A question of balance – managing recruitment risk

research C O R P O R AT E R E S E A R C H F O R U M

October 2015

A question of balance – managing recruitment risk

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"Internal recruitment executives in many companies have succeeded in instilling process and efficiency in their global hiring practices, and in many cases adding science to what had been considered primarily an art. Along with this has come recognition of the risks involved in recruitment: good hires add value to the business, but bad ones – or badly managed hiring experiences – can damage it in many ways... While the sources of recruitment risk vary, they can usually be traced back to a lack of clarity about, and ownership of, the recruitment process."

Denis McCauley, Report author.

Sponsored by

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CORPORATE RESEARCH FORUM

CONTENTS

Contents About the research / About CRF

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Foreword

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Executive Summary

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1 What are the potential consequences if your recruitment process goes wrong?

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2 Sources of risk

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3 Cross-border complexity

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4 Checklist for minimising recruitment risk

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5 Conclusion

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All rights reserved.

A question of balance – managing recruitment risk No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means without prior permission in writing of the publisher.

Corporate Research Forum One Heddon Street Mayfair London W1B 4BD United Kingdom ISBN: 978-0-9934094-0-0

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CORPORATE RESEARCH FORUM

ABOUT THE RESEARCH

About the research This Corporate Research Forum report, sponsored by HireRight, is based on a series of indepth interviews with senior recruitment executives and experts, as well as extensive desk research, conducted in June and July 2015. We would in particular like to thank the following individuals for providing their insights: Denis McCauley

• Greg Allen, Global Head of Resourcing, Lloyd’s Register

About the author

• Jonathan Briggs, Head of Talent Acquisition, IP & Science, Thomson Reuters

Denis McCauley is a writer, editor, speaker and moderator with particular expertise in how businesses, governments and individuals use technology. He has spent much of his career with the Economist Intelligence Unit (EIU) in a variety of editorial roles, most recently as Editorial Director, Thought Leadership, EMEA. Denis also directed its global technology practice and is the author or editor of numerous technology and management practices reports.

• Scott Fitzgerald, Talent Acquisition Specialist, European Bank for Reconstruction and Development (EBRD)

• Steve Bright, Director, International Human Resources, Northrop Grumman Corporation

• Steve Girdler, Managing Director EMEA and Asia Pacific, HireRight • Gary Knight, Group Head of Strategic Resourcing, First Quantum Minerals Ltd (FQML) • Steve Wing, Director, Strategic Dimensions.

About CRF Founded in 1994, Corporate Research Forum (CRF) is a membership organisation whose international focus is on research, discussion and the practical application of contemporary topics arising from people management, learning and organisation development. CRF has become a highly influential focal point and network for over 160 members representing a cross-section of private and public sector organisations.

• Its annual programme of research, events and publications fully reflects members’ interests, in addition to the annual international conference. Side meetings and interest groups are also initiated to meet challenges that members might have.

• Contributors are acknowledged experts in their field with a worldwide reputation as leaders and innovators in management thinking and practice.

• Sharing and collaboration among members is a key feature of CRF’s activities. We actively encourage networking at all events, and especially through member lunches and HR director dinners.

• CRF is led and managed by highly-regarded former HR professionals who have a passion for delivering excellence in the leadership and development of organisations and people.

CRF’s goal is to be valued for excellence, rigour, relationship building and providing an independent view which, together, lead to measurable improvement in members’ people and organisation performance.

For more details on how your organisation can benefit from membership to CRF please contact Richard Hargreaves, Commercial Director, on +44 (0) 20 7470 7104 or at richard@crforum.co.uk. Alternatively, please visit our website at www.crforum.co.uk.

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FOREWORD

Foreword

Steve Girdler Managing Director EMEA and Asia Pacific, HireRight

In an ever growing global workforce, one of the biggest challenges for recruiters is avoiding a bad hire. With the challenges recruiters’ face increasing, getting the right person for the job is a hard task, and the stakes are higher than ever. One bad hire can destroy a company.

