The High Cost of Subjective Hiring (And How to Fix It)

The job interview process is broken. While most companies recognize the importance of hiring top talent, far too many still rely on unstructured interviews and gut feel to make critical hiring decisions. The result is expensive mis-hires, lack of diversity, and underperforming teams.

Consider these shocking statistics:

  • A CareerBuilder survey found the average cost of one bad hire is nearly $15,000. For managers and executives, the price tag skyrockets to $50,000 or more.
  • Zappos CEO Tony Hsieh once estimated that his own bad hires had cost the company "well over $100 million."
  • A Gallup study found that only 13% of employees worldwide are engaged at work. Poor job fit is a major contributor to disengagement and turnover.

The financial and cultural cost of getting hiring wrong is simply too high to leave it to chance. The good news is that by using objective criteria and a structured evaluation process, companies can dramatically improve their odds of making the right hire every time.

The Problem with Relying on "Gut Feel"

The typical unstructured job interview is an unreliable predictor of future performance. Casual, freewheeling conversations allow biases to run rampant and first impressions to cloud objective judgment.

Our brains are wired to make split-second assumptions about people based on extremely limited information. According to research by Princeton psychologists, we decide whether we "like" someone within the first few seconds of meeting them. This initial gut reaction colors our perception of all subsequent interactions.

We then subconsciously look for data that confirms our original opinion of the candidate (a phenomenon known as confirmation bias). We interpret vague, wishy-washy answers charitably if we want to hire the person, yet we are hyper-critical of responses from candidates we don‘t naturally gel with. Instead of objectively evaluating skills and abilities, we are really just rationalizing snap judgments.

The lack of a clear rubric for assessing candidates allows all sorts of bias to creep in – similarities bias (favoring people who are like us), pedigree bias (overvaluing academic credentials), halo/horns effect (assuming one great/terrible quality indicates everything else must be great/terrible). The end result is homogenous teams, hiring mistakes, and a heavy dose of groupthink.

Unstructured interviews are riddled with so many opportunities for bias that researchers have found they are worse than a coin flip at predicting job performance. Relying on gut feel is both lazy and unscientific. There simply has to be a better way.

A Tale of Two Hires

Let me illustrate the perils of subjective hiring with a story about two companies, ACME Consulting and Pinnacle Software. Both firms needed to fill a critical sales role, but their approach couldn‘t have been more different:

The Old Way: Winging It

ACME‘s hiring process was haphazard from day one. The VP of Sales jotted down a generic job description and blasted it out on LinkedIn. There was no discussion about the specific traits and competencies needed for success in the role.

After a cursory resume screen, the VP brought in his top 3 picks for interviews. But with no set criteria, each conversation meandered in a different direction. One candidate wowed with her polished presentation skills. Another had an MBA and came across as highly ambitious. The third had the most years of experience and told great stories about wining and dining clients.

The interview panel was dazzled, but for very different reasons. When they got together to debrief, it became clear that each interviewer valued completely different attributes. There was no way to make an apples-to-apples comparison of the candidates.

In the end, the VP went with his gut and chose the MBA grad. Her pedigree and business savvy made her seem like a safe bet. But three months in, major problems emerged. The new hire struggled to build rapport with clients and persistently missed her quota. Her academic accomplishments, while impressive, didn‘t translate into sales success.

ACME was forced to put her on a performance plan and eventually terminated her. All the time and expense of hiring and training had been wasted on a bad fit. It was painfully clear that the company needed a new approach.

The New Way: Following a Structured Process

Around this same time, Pinnacle Software was also looking to fill an enterprise sales role. But they attacked the hiring process much differently. Before even posting the job, the CEO worked with the head of Sales to define the key criteria for success in the role:

  • Proven track record of sales to Fortune 500 companies
  • Deep technical knowledge to advise customers
  • Excellent listening and objection handling skills
  • Collaboration and cultural fit with the team

They developed a scorecard with these attributes and a rating scale from 1-5. Every interviewer would use this to evaluate candidates on the same rubric.

When resumes started coming in, they were screened against these core criteria. Only those who met the bar moved on to a phone interview, which involved a standard set of questions designed to surface the key competencies.

The top performers were invited for in-person interviews with a panel. Each interviewer focused on a different segment of the scorecard, asking behavioral questions to understand the candidate‘s approach and past experience.

For example, to assess objection handling, they asked questions like: "Tell me about a time you had to deal with a very difficult client concern. What was the issue and how did you resolve it?" The candidate‘s answers revealed far more about their abilities than the generic "Tell me about yourself."

After the interviews, the panel immediately scored the candidate on the scorecard. Only once everyone had submitted their ratings did they discuss the aggregate results. Low scores on cultural fit and collaboration were an instant red flag, as those were must-have qualities.

The end result? Two candidates rose to the top of the list, with consistently strong scores from all interviewers. After a round of references, Pinnacle extended an offer to their top choice. She ended up being a fantastic addition to the team, beloved by both colleagues and clients.

By using clear criteria and a scorecard to guide their hiring process, Pinnacle eliminated the guesswork and personal bias that often derails hiring. The numbers spoke for themselves. And now they had a framework that could scale as the company grew.

