When (and How) to Take Risks on a Candidate

No candidate selection process can deliver a 100% success rate—as long as we are dealing with human beings, we will make mistakes from time to time. The critical point is knowing when to take greater risk, and equipping your organization to address hiring mistakes efficiently and appropriately.

Some organizations we work with have felt the pain of mis-hires more acutely than others, and there are telltale indicators. The entire hiring process carries an air of risk aversion. The sourcing approach focuses on “tried and true” talent pools at the expense of innovation and diversity. Qualification lists grow longer and interview lineups expand to 10 or more interviews per candidate. Questions are oriented towards minimizing downside risk rather than uncovering the seeds of greatness. And often, the companies that are most risk-averse are the ones that simply can’t or won’t address the mistakes they have made.

While it is critical to take steps to minimize the risks of mis-hires, it is unwise to let this ethos dominate your process. You may avoid a mistake or two on the margin, but fail to achieve the full potential of your business because you are either chronically understaffed or overly focused on “safe” hires rather than transformational ones.

There are three principles that can help your organization strike the right balance.

The first involves getting clarity on where you can safely embrace more risk, and where you should not. As a general rule, mis-hires are more painful as you move up the management chain. Taking a flyer on a senior executive is a much riskier proposition than a front-line employee, given the potential for employee attrition and cultural conflicts. Also, it may make more sense to avoid knee-jerk rejections in a “thinner” or more competitive labor pool than in a deep one. False negatives—rejecting an individual who might have succeeded—can be enormously costly in some situations (e.g. experienced data scientists) and lower cost in others (e.g. front-line BDRs). Finally, it may make more sense to take risks in areas where individual performance is easier to measure quickly (e.g. sales roles with clear quotas), or where individuals can build skills and improve performance over time. This leads to our first principle:

Recommendation #1: When building your spec for a new role, assign the role two quantitative ratings: (1) cost of a mis-hire and (2) cost of a false negative (rejecting a candidate who may have been successful). If (1) is relatively high and (2) is relatively low, maintain an exceptionally high bar. If it’s the reverse, consider embracing greater risk.

The second principle involves your selection and decision-making process. When you establish the results and competencies required in the role, get clear on which items represent strict thresholds and which represent more of a “sliding scale.” For example, if you have a strong culture around radical transparency and honesty, you may be unwilling to take even a slight risk on a candidate who expresses defensiveness about his/her shortcomings, while viewing another skill area (perhaps proven ability to multi-task) with more open-mindedness.

Recommendation #2: decide which results and competencies are absolutely essential, and establish clear threshold/minimum ratings of candidates in those areas. Do not compromise! For less essential results or competencies, consider candidates who may fall slightly below the mark on one, but who show clear signs of greatness in others.

The third principle involves how you onboard new hires. Some organizations are better-equipped to deal with mis-hires than others, without question. Why? Because they are able to “fire fast”—to part ways with marginal candidates in a transparent and supportive manner. The most effective way to build this discipline is to clearly communicate expectations from the start, and to track the new hire’s performance vigorously thereafter. Doing so will prepare new hires—and you—to make performance management discussions far more painless. New hires will know what you expect and will know when they are missing the mark.

Recommendation #3: prior to the new hire’s start date, include a thorough debrief in which you share the specific results they are accountable for and the competencies/qualities you need them to exhibit. Check in with them as early as reasonably possible to gauge progress. If they are falling behind the mark, provide coaching and support. If their performance continues to lag expectations thereafter, discuss the gap openly, and support them in finding a new role in your company or elsewhere.

It is essential to maintain a high bar in your hiring process, of course. But creating a process that is exclusively focused on “zero risk” can threaten both your hiring targets and your pursuit of intellectual and demographic diversity. Great companies are able to strike a healthy balance, understanding where they can and cannot embrace risk, and creating a process that addresses mis-hires in an efficient and fundamentally humane manner.