As Warren Buffett so famously said, “It takes 20 years to build a reputation and five minutes to ruin it”, therefore, mitigating risk should be a top priority for recruiters. They have to know everything about a candidate to ensure they are a good fit for the company and that the candidate can do the role in question.

However, it cannot all be about mitigating risk and avoiding a bad hire. In the modern day, candidate experience is a vital consideration for all recruiters. A laborious and time consuming application process, poor communication and long delays in feedback are just some of the things that can put off potential candidates, and with the globally connected world, sharing a bad experience with a mass audience is available at the click of a button, and can be potentially harmful to even the most well established reputation.

But how do you mitigate risk and not put off potential candidates? As Corporate Research Forum (CRF) highlights in this report, it is all about getting a balance. Recruiters must ensure they protect their business from a poor hiring decision whilst also making the candidate experience as easy as possible. It is about understanding the candidates’ needs whilst protecting their company’s best interests.

I am delighted that CRF chose to bring this subject into the industry spotlight. At HireRight we screen over 12 million candidates a year for 40,000 clients, across 240 countries and territories. Ultimately, our role is to mitigate risk for our clients but we recognise that screening is often stressful for any candidate and therefore strive to put the candidate experience at the heart of the service.

Reducing recruitment risk is an essential part of any new hire and is something that can no longer be skimmed over. The danger of a bad hire is real, and it is up to the HR community to manage it.

Steve Girdler Managing Director EMEA and Asia Pacific, HireRight

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EXECUTIVE SUMMARY

Executive Summary With most of the world’s major economies in growth mode again, talent wars are heating up. The internal recruitment functions of businesses large and small are straining to fill key roles, with the power shifting from the client to the candidate. Internal recruitment executives in many companies have succeeded in instilling process and efficiency in their global hiring practices, and in many cases adding science to what had been considered primarily an art. Along with this has come recognition of the risks involved in recruitment: good hires add value to the business, but bad ones – or badly managed hiring experiences – can damage it in many ways.

This report sheds light on the different types of risk involved in organisations’ recruitment practices. It finds that when the biggest risks materialise, the consequences can be as or more ruinous as a major security breach or regulatory violation. It also uncovers that, while the sources of recruitment risk vary, they can usually be traced back to a lack of clarity about, and ownership of, the recruitment process. The report also examines how some organisations are seeking to minimise recruitment risk.

Key findings: 1. The greatest recruitment risk facing organisations today is hiring the wrong person. A bad hire can lead to loss of earnings, contracts, reputation or customers. It can also lead to a loss of other key staff, if morale is affected. The more senior the hire, the greater the risk.

In the most extreme cases, a bad hire at chief executive or board chairman level can bring down a business. Many organisations fail to vet the backgrounds of their most senior hires thoroughly.

2. Overly long or poorly managed recruitment processes can result in the loss of good candidates. With organisations’ greater attention to due diligence, the recruitment process is getting longer.

In competitive talent markets, however, excessive deliberation in hiring can be costly. A lack of communication and engagement with candidates during the process can have the same result.

3. Much recruitment risk stems from a loose brief – failure to carefully define the role requirements at the outset. Other key sources of risk include • lack of transparency with candidates and internal stakeholders • over-reliance on one part of the process (such as interviews or testing) • laxity in screening and vetting internal candidates • inattention to the recruitment web portal.

4. Any one of these drawbacks is usually a symptom of a larger problem – unclear ownership of the recruitment process. Unclear division of responsibilities between the hiring and recruitment manager leads to lack of accountability, and failure to ensure processes and timelines are adhered to and issues addressed.

5. The closer co-ordination of recruitment practices globally should serve as a complement to a company’s overall business strategy.

