure the success of your business?
No matter what your particular answer, there is a well-defined, proven system that ensures you make the best decision and get the highest possible return on your investment. This system is used by governments, privately held and public corporations, charitable organizations and churches, startups, and franchisors everywhere for one reason and one reason only: because it works.
It’s in use every day, worldwide, to purchase everything from paper clips to airplanes. It works for tangibles such as furniture and fixtures as well as for services such as consulting and catering. And yet this proven system is routinely ignored when it comes to making what is truly the most important buying decisions any business owner or manager ever makes: who gets hired. Let’s face it; competitors can copy your products and services, marketing strategies, and promotions. What they cannot copy is the quality of your employees -- that is the only sustainable, competitive advantage you’ll ever have.
A couple of reasons for this oversight come to mind. The first is that few people realize that the standardized practices they already use for purchasing and procurement also comprise an efficient, effective hiring system. Also at play here is a reluctance to systemize hiring in the mistaken belief that it’s not possible to choose human capital the same way we acquire other products and services. This is why most hiring decisions still hinge on the result of gut-instinct interviews -- in spite of the fact that interviews are proven to be only 8 percent more reliable than if you just flipped a coin.
That’s why it’s time to take a page out of your Purchasing Procedures Manual and start “buying” employees with the same due diligence you apply to every other buying decision.
Spell Out Your Purchasing Specifications
Be it a new pickup truck or a crew foreman, you can’t get what you need if you don’t know exactly what you need it to do. Your purchasing specs for every new employee should go beyond the basic job description and spell out:
1. The mental and physical capacities needed. Do you need a rocket scientist or someone with a GED? Does the applicant need to be able to leap tall buildings in a single bound or just be able to install an irrigation system?
2. The innate attitudes that ensure the employee likes the job and your customers like the employee. The Harvard Business School determined that the four major factors critical to success on any job are information, intelligence, skill and attitude. Of these factors, they found that the first three account for only 7 percent of success, while attitude accounts for the remaining 93 percent. That’s why savvy employers hire for attitude and train for skills.
3. The personality traits best suited to the job, your location and the corporate culture. Is the company rigid or relaxed? Does the job call for a person who is competitive or a team player? Installers should have a natural propensity for attention to detail, while your managers should be big-picture thinkers.
4. The specific skills you need. Does the ideal candidate need to operate a variety of equipment and use particular tools? If yes, have applicants actually use the equipment or, at least, tell you in detail how they would go about doing a particular task. (Just remember, hire for attitude and train for skills. It’s well worth it to train a person with a great attitude in data entry rather than hire a skilled person with an “it’s just a job” attitude.)
With the specifications now in hand, the purchasing agent issues a Solicitation of Interest to find out who might provide the required products or services. This is analogous to advertising your job opening, and just like a good purchasing agent, you should use every possible resource. Ask for referrals from employees, customers and vendors. Advertise on job boards, on your website, and in the local papers and/or on Craigslist and Facebook. Call the good people who used to work for you and see if they might want to come back.
Evaluate Bidders’ Qualifications
In the purchasing world, a qualified bidder is “an entity that has the capability in all respects to perform fully the contract requirements as well as the integrity and reliability which will assure good faith performance.” In the hiring world, this is the heart and soul of an effective employee selection system. It comprises a series of simple, logical steps that reduce employee turnover by ensuring better hiring decisions.
The first step is a telephone prescreen to determine if applicants meet the most basic hiring criteria (i.e., the ability to work the hours needed, reliable transportation, citizenship or a green card, and willingness to work for the wage offered and to take a drug test). There’s no point in taking the time to see anyone in person who doesn’t pass this screening step.
For those who pass the prescreen, you then conduct the appropriate tests to determine if applicants meet the rest of the requirements called out in your specs. The first tests are for the required skills and capacities.
For those who pass this screen, standardized attitude tests are also widely available to more narrowly identify those people best suited to the job, or you can build attitude questions into your interview. (“How many times were you late for work in the past three months?” “What would you do if you saw another employee take something that belongs to the company?” “What is the latest new work-related skill or information you’ve learned, and how did you apply it?")
Issue Your Request for Proposal (RFP)
At this point, the purchasing agent invites qualified vendors to submit their proposals. Similarly, you have identified a group of people you want to invite in for the big test -- the interview.
There are several steps to conducting an effective interview, and the first is to tell the applicant up front what is going to happen and what you want him or her to do. Above all, you want the person to be honest with you and you can accomplish this by saying something like: “I’m going to be honest and open with you about this job and about our company, and I hope you will be open and honest with me. It doesn’t matter if you’ve ever been fired or had trouble with a boss or anything else. As long as you tell me, we can take it under consideration. But if you don’t tell me and we find a problem when we run a background check and check your references, I can’t hire you. Do you understand what it is I want” Now the applicant is positioned to answer your questions truthfully.
As for the questions, the interviewers who get the best results use structured interview question sets. By asking each applicant the same questions, they’re able to compare apples to apples and make the best hiring decisions.
Conduct Your Bid Analysis
Now our purchasing agent will enter all the information from the proposals submitted into some kind of spreadsheet in order to analyze the data and make a decision. This is where you gather up all the information you’ve collected about each applicant you’ve interviewed and do the same.
When making a final decision about whom to hire, there are four things to consider in your analysis:
1. Test results should count for 30 percent
2. The interview should count for 30 percent
3. References should count for 30 percent (if you’ve thoroughly checked them)
4. Your personal perception should count for 10 percent because no matter how hard you may try to eliminate your biases, you still have them, and this is why so many people hire the best applicants instead of the best employees.)
If the applicant scores poorly on any one of the criteria, it’s worth 100 percent and eliminates the applicant. On the other hand, a fantastic rating in any one of these areas can’t, on its own, get someone hired. When you find good-to-great ratings in all four areas, you’ve found the right person for the job.
Make the Award and Letters of Regret
At this point, our purchasing agent will issue a contract to the winning bidder. This document spells out all the terms and conditions as well as the rights and obligations of both parties. The applicant’s signed and dated employment application form should cover all these issues, however, when you “award” the job you’ll want to spell out a few more things to avoid the misunderstandings, disappointments and assumptions that can lead to that person quitting or to termination for cause.
First, tell the successful candidate why you chose him or her. Explain how the person’s capacities, attitudes, personality traits and skills are a good match for the job. When you set expectations early in this way, the person will either meet your standards or opt out by declining your offer. (Don’t be upset; you just saved yourself a world of grief.)
Second, make sure the person understands all the terms and conditions of the offer: the position, earnings, start date and any contingencies (physical exam, drug test, etc.).
Third, ensure the person knows the grounds for termination by reviewing all job-related rules and your company’s performance appraisal form.
Finally, don’t forget to notify the other candidates that you have decided to hire someone else. Thank them for applying and the time they invested and wish them well. After all, you don’t want to create bad feelings in people who could become clients or have friends and relatives who are clients, vendors or neighbors.
Make no mistake about it, every job applicant knows your job is to “buy” the best applicant you can. Don’t disappoint them. Do what works. Use purchasing policies and procedures to decide who gets hired and watch your organization prosper.
Certified Speaking Professional Mel Kleiman, NYSNLA's 2016 Leadership Forum presenter, is North America’s foremost authority on how to recruit, select, and retain hourly employees and president of Humetrics. Founded in 1976, Humetrics provides selection and retention tools as well as speaking, training, and consulting services. Mel is also the author of five books including the best-seller Hire Tough, Manage Easy.