Best Practices

40% failure rate! What should HR do?

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If any organization failed 40% of the time with its product launches, or with the quality of its product, it would not stay in business. However, according to an article by Human Resources Director of Canada that is exactly what is happening with executive hires today.

Research shows that 40% of newly hired executives fail in their new jobs within the first 18 months – often citing a struggle to adapt to the new culture and difficulty getting up to speed in their new role.

Click here to read the complete article.

The question the HR department needs to consider is, what is the best practice for hiring? Is it best to h­ire externally or to select from within? Of course, there is no blanket answer to this question. However, the University of Pennsylvania found that external hires get paid approximately 18% more than internally promoted workers, yet they perform worse, based on peer reviews.

Let’s review the numbers. Hiring executives externally, the failure rate is 40% and it costs the organization 18% percent more for the privilege of having someone whose performance is worse than someone hired from within the organization. This does not add up to a successful HR practice.

HR must constantly reflect on all of its practices, from hiring strategies to employee development, and make sure that these practices are not only complementary to each other but the correct strategy to meet their organization’s strategic goals.

 

Discussion Questions:

  1. Conduct some research and identify two organizations that primarily use the “selection from within” process. Prepare to present why they have chosen this HR selection practice and what their successes from hiring from within are.
  1. Identify the most significant and compelling reasons why an organization would choose to hire externally for senior executive positions?

Is the Salary Question Awkward or Inappropriate?

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Sergey Fatin/Shutterstock

Should candidates be asked about their salary history as part of the screening and hiring process?

A recent article posted in Human Resources Director Canada cites an American push, in certain states, to ban asking candidates questions about their recent salaries as part of the recruitment process.

Click here to read the article.

It seems a curious thing to be asking about, in the first place.

From a best practice perspective, asking candidates about their salary history comes loaded with difficulties, especially in a Canadian HR context. As we have learned from our Recruitment and Selection studies, our focus as Human Resources practitioners is to ensure that the end-to-end hiring process is as neutral and objective as possible.

While the article speaks to the benefits of assessing a candidate’s monetary expectations, asking the question about how much money the candidate makes now is, in the opinion of this HR blogger, completely irrelevant.

Candidates are better served by having a clear and transparent understanding of the position requirements, the duties, the responsibilities, the expectations and the compensation range that will apply to the successful applicant in the position. It is the value of the position that pays the wage, not the value that is placed on the person applying for the job. This is why we have compensation related legislation in place including the Pay Equity Act of Ontario, the Employment Standards Act and, of course, the fundamental principles of equality and fairness outlined in the Ontario Human Rights Code.

If a candidate chooses to apply for a position that is at a lower compensation level than their current situation, that is their choice. The employer is not obligated to over-compensate the applicant, if they are hired, for making that choice. Similarly, if a candidate applies for a position at a higher rate than their current wages, the ethical employer will not (should not) pay lower than the pre-determined compensation level if that person is hired into that position as a result.

When there is a salary range linked to a position, that range should be the only determinant that sets the wage in order to ensure a fair and equitable assessment of mutual values.

Bottom line, some questions are just not worth the asking.

Discussion Questions:

  1. As a candidate, how would you respond to a question that probes your salary history during the interview process?
  2. What are the benefits to the HR practitioner in asking about candidate salary history?
  3. What are the perils to the HR practitioner in asking about candidate salary history?

 

CEO Considerations

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Human resources and corporate hierarchy concept - recruiter complete team by one leader person (CEO) represented by gold cube and icon.
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When we think of best practices for purposes of recruitment and selection, the following items are usually included during the candidate selection process:

  • Evidence of previous performance
  • Evidence of required skills
  • Evidence of required attributes

All of this helps the Human Resources professional guide the recruitment process through objective, evidence-based criteria in order to ensure a fair process for everyone involved.

When embarking on the recruitment process for the organization’s CEO, it would seem that these best practices would be more important than ever. When recruiting for the top job, should the recruiter not be using their top practices and procedures?

Apparently not.

According to a recent article posted in Canadian Business, some strategic recruitment best practices need to be set aside in order to get the right person into the most senior of the organization’s roles.

Chance and luck seem to take priority over traditional recruitment strategies.

Click here to read the article.

The concept that past behaviour predicts future behaviour may not apply when looking at the organizational performance record of the CEO candidate. The article argues that past organizational performance may have nothing to do with the individual and everything to do with chance. Further, the fact that the typical tenure for a CEO is around four years indicates that the role has much less time to influence the organization’s success for the long term. This would leave a good news/bad news scenario for the person coming into the role of CEO.

If the incoming CEO inherits an organizational mess, they do not have enough to clean it up. If they inherit a smoothly running system, they do not have enough time to mess it up.

Having said that, the article goes on to state that luck also comes into play. The CEO recruitment process appears to depend on who is in the right place at the right time for consideration based on where the information sits in a headhunter’s database.

Perhaps the takeaway from all of this is that the organization is bigger than the CEO and therefore a ‘bigger’ approach is needed when looking to fill the top position.

At this level, relying on luck and chance seems a risky game to play.

Discussion Questions:

  1. Do you agree with the contents of this article? Why or why not?
  2. What could you do as a professional headhunter to reduce the risks of luck and chance when recruiting for a CEO?
  3. Which recruitment best practices do you think would be most important for selecting someone into the role of CEO?