Central policy is essential, but it needs to allow for local interpretation. In-country teams must have the ability to adapt to local conditions. Vastly different hiring rules and practices around the world – for example, in interviewing, reference checking or other aspects of background checks – dictate the need for local flexibility.

Along with growing awareness of the risks involved in recruitment is recognition that the company’s brand and reputation are at stake in every hiring process. A well-managed process can improve the chances of the right candidate being impressed and accepting the offer. Even if the candidate doesn’t make the cut, a good impression will have been created. Enough negative candidate experiences, however, especially if shared widely in social media, can undo all the good work of building an employer brand.

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WHAT ARE THE POTENTIAL CONSEQUENCES IF YOUR RECRUITMENT PROCESS GOES WRONG?

Hiring the wrong one In November 2013 Paul Flowers resigned in disgrace from his post as chairman of The Co-operative Bank, then one of Britain’s largest lending institutions, after being arrested on charges of purchasing recreational drugs. The board which recruited him in 2010 also resigned after it transpired that concerns about his experience and lifestyle were set aside during the hiring process and his background not thoroughly vetted. This scandal, along with evidence of gross mismanagement by the executive team under Revd. Flowers’s stewardship, created a downward spiral in which the bank has come close to collapse.1 Although unusually high-profile, this episode underscores the greatest risk facing organisations’ recruitment teams today – hiring the wrong person. The repercussions of poor recruitment practices are often not as dramatic as The Co-operative's, but they can be extremely damaging, leading to loss of earnings, contracts or customers.

At Northrop Grumman, the country chief executives that Steve Bright, Director of International Human Resources, and his team hire, negotiate defence contracts at the highest government levels. Gravitas, good diplomatic skills and demonstrably solid ethics are sine qua non for new hires, he says. “At this level one misstep can completely undermine all the good work we’ve done to build relationships.”

Hiring the wrong candidate can also have repercussions for staff morale and retention: colleagues may leave if they feel an underperforming new recruit is not dealt with. “The impact of bad hires is a lot wider than the time spent trying to manage someone performing poorly or replacing them,” says Greg Allen, Global Head of Resourcing at Lloyd’s Register.

The more senior the hire, the greater the risk. According to the consultancy PwC, the average cost to large firms of forcing out the chief executive officer (CEO) is US$1.8 billion in shareholder value.2 It is all the more concerning, then, that many organisations fail to vet the backgrounds of their most senior hires thoroughly. Several of our interviewees observed that practices for senior hires across their industries are often patchy. One observes from previous experience, for example, that candidates for senior roles sometimes refuse to submit to psychometric testing. “Recruitment processes are often bypassed entirely in such cases,” he says.

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At the time of writing, the bank was in the process of being sold to hedge funds.

“A Forced CEO Turnover Costs a Large Company $1.8B More in Shareholder Value than a Planned Turnover”, PwC press release, 13 April 2015.

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WHAT ARE THE POTENTIAL CONSEQUENCES IF YOUR RECRUITMENT PROCESS GOES WRONG?

According to a recent report half of the UK firms surveyed stated that ‘connections’ win high-level positions. Boards at almost as many companies (46%) rely on personal recommendations when hiring new members.3 But, these hires needs to be supported by the same background screening that would apply to any new senior hire, whichever route they have taken to get there. In other countries, such as India, points out Steve Girdler, Managing Director EMEA and Asia Pacific with HireRight, a ‘cult of seniority’ prevails in which the people screening candidates find it difficult to ask tough questions of senior-level people. “Important questions simply go unasked,” he says.

More than half of hires have at least one discrepancy in their background screening 70%

Senior Hire Discrepancies in EMEA 49% 34%

49% = organisations in which senior leaders who join as a result of M&A are not checked beforehand

34% = HR directors aware of a potential scandal resulting from this that could affect their organisation

60% 50%

Source: The Untouchables: Protecting your organisation from leadership risk, HireRight, 2014.

40% 30% 20% 10%

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Source: HireRight. Data on discrepancy rates in background checks of candidates (EMEA data).