How to Implement an Objective Hiring Process

Developing a structured, criteria-based hiring process takes effort, but it‘s one of the highest-ROI activities a company can undertake. Here are the key steps:

Step 1: Define Your Must-Have Criteria

Before you write a job description or even think about candidates, define the 5-7 key attributes that are required for top performance in the role. Focus on core skills, traits, and values, not generic "nice to haves."

For a sales role, the criteria might include:

  • Consultative selling ability
  • Exceptional verbal and written communicator
  • Creative problem-solver
  • Technical/industry expertise
  • Drive for results
  • Collaboration and teamwork
  • Coachability

For a software engineer, you‘d likely prioritize:

  • Masterful at coding in required languages
  • Creative and analytical problem-solver
  • Passionate about elegant code
  • Fast learner, always developing skills
  • Strong communicator to non-technical audiences
  • Team player with low ego
  • Believer in the mission

Consider what differentiates the top performers in this role from the average. What traits and abilities do they consistently demonstrate? Involve a variety of stakeholders in this process to get diverse perspectives.

Step 2: Develop a Candidate Scorecard

With your key criteria identified, build out a scorecard that interviewers will use to evaluate candidates on each trait. Include a rating scale (1-5 is common) and specific behaviors that indicate each level of proficiency.

Here‘s a simplified example for a Product Manager role:

Attribute 1 – Poor 3 – Average 5 – Excellent
Product sense Unable to articulate vision for product and features Some product intuition but thinking is disjointed Clear point of view on product strategy & roadmap
Analytical skills Struggles to draw insights from data Able to conduct basic analysis Masterful at deriving actionable insights & measuring impact
User empathy Indifferent toward user pain points Shows some concern for user needs Able to get in users‘ shoes and design delightful experiences
Execution & leadership Poor track record of delivering Decent at execution in right environment Consistently ships high-quality products and motivates team
Communication Disorganized and unclear Reasonably articulate Compelling writer and presenter to all audiences
Cultural fit Values and style don‘t match company Decent fit but some misalignment Strong match for company values and team culture

For each attribute, brainstorm 2-3 interview questions or exercises that will give you visibility into the candidate‘s proficiency. Aim for questions that elicit specific examples and stories, not just opinions.

For example, to assess user empathy you could ask:

  • "What‘s a product you love and why? How would you improve it?"
  • "Tell me about a time you championed the user perspective on your team and how you influenced the product direction."

For analytical skills:

  • "What metrics did you use to measure the success of your last product launch? Walk me through your process for tracking and improving them."
  • "How have you leveraged data to drive meaningful product changes?"

The scorecard is a living document that you should iterate on as you learn which questions and criteria best predict success in the role. Solicit ongoing feedback from interviewers on what‘s working and what can be improved.

Step 3: Implement Structured Interviews

Armed with your list of must-have traits and scorecard, you‘re ready to start interviewing. The key is consistency and objectivity:

  • Have a diverse set of 3-5 interviewers meet with each candidate
  • Assign focus areas so that all key criteria are covered
  • Equip the interview team with list of behavioral and situational questions to ask in their focus area
  • Encourage interviewers to go deep with follow-up questions to really understand the candidate‘s approach
  • Interviews should make their evaluation independently without discussing candidates in advance
  • As soon as the interview concludes, have each interviewer fill out the scorecard while impressions are fresh

Structured interviews are not a casual chat, but rather a targeted assessment of skills and abilities. Interviewers should take copious notes, document specific examples, and score the candidate on each attribute immediately afterward.

It‘s crucial that interviewers not discuss candidates until everyone has completed their scorecards. This prevents groupthink or one emphatic thumbs up/down from swaying others‘ evaluations. You want to evaluate based on data, not groupthink.

Step 4: Make a Data-Driven Decision

With interview scores submitted by all panelists, it‘s time to analyze the data and home in on a finalist. Start by averaging the ratings for each candidate on the individual attributes and overall.

Look for strong performance across the board, with high marks from all interviewers. You want broad agreement that this is the right person for the job. If a candidate polarizes your team, that‘s a red flag!

A good rule of thumb is that averaging a 4.0 or higher indicates a strong hire, 3.0-4.0 is a maybe, and below 3.0 is a firm no-go. Trust the rubric you‘ve developed, not your gut feel.

If you have two neck-and-neck finalists, consider culture fit and growth potential as your tiebreaker. Who aligns best with your company values? Who raises the bar for the entire team? Remember, you can teach skills but you can‘t teach attitude. Always pick the candidate with exceptional character.

Before extending an offer, do a final gut check with the interviewers. Does anyone have concerns that weren‘t captured in the scorecard? Dig into those. And of course, make sure to do reference checks to validate everything you heard in the interviews.

The Bottom Line

Committing to a structured, criteria-based interview process requires an upfront investment of time and energy. You have to be intentional about defining what success looks like and building a framework to evaluate candidates objectively. There are no shortcuts.

But the payoff is huge – better quality hires, increased diversity, lower turnover and a happier, more productive team. Bad hires are painful and costly. Great ones pay dividends for years to come.

What‘s holding your company back from revamping its interview process? How might you start putting these principles into practice with your next hire? Block off some time with your team to brainstorm must-have criteria and begin building your scorecard.

The talent war is real and the companies with the best hiring processes and cultures will have a huge leg up. Don‘t let subjectivity and bias sabotage your shot at landing phenomenal candidates. Let the data be your guide.