In today’s business landscape, data is king. Companies are relying on big data solutions like ERP and MRP systems (SAP, JDE, Ariba) to gain unprecedented visibility into their Supply Chains, allowing more strategic possibilities than ever before. That’s in our corner of the world, but the big data revolution has touched on all aspects of organizations, from marketing to R&D to finance.
Then there’s hiring. According to PwC’s most recent survey, CEOs view the unavailability of talent and skills as the biggest threat to their business. Which confirms what any business leader knows: hiring is hard.
More startups are utilizing data and sophisticated algorithms to promise better candidates with less effort. They’re investing massive marketing dollars to sell these solutions as a tech-enabled alternative to traditional hiring. It’s a bit of a wild west, and last week, a great article in Harvard Business Review on this topic caught our attention, by stepping back to ask a fundamental question:
If you invest in these solutions, but don’t measure your results, how do you know they’re worth paying for?
More than that, Do they actually produce better candidates than human sourcing methods? Do they make the process faster, or actually slower?
The article, titled “Your Approach to Hiring is All Wrong,” was written by Wharton Business School Professor Peter Cappelli. It digs into the history and research to dispel a lot of the underlying assumptions behind today’s hiring process.
When a leading professor at one of the world’s top business schools says that most companies are hiring the wrong way, it’s worth listening.
As Cappelli puts it, “obsessed with new technologies and driving down costs, [employers] largely ignore the ultimate goal: making the best possible hires.”
If you’re in a position with hiring authority, you probably get pitched on these solutions all the time. A few of the examples:
- Platforms that promise to automatically find you candidates.
- Applicant tracking systems that post to job boards, build a massive haystack of unsuitable resumes, then use flawed methodology to try to find the needle in that haystack.
- Voice recognition algorithms that try to measure someone’s competence by their speech patterns instead of actually, you know, having someone talk to them.
All of these solutions promise to cut down on time, but they end up making you – or your internal recruitment team – work the system instead of working your actual job. They have no ability to assess candidates for cultural fit, which 96% of HR decision makers agree is crucial to the hiring process.
They also lead to jobs that sit open for longer, which doesn’t surprise us at Argentus – where we hear all the time from companies who have had roles sitting open for months.
As Cappelli puts it, “the big problem with all these new practices is that we don’t know whether they actually produce satisfactory hires. Only about a third of U.S. companies report that they monitor whether their hiring practices lead to good employees; few of them do so carefully, and only a minority even track cost per hire and time to hire.”
The world of hiring is poised for a big data revolution, just like Supply Chain and so many other business areas. But here’s the thing: applying big data to the movement of, say, microchips across the globe is one thing. Applying it to human psychology, motivation, and cultural fit is a whole other story – and it’s farther down the pipe. Right now, these solutions just aren’t effective enough to replace a human eye and skilled human assessment.
We’re biased, but a recruiter who deeply understands your world, who has an existing network of the best passive candidates, will fill your most strategic positions faster than these platforms – especially in a niche like Procurement or Supply Chain, which is a bit beyond the capabilities of an automatic system to assess. You don’t need to pay them until you make a hire, and they’ll issue a guarantee in the case that the candidate doesn’t work out. It’s an opportunity to see 5-7 (give or take) very high-quality candidates, rather than creating the work of trudging through 500 resumes to find the needle in the haystack – assuming that the system hasn’t filtered the needle out.
Digital has changed almost everything about business, but hiring the best is still about relationships – now, and for the forseeable future.
Bet on it.
We encourage everyone to check out the article!