The figures represent the percentage of cases where one or more discrepancies are uncovered.

Losing the right one Overly long or poorly managed recruitment processes can rebound on organisations in other ways. One is when good candidates slip through the net. London-based recruitment managers attending a Corporate Research Forum meeting in June 2015 reported that talent markets are heating up in Europe and North America now that most economies are growing again.

(Scarcity of skilled managerial talent has been a long-standing feature of emerging markets.)

This is creating a dilemma for many firms, as the added attention to due diligence – partly to minimise the risk of bad hires – has also served to lengthen the recruitment process.

Steve Wing, Director of Strategic Dimensions, a UK-based executive search firm, reports that for the candidates it works with, the time between first interview and an offer being made is longer than ever. More than five interviews and assessment processes lasting several months have become commonplace. “Whilst due diligence is of course critical to making the correct hiring decision,” says Wing, “businesses also need to be aware that good candidates are in demand. Organisations that are decisive and move candidates quickly through the process will snare the best talent.”

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The Untouchables: Protecting your organisation from leadership risk, HireRight, 2014.

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WHAT ARE THE POTENTIAL CONSEQUENCES IF YOUR RECRUITMENT PROCESS GOES WRONG?

Jonathan Briggs, Head of Talent Acquisition, IP & Science for Thomson Reuters, a business information provider, confirms that in some markets excessive deliberation in hiring can be costly: “We’re exceptionally quick in San Francisco, for example, where the market for technology talent is extremely tight; if we were slow we would just lose candidates.”

A matter of legality … and reputation A screening process gone awry can land organisations in legal hot water. Inappropriate questions posed during interviews are a common source of employment tribunal hearings.

Even job descriptions can lead to problems, warns Greg Allen of Lloyd’s Register. In the UK, the job description is the tool for selection, and designs the questions and skill sets required in the fair selection process. Too prescriptive a job description could lead to no candidates; too vague could bring claims of discrimination on gender, race, age or other grounds, he says. (See “Cross-border complexity” later in this report.)

As we will discuss later, transparency and good communication can keep candidates onside even in a lengthy recruitment process. Their absence, however, may not only cost the organisation the best hire, but can also damage its brand. Poor candidate experience will almost certainly hurt the organisation’s image in his or her eyes. “If the candidate has a negative experience where the hiring company isn’t completely open about what to expect from the entire recruitment process, including the outsourcing of services such as psychometric testing and background screening or not get back to them in a timely manner,” says Steve Girdler of HireRight, “that can have a knock-on effect. The candidate may be an existing or potential customer that will look at you in a different light.” In the age of social media and websites such as glassdoor.com, a disgruntled candidate can also spread the word about such negative experiences widely.

Good management of the entire candidate experience is thus critical if organisations want not only to protect their overall brand equity, but to build their employer brand.

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SOURCES OF RISK

Why does recruitment sometimes go wrong? Below we discuss some common failings in the recruitment process. However, when something goes wrong, it is usually a symptom of a larger problem – unclear ownership of the recruitment process.

In most large organisations – particularly in the developed world – the recruitment function is highly professional, with a great deal of process and rigour. All too often, however, hiring managers take the lead on filling vacancies and seek only tangential support from recruitment professionals. Other hiring managers exempt themselves from the process entirely until it is time to interview screened candidates.

One-third of UK HR directors say that every time they recruit a new board member, they use a different process Source: The Untouchables: Protecting your organisation from leadership risk, HireRight, 2014.

Decision by committee can be another manifestation of unclear ownership. This is not always the case: there are often good reasons to widen the universe of senior managers involved in the screening process. Steve Bright of Northrop Grumman maintains it is critical for the types of high-profile country roles that his team fills. This is not only to vet the candidate thoroughly and ensure no one on the senior executive team has red flags. It is also, says Bright, “to get their emotional buy-in to the candidate when the latter is appointed, because for that individual to be successful when they’re back in-country, they need to know they have the backing of the executive team.”

