“How much time are growing companies spending on hiring?”
“What is most challenging and time-consuming about the hiring process?”
“Can we quantify the benefits of making a great hire?”
As we help growing companies built high performing teams, these are a few of the questions that we keep being asked. Despite how basic these questions may seem, there’s actually very little reliable data out there to answer them, at least in an emerging market context. To begin to change that, we partnered with FSD Kenya and Open Capital Advisors to learn more about how small and medium-size enterprises (SMEs) in Kenya are hiring. We’re excited to release the report and share its findings with you. In case you don’t have time to read it in full, here are three takeaways:
1. Hiring is extremely time-consuming
During the decade we spent — before and after we created Shortlist — helping SMEs source and screen talent, we have become acutely aware that hiring is massively time consuming. From figuring out what to put in a job description, to sourcing candidates through multiple channels, to sifting through hundreds of applications, to organising and managing interviews, to all the follow-up needed to negotiate a final offer — the hours add up. But most companies that we’ve observed, including the ones we interviewed for this research, aren’t actually recording or analysing the time it takes them to hire, and consequently don’t know what it’s really costing them.
We found that for a single mid-level hire, companies are spending around 18 hours screening CVs, and then 19 additional hours interviewing candidates. Unfortunately, many hiring managers report feeling that much of the time spent before the interview stage is being wasted.
How can organisations screen and interview candidates more efficiently and effectively? A few solutions:
- Rather than filtering candidates based on CV data, implement a competency-based screening approach to objectively filter out candidates who don’t possess the core requirements needed perform on the job. Much of this process can now be done online.
- Generate discipline around what you will screen before an interview and how you’ll spend valuable interview time. Many assessments are more effectively administered remotely and scored by machine, equipping hiring managers to interview candidates who have already been pre-vetted in ways that can be tough to do in an interview setting. Cognitive ability, for example, is highly correlated to job performance across job categories, but is often harder than we might imagine to assess quickly in a short face-to-face setting.
- Use a structured interview method to significantly increase the chances that your interview will actually predict on-the-job performance.
2. Too many high-level staff and non-HR employees are involved in hiring
When companies consider their hiring costs, they often only consider direct expenses, such as job board posting fees. In fact, we found that the key cost driver is time, and 85 percent of hiring time is spent by non-HR staff.
In practice, this means that non-HR staff are involved with screening CVs, because functional knowledge is needed for identifying the right skill sets and experience, though CV screening can be a futile task. Business managers often lead the interview process as well, and up to 3 interviews are often conducted.
We’re sometimes asked how business managers can spend less time on the hiring process, and we often provide the following guidance:
- Define the “must have” requirements that will drive high performance (and by “must have”, we mean a maximum of 3 requirements, not 20).
- Collaborate on designing an assessment that mimics a key task that a candidate would need to excel at if you hired them (not a theoretical exercise).
- Agree in advance what will constitute a “good answer” to your interview questions, such that business managers don’t need to be present in each interview round.
3. A high-performing hire is exponentially more valuable than a low performer.
We all know what it feels like when we make an amazing new addition to our team. As soon as they join, we’re often instinctively aware they will have a net positive impact on the company. We wanted to back up that instinct by quantifying the difference high-performing employees make. We found that top-performing employees have a an exponential — not linear — effect on their organisation’s bottom-line, especially in sales or credit roles:
- A high-performing sales agent can generate around two and a half times the margin of a low performer in the same organisation.
- For one of the companies consulted, the difference between a high and low performer amounted to a difference of approximately US $30,000 in revenue per agent per year (in a business with sub-$1,000 transaction sizes).
- High-performing loan officers can generate up to seven times the annual margin of low performers.
These figures show that for growing SMEs, hiring high-performers should be prioritised with great urgency. If this sounds obvious, you may be surprised to know that the vast majority of HR departments are measured based on cost-per-hire or speed-per-hire rather than quality-per-hire.
We recognise that this research isn’t exhaustive, but we hope it will at least begin to point to ways that you can help your organisation hire more effectively, and we would welcome your questions and input.
Download the full report here — Hiring in Kenya: Current Methods, Hidden Costs and the Value of Top Performers — and check out our Business Daily op-ed on the research findings. Want to spread the word? Share your favourite fact from the report on Twitter using #HiringinKenya, and tag us @Shortlisthires!