The main objective of the hiring process hasn’t changed much in the last 100-or-so years: finding the right person, with the right skills and experience, to close a gap within the organisation.
In more recent decades, with the concept of a “job for life” coming to an end and candidates becoming much happier to jump ship for better pay and opportunities, employers have also started to factor “cultural fit” into their hiring decisions.
And they have a whole raft of tools – from machine learning and social media analysis, to psychometric profiling and CV filtering – at their disposal to make the hiring process faster, simpler, cheaper and more effective.
But is all this choice a good thing? Does it actually work?
Research shows that just 2.4% of UK organisations – and a startling 0% of those with 1,000+ employees – rate their recruitment and selection practices as “very effective” in helping them source and secure quality hires.
From conversations with our network, we know that this is a real concern for the investment management sector. We know that lots of you feel your hiring process isn’t helping you access the talent you need to transform your business.
Common hiring process challenges for investment management firms
No two investment management businesses are the same. But when it comes to the hiring process, we hear the same challenges cropping up time and again, both from clients and candidates:
- Having a consensus-based hiring process that falls apart if one person is indifferent;
- Uncertainty among hiring managers and other decision-makers as to whether a candidate is the right fit, meaning additional interviewers or “final” rounds of interviews are added to the process;
- Losing momentum throughout the process due to large gaps between interviews;
- First-stage screening being carried out by people who lack a full understanding of the role, meaning good talent can be missed;
- Reducing spend on recruitment fees means the hiring process is passed to HR, who may not a) enjoy it, b) understand the role fully, or c) have the network to reach the best talent (often passive candidates).
No one person or department is “to blame” for any of these issues. This article isn’t about pointing fingers or levelling criticism. Instead, it’s about helping investment management firms fine-tune their hiring process to help them consistently hire exceptional talent.
The implications of an ineffective hiring process
If your hiring process isn’t where it should be, that doesn’t just mean it takes you longer or costs you more to hire the right people.
You might hire the wrong people altogether – and hiring a poor Fund Manager, Research Analyst or Salesperson could cost you huge sums of money. Along the way, you might burn through candidates because you’re unclear of what the “right person” looks like, damaging your employer brand and making it harder to attract top talent in future.
But the implications go beyond struggling to fill a specific vacancy. Performance is hampered if less-talented investment professionals are hired. Company growth plans are impacted. Dissatisfied with how things are going, investors withdraw money, reducing assets under management.
In other words: this isn’t a hiring or HR problem – it’s a business problem.
Now, here are five steps you can take to revamp your hiring process:
- Design jobs with realistic requirements
Without internal recruiters to push back, it becomes all too easy for hiring managers to create unrealistic job specifications. We’ve all seen instances of this shared on social media – demands for 5+ years’ experience using a piece of software that only launched two years ago.
But while those viral examples have at least entertained people on LinkedIn and Twitter, they mask a more serious issue. In an age when applicant-tracking software automates the CV-sorting process and makes black-and-white decisions based on whether or not the desired job requirements are met, organisations find themselves with virtually no candidates who actually make the grade.
Take a closer look at your job specs. Is each of those requirements truly critical to the role, or merely beneficial? If you found a truly exceptional Equity Research Analyst who lacked experience of covering a specific sector, do you really want to dismiss them out of hand? Or can they pick up that experience on the job – or through a training programme that you’ve built or funded – in a relatively short space of time?
- Understand the limits of referrals
Employers love referrals, and investment management firms are no different. Across all industries, they’re the most popular means of finding quality hires.
The logic behind this approach seems sound. Your employees understand the demands of the job and your company culture, so they should be well-placed to recommend people from their network who’d be a great fit.
But the evidence doesn’t really support this. Indeed, a landmark study published in the American Journal of Sociology discovered that when referral hires are more successful than other hires, this is because they are looked after – and essentially onboarded – by the person who referred them. If their referrer quits the organisation before the new hire arrives, they perform no better than non-referrals.
There’s another obvious downside, too: if you rely heavily on referrals, you risk building a homogenous workforce, because we typically know people who are like us. That’s an issue, because numerous studies have shown that diverse teams are more creative, productive, innovative and engaged – and that their employers are more profitable.
Referrals can be an effective way to grow a talent pipeline, but they shouldn’t be your go-to method. And referred candidates shouldn’t be automatically prioritised over any other candidate.
- Be transparent about what the job entails
You’re speaking to an exceptional candidate. A genuine A-player. You know they’d be a huge asset to your organisation. So you talk up how brilliant it is to work there. You might even lapse into the occasional bit of exaggeration.
The problem is, if the realities of the role don’t live up to the expectations you’ve set out, that exceptional candidate is going to feel pretty disillusioned. That might affect their performance, or they might leave.
That’s partly why the psychologist John Wanous advocated giving candidates a realistic insight into what the job entails.
Google has long been a proponent of this approach. Back in 2004, it ran a whole recruitment campaign based around a series of mystery puzzles posted on billboards and otherwise-empty websites. Today, it holds regular Code Jams to find the world’s best coders. Both approaches allow the search giant to find the best talent, while showing candidates the sort of work they’d actually be doing.
This is clearly an extreme example. Chances are, you don’t have Google’s talent acquisition budget, nor the time or inclination to organise “Britain’s Next Top Investment Manager”.
But there’s still a clear learning here: don’t be afraid to talk about the good and bad of a role. Be honest about the challenges you’re facing – and how you see the candidate in question helping you to overcome those challenges.
- Update your interview process
Employers are spending almost twice as long on interviews as they were in 2009. But it’s debatable whether all that extra time is helping them to make better hires, because the interview process is often flawed to begin with.
Ideally, interviewers should consistently use a set list of questions designed to predict whether a candidate will be a good hire. However, it’s not uncommon for interviewers to simply make up questions on the fly, which makes it much harder to directly compare candidates.
The interview stage is also where unconscious biases can creep into the hiring process. Answers can be interpreted based on snap decisions about the candidate.
Examining the hiring process for elite positions in professional services firms, sociologist and former management consultant Lauren Rivera found that a lot of emphasis is placed on characteristics that have little to do with a candidate’s actual ability, such as:
- Where they studied;
- Their hobbies and interests;
- What their upbringing was like.
Interview practices like this could be actively blocking you from hiring the best candidates, in favour of people from similar backgrounds who share similar worldviews. And these problems are only exacerbated when senior decision-makers step into the process at a late stage.
- Measure the results
We live in a world of KPIs and result-tracking. We assess everything against the ROI it delivers. Yet we rarely apply the same stringency to the hiring process.
For instance, only a minority of employers truly understand which channel helps them access the best talent at the lowest cost.
There’s no obvious reason for this. If marketing runs a three-month campaign, it would be expected to give hard evidence on what worked and what didn’t. Yet, despite frequently referring to talent as our “most important asset”, we don’t do the same for the hiring process.
Of course, there are exceptions. Tata, the Indian conglomerate, calculates which universities produce employees who perform strongest, stay with the company longest, and have the lowest starting wage.
In a numbers-driven industry like investment management, employers have the data at their disposal to measure the results of the hiring process. Gather all the information you can on how you find new hires, assess their performance over time, and use it to make smarter hiring decisions moving forward.
At Berkeley Croft, we drive investment management firms to thrive and succeed by unearthing the high-calibre candidates that will transform your organisation.
We embed ourselves in your hiring process, saving you time and helping you source exceptional talent.
Contact us to find out more.