Handled the wrong way, however, committee decision making can lead to a loss of accountability and to indecision. Jonathan Briggs of Thomson Reuters observes that “when people get nervous in the recruitment process they throw more people into it, which creates more indecision.” This can lead to the loss of good candidates as they tire of the process.

Following are specific manifestations of unclear recruitment processes – and sources of recruitment risk.

• The loose brief “If you end up getting the wrong person, or if the process takes too long, nine times out of ten you will find that there wasn’t a good enough quality conversation at the start about how you’re going to hire and the type of hire it needs to be.” Jonathan Briggs explains why a failure on the part of the hiring manager and recruitment manager to define the job profile with precision – and especially what new requirements the role may entail – can result in hiring the wrong person.

Gary Knight, Group Head of Strategic Resourcing at First Quantum Minerals Ltd (FQML), agrees: “When a vacancy arises, managers often assume they need to hire someone with the same skills as the person departing. Hiring managers – with the help of their recruitment colleagues – need to ask where the business is going and whether the role needs to be changed accordingly. Every vacancy should be an opportunity to rethink the role.”

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SOURCES OF RISK

• Failure to communicate

“If a rocket’s fired and is one degree off course, you don’t notice it much in the first couple of seconds, but at 30 seconds it can be a kilometre or two off course. It is similar with the hiring brief – it sets the direction for everything you do.”

Scott Fitzgerald, Talent Acquisition Specialist, European Bank for Reconstruction and Development

Good candidates normally have multiple irons in the fire, and will walk away if they feel ignored during a protracted hiring process. “Feedback we receive from our candidates suggests that how they are engaged by the potential employer throughout the process colours their decision on whether to accept an offer,” relates Steve Wing.

With growing recognition of the importance of due diligence, a lengthy recruitment process may in many cases be unavoidable. This need not mean that candidates will withdraw, provided they are kept informed and engaged along the way. This may be as simple as communicating time frames when an additional interview or test can be expected to take place. “The market is tight, meaning time is of the essence, yet at the same time more robust screening and selection are required,” says Scott Fitzgerald, Talent Acquisition Specialist at the European Bank for Reconstruction and Development (EBRD). “To strike the right balance requires good relationship management with all parties, both internally and externally, and making sure that when you’re defining the process you put in a clear timeline right from the onset.”

An explanation of why a candidate wasn’t selected, along with some constructive advice on areas for improvement, can also go a long way to building the employer brand. A lack of communication throughout the process or a perfunctory rejection notice, on the other hand, can move some to share poor feedback on social media.

• Over-reliance on one part of the process Recruitment professionals generally regard interviews as a flawed but necessary part of the hiring process. Multiple interviews allow hiring managers and other key executives to ask probing questions of a candidate, and also to build a personal picture of his or her cultural fit with the team and organisation. Interviews are only one part of the puzzle, however, and poor questioning (see below) can limit their value.

This recognition led to psychometric and other forms of testing to become standard at many organisations as long as two decades ago. The benefit for many recruitment practitioners has been to add a substantial quantitative basis to the selection process. “There’s been an increased emphasis on data in the past few years,” says Scott Fitzgerald. “This has pushed tests to the forefront, because people want quantitative results that they can analyse and use to justify their hiring decisions.”

Psychometric tests also have limits. Some high-profile examples of executive wrongdoing, including lying about credentials, have involved individuals who went through testing when they were hired. Likewise, testing plays an important role in assessing capability and fit but cannot uncover flaws in ethical behaviour. The lesson is to weigh each part of the screening process in a balanced fashion.

“If I had my way nobody would be able to conduct an interview unless they’d received some form of accreditation.”

