According to the Corporate Leadership Council, hiring the wrong executive can cost an organisation as much as three times their annual salary. Another study by Columbia University claims that replacing a professional will cost the organisation between 1.5 to 3 times of their annual salary and replacing an executive can cost up to 5 times of their annual salary.1)
This article will guide you on how to use Competency Based Interviewing in your organisation, to avoid making hiring mistakes and to make the best selection decisions.
COMPETENCY BASED INTERVIEWING
The best way to recruit and select the best person for the job is by using a ‘Competency Based Interviewing’ (CBI) approach.
CBI has been identified as the most effective approach in selecting the best candidates, with more than 77% success rate, while unstructured interview techniques results in only 57% success.2)
- Candidates to be evaluated against specific competencies or behaviours that are required for the job.
- A consistent and fair approach to all candidates, by using a set of specific competencies and questions, rather than using a ‘scatter gun’ questioning approach.
- Best evidence and prediction of how the person will perform in the job, based on examples of how they have worked in the past.
What is CBI?
CBI gained popularity in the late 1990s among US multinational companies. It is part of ‘Competency Based Systems’ widely used around the world. The other part of the system is the Competency Based Appraisal (CBA). Now, both CBI and CBA are used by at least half of the Fortune 500 and other major companies around the world to help select and manage their human resources.4)
CBI is defined as a highly structured interview which uses behavioural questions to help the interviewer assess candidates based on critical competencies identified for the position.4)
CBI focuses on asking the candidate a series of competency based questions. The rule of thumb is that:
CBI can also be referred to as evidence based interviewing or behaviour based interviewing.
What is the Difference between Traditional Interviewing and the CBI Approach?
The traditional interview focuses on the candidate’s beliefs. Typical questions include:
• “What would you do if ...?”
• “What are your strengths and weaknesses?”
• “How does your boss describe you?”
Traditional interviews tend to be a poor predictor of performance in the job: they are unsystematic; they can lead to stereotyping i.e. this person is too old/too young etc; hiring managers tend to recruit people similar to themselves; and the ‘halo’ or ‘horns’ effect can lead to either liking or disliking the candidate.
Competency based questions are the best interview questions to ask because candidates have to recall details about their past experiences and they have to talk about their behaviours, actions and results. As CBI focuses on competencies required for the job, the questions are more objective and consistently used for every candidate, ensuring that a fair and systematic approach is followed at all times. CBI also makes it easier to evaluate candidates based on the objectivity of the data, rather than a subjective evaluation whether the hiring manager likes the candidate or not.
How can Organisations use a CBI Approach?
To ensure you recruit the best talent for the job, whether you hire from inside or outside your organisation, make sure you do the following:
Step 1: Competency Requirements and Framework
Decide what competencies are required for the job. Does your company have a set of organisational competencies? If yes, which ones are most important for the role? When defining the competency framework for a specific role, make sure that it covers both behavioural and technical competencies.
If your company does not have a set of organisational competencies, define a list of competencies that are most important for the role. Let’s take the example of a Finance Manager. This type of role usually requires managing a team of people so the ability to lead is important, along with collaboration i.e. working with others inside and outside the department, understanding the business from a commercial perspective, strategic planning short and long term goals, adhering to compliance and integrity, influencing stakeholders, and creating innovative solutions to problems. The competencies required for this Finance Manager role are leadership, business and commercial awareness, strategic planning, compliance, influencing and innovation.
Step 2: Competency QuestionsWhen the competencies for the role have been established, the next step is to define a set of questions that can be asked to each candidate. Competency questions are based on examples and past experiences which will give evidence on how competent a person is for the job.
- “Describe a time when you created an innovative solution to a problem.”
- “Give me an example when you had to deal with a difficult staff situation.”
- “Tell me about a situation when you had to make a critical decision for the business.”
Step 3: Probing for InformationSearching for evidence of knowledge, skills and behaviours is like being a detective. You have to probe for information. In the Human Resources profession, the ‘Funnel Technique’ is used in conjunction with the STAR model to gather in depth and specific evidence based information. The Funnel Technique starts with a general question to encourage the candidate to be open, then continues with more open, specific questions, using the Situation, Task, Action, Result (STAR) model, to get the level of detail you need to properly assess the candidate.
By using follow up questions, you will be able to gain clarity and specific information on what the candidate achieved and can do. This will demonstrate the candidate's level of responsibility, initiative and suitability for the role.
Many hiring managers make the mistake of asking closed questions. For example, “Do you like detail?”, invites either a ‘yes’ or ‘no’ answer. It is closed and gives you no indication how the candidate is detail orientated.
An open question invites open answers. For example, “How do you manage detail?” The answer from this question will allow you to understand how they perform at this skill.
Step 4: Get SpecificMost candidates talk in generalisations. For you to make the best hiring decision, you need to get the candidate to give you as much specific information as possible. By asking for specific information related to the competencies that are required for the role, you will be easily able to establish their level of competence. If the interviewee responds in generalisations, ask them to be more specific.
You have to probe below the general questions and may have to keep on asking specific questions to get the best information, even if you think you’re repeating yourself.
Never be afraid to ask more questions or for more specific information if you are not clear how the candidate performed.
Step 5: Weight and Rate
Additional evaluation on education background, relevancy of work experience and identified disqualifiers (such as interpersonal skills and commitment) can be added to get better comparisons between candidates. Weighting between competencies, education and experience and disqualifiers are required to make the selection better.
What Else Can CBI Offer You?
CBI allows the employees, both candidates and hiring managers within your organisation to become fully conversant in competencies. A competency approach can be applied from recruitment and selection to appraisals and performance development. By using the CBI approach for all your hiring managers, the use of competencies can become ingrained in your organisational culture and will lead to an enhancement in employee skills. Your employees will not only become more skilled at interviewing, they will also become better interviewees which will give them a better chance in developing their career internally and will ultimately lead to retaining talent.
For more information call the NoLimits Head Office on +65 6232 2466, or contact:
- NoLimits Business Manager: Sandra Lai, firstname.lastname@example.org for Training and Development Programmes.
- NoLimits Senior Consultant: Yulia Chatim, email@example.com for Executive Search.
- Brad Remillard, ‘What are the Cost of Bad Hiring’, ezines articles, 2010 and Sonya Sullins, ‘Employee Engagement’, ezines articles, May 2009)
- Ira Wolfe, Maximizing Insight Newsletter, March 2007.
- HR site, RSM McGladry Consulting.
- Robert Kessler, Competency Based Interviews, 2006.