Jonathan Briggs, Head of Talent Acquisition, IP and Science, Thomson Reuters

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• Failure to coach interviewers “Managers are generally not very good at interviewing,” says Gary Knight. “They default to interviewing people based on their technical skills, and they base their decisions on whether or not they like them.” This is a common complaint among recruitment managers interviewed for this report. Most people involved in the hiring process, in Scott Fitzgerald’s view, have an inflated impression of how good a judge of character they are. “This represents a big risk in the interview process,” he says.

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SOURCES OF RISK

Managers at all levels need coaching on how to conduct an interview effectively. Few organisations provide this in a systematic way. As the resources at their disposal grow, mandatory training in the art of interviewing may be expected to become more common in management development programmes.

• Inattention to the ‘shopfront’ The recruitment portal on the employer’s website often serves as the candidate’s introduction to the organisation, and his or her main source of information during the hiring experience.

Organisations must pay attention to the ‘shopfront’, which should be user-friendly and informative for the candidate, and kept up to date. Like other elements of the process, a professional looking and informative recruitment portal can help create a positive candidate impression.

• Lack of discipline in internal recruitment When internal and external candidates apply for vacant positions, they are not always treated equally in all parts of the recruitment process. When it comes to screening, Steve Girdler believes organisations generally have a less comprehensive approach to internal candidates as opposed to external ones.

Lloyd’s Register, says Greg Allen, treats all candidates the same. An internal candidate must go through the same interview process as externals, and is measured against a standard competency framework from the job description. At senior level, internal candidates must also go through the same external search process. “We need them to measure up to industry standards and expectations,” he says.

The biggest risks of not screening leaders Damage to reputation of the business

58%

Leadership which has negatively affected...

56%

Damage to culture

54%

Rise in fraud

51%

Loss of company confidential data

50%

Management that is not aligned with the...

46%

Theft

46%

Increase in staff turnover

44%

Falling share prices

44%

Decrease in company profits

41%

Turning weakness into strength “Don’t look for perfection in the marketplace.

A good training programme will help to address a new hire’s weak areas.”

This advice from one interviewee has been taken to heart by Northrop Grumman. Psychometric tests, says Steve Bright, are instrumental in helping the hiring team make the right decision about a candidate. But their use doesn’t stop with the job offer. A new hire’s weaknesses that are identified in testing are a focus of the company’s 90-day development plan. The fourphase plan – encompassing pre-employment, the first 30 days, the first 60 days and the first 90 days – incorporates standard elements of most on-boarding programmes, including personal goals set by the new employee, outputs to be provided by their line manager and steps to be taken by HR. As part of the plan, an internal mentor is appointed who helps the new joiner to navigate their way around Northrop Grumman’s U.S. organisation.

The mentor, however, is someone who recruitment and HR deem is best suited to work on the new hire’s chief blind spot. Bright explains: “If we hire someone with a good aerospace background but who doesn’t understand enough about the cyber-world, then we’d appoint a mentor from the cyber side of the business; that mentor will also help explain how the U.S. organisation works.

Because if you’ve not worked for a U.S. defence business before, it’s quite complicated.”

Bright’s team then appoints an external coach who continues to work on the new manager’s weak areas as identified in the psychometric testing. The external coach may stay on beyond the 90-day period if necessary. If the new manager is senior, Bright himself will meet regularly with the coach and the individual to work on what amounts to a constant development plan.

Northrop Grumman is far from the only organisation to take this approach. Both Thomson Reuters and Lloyd’s Register, for example, takes new hires through the results of their behavioural tests and discusses potential areas for a development plan.

Source: The Untouchables: Protecting your organisation from leadership risk, HireRight, 2014.

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CROSS-BORDER COMPLEXITY

Lloyd’s Register’s global recruitment algorithm Lloyd’s Register has developed an algorithm to guide how it recruits talent in different countries.

Part of the algorithm, Greg Allen explains, is a ratio that compares the actual time against the theoretical time to recruit in each country.4 “The ratio looks at the time from application and screening to first and second interview that results in a placement. Through this we can determine what the average recruitment cycle looks like, and then compare that with our theoretical model.” The ratio also takes into account the relevant legislation in each country – another indicator of how difficult it is to source talent there.

Combined, these not only help determine how effective the recruitment process is in the country, but they also allow Allen to plan the number of recruiters he will need to fill the targeted number of roles there. “The algorithm allows us to monitor and look at what we have done in the past as a predictor of what we are going to use in the future,” he says.

It all builds up to a global ratio. This enables him to compare any country’s recruitment performance against the global standard. “A zero means that country has hit the target on the nail; above zero means that it’s getting less efficient, while under zero means it’s getting more efficient.”

The underlining algorithm is reviewed and updated about every two years. Now his team is trying to determine if their recruitment success rate has actually improved since they started using it.

The key question for multinational organisations is: what degree of co-ordination is necessary? Most – though not all – of the recruitment executives interviewed for this report have sought to create a global recruitment template of one sort or another. All, however, recognise that a highly centralised approach could do more harm than good.

Degrees of centralisation “Our model is very de-centralised,” says Gary Knight of FQML. “We pride ourselves – in recruitment as well as management decision-making – in being very nimble. We provide guidelines, and expect people to take responsibility and accountability for working within those guidelines whilst not stifling their ability to solve problems in different ways.” The reason for the de-centralised approach, he explains, is simple: “All of the countries we operate in are different. All of the roles that we are hiring for are different and require different levels of intervention, so we don’t have a one-size-fits-all approach.”

Thomson Reuters, according to Jonathan Briggs, takes a regional approach when applying recruitment guidelines. The US and UK are treated fairly similarly, he says, along with Europe, but with distinct treatment of some European markets such as Germany. Asia is entirely different: Japan, Singapore and Hong Kong are highly competitive markets for the types of talent Thomson Reuters employs, and Briggs says the hiring process for many high-level positions likely to take a lot longer there than in Europe or the US. External recruitment agencies are also more commonly used in Asia than elsewhere.

At Lloyd’s Register, Greg Allen has developed a global template – based on an algorithm – which specifies the different hiring conditions, including different rules and restrictions, prevailing in each country where it operates. This, he says, has become an extremely useful tool in managing recruitment risk at the global level (see the column).

Legal minefields Vastly different hiring rules and practices around the world dictate the need for some local flexibility. Steve Girdler points out that countries have different rules on background checks, ignorance of which could land a company in court. Poland, for example, recently introduced restrictions on credit and criminal checks. European courts are paying attention to where candidates’ personal data gained during screening is held. If it is stored in the US – which has different data privacy rules than the European Union – a European employer could face sanctions.

Candidates with international experience can make the screening process more complex even in their home country, says Girdler. “If you’ve got someone who’s worked in Angola, Saudi Arabia and Taiwan in the past five years, it’s going to take longer to check on their employment history or their credit and criminal history than it will if they’ve never worked outside the home country.”

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In May 2015 Greg Allen was named In-House Recruitment Leader of the Year by the Recruiter website.

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3 CROSS-BORDER COMPLEXITY

Obtaining legal permits for newly hired expatriates is another risk. FQML hires expats to work in its Africa mining businesses, and Gary Knight reports that the due diligence required for a work permit or visa is getting more complex. “This is starting to become a challenge in certain countries where we operate,” he says.

Cultural nuances Tracking rules and restrictions should (in theory) be straightforward. Navigating the different cultural norms around hiring in different countries is trickier. Background checking, for one, needs to be tailored to the established practices in each country. In Japan, for example, according to Jonathan Briggs, it’s not accepted for background checks to be intrusive or aggressive. In some Asian cultures there’s a reluctance to ‘grill’ senior candidates in interviews.

The kaleidoscope of varying legal and cultural norms makes it difficult to enforce global recruitment policies too strictly. Probation is another good example: not all organisations have standard probation periods, but those that do find they are generally accepted, and adhered to, in the US and UK. In other countries, and depending on the position being filled, probation may not make sense at all.

Gary Knight says that FQML has a standard three-month probation period but it is not always enforced strictly. “Who wants to admit three months after you’ve made an important hire that it was the wrong decision? We need to educate managers more on how to use probation effectively.”

Senior country roles at Northrop Grumman are too visible to have a probation period, says Steve Bright. “After announcing to an ambassador or prime minister that you’re making a big commitment to the country in hiring a high-profile individual to lead the business, you cannot then say this person will be gone if they fail their probation period. Doing that would critically undermine our strategy for the country.”

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CHECKLIST FOR MINIMISING RECRUITMENT RISK

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Define the recruitment process clearly, and establish accountability.

No business operations run effectively without clear processes to guide them – recruitment is no exception. Even if hiring decisions are made by committee, someone must be fully responsible for ensuring the processes and timelines are adhered to.

Think global, act local.

Global guidelines are necessary to ensure the organisation’s core standards are met, both for new hires and the recruitment process itself. However, every country is different – some degree of local flexibility is imperative.

Get the brief right.

Every position should be reviewed by the hiring manager when it becomes vacant and the requirements updated. Rigour at this stage will help minimise the risk of a bad hire later, and could save time.

Explain and communicate.

Keep candidates informed and be clear about timelines. Explain the whole approach upfront including the process for any outsourced companies, what they will ask for and why they are being used. Those who feel ignored or unwanted are likely to lose interest in the organisation, and may harm the employer brand if they are vocal about it.

Train your interviewers.

Few managers always probe candidates effectively in interviews. Training in the art of the interview should be part of management development programmes. Hiring and recruitment managers should at least discuss the line of questioning before interviews.

Beware gut feel – test thoroughly.

Personal endorsements and impressions gained in interviews have a place in selection decisions, but they only provide a partial picture of a candidate. Testing is also just one part of the process, but it can uncover weaknesses – and strengths – not apparent elsewhere.

Work on the new hire’s weaknesses.

No candidate is perfect – weaknesses uncovered in an otherwise strong contender for a role need not disqualify them.

Weak areas can be targeted in the candidate’s development plan after joining.

Good, ethical behaviour counts just as much as skills.

From a risk perspective, thorough probing into a candidate’s behaviour, through testing, reference checks and background checks, is paramount. Skills can be developed even at senior levels; but it is a lot harder to change bad behaviour.

Talk with your corporate risk manager.

A hiring process gone wrong can have damaging consequences for a business. Keeping the risk manager up to date will create a fuller picture for senior management of the company’s risk exposure. Much can also be learned from the risk function about mitigation.

Make rigour in recruitment your organisation’s selling point.

Rigorous interviewing, testing and screening should convince candidates that the organisation is serious about doing things right, and should also help strengthen the employer brand.

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CONCLUSION

So is successful recruitment an art or a science? In recent years a good deal more science has been added to the body of recruitment practice in the form of psychometric and other testing, advanced data analysis, and the use of algorithms and models. Gary Knight is one proponent of the scientific approach: “We wouldn’t accept decisions about a sales strategy or a marketing plan, or in any other part of the business, based on a manager’s gut feel.

Why should we do it with our people?”

The management of recruitment risk is not yet a discipline in its own right. It may never need to be, provided the recruitment function as a whole, as well as the executives who manage each individual hiring process, recognise the potential risks to their organisation of poor recruitment management. The application of scientific methods will undoubtedly help recruitment managers identify risks in any hiring process and plan accordingly.

But even for those who believe strongly in the art of recruitment, process and rigour are paramount. “The best way to minimise risk in recruitment,”says Jonathan Briggs, “is to have a really robust selection process. It is not having four people meet a candidate for coffee. Not only do you get a better result, but a good candidate will have more respect for an organisation that tests them through the recruitment process than one that simply courts them.”

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