Employers spend billions annually screening and assessing potential new hires, but they aren't getting much for their money. As many as 95% of employers admit to hiring the wrong people each year. Worse, more than a third of employers report being unaware of the true costs of bad hires, which can reach as high as five times annual salary costs.
The research, however, shows that these results should be no surprise. Our hiring problem starts at the very beginning of the recruiting process with the most ubiquitous screening tool: the resume.
In 2016, leading industrial organization researchers analyzed a hundred years of data to determine which popular hiring screens actually correlated with candidates' on-the-job performance. They found that top resume "boosts" like years of relevant education and experience, interests, and GPA had little to no correlation to later job performance. In other words, a century of data tells us that the candidate with the highest number of degrees, straight A's, and work experiences — even in the "right" industry — isn't always the "right" candidate.
The reason for this disconnect is that resumes can't truly reveal job skills, but instead focus on whether candidates have done something that "looks like" the job in the past. These "looks like" metrics not only fail to predict performance, but also perpetuate existing demographic inequities in the workforce, stalling socioeconomic mobility, creating compliance risks, and scaring off potential employees. Prestigious professional service firms, as one example, employ resumes and a host of other traditional screening techniques in their search for the "best and brightest" employees. Research tells us, however, that they often accidentally select employees based on "looking glass merit," or similar race, class, gender, and other traits to hiring decision-makers.
Despite its defects, coming up with a better alternative to the resume is not easy. The alternatives are also flawed. For example, some employers have turned to cognitive tests, which assess whether candidates will be able to learn the requisite knowledge and skills after they are hired. These tests are among the most predictive top-of-funnel screens — but candidates don't like them.
Moreover, they risk perpetuating existing inequalities: low-income and underrepresented minority candidates tend to underperform on these assessments independent of their actual ability. This is not only an ethical issue, but a legal one. The Equal Employment Opportunity Commission (EEOC) actively polices "adverse impact," and candidates can sue employers for it. Between 2015 and 2018, for example, Target paid out almost $7M in fines and settlements over adverse impact in its pre-hire assessments and other recruiting screens.
A better option is what's called a "behavioral consistency screen," in which candidates are asked to qualitatively describe how their past experiences demonstrate their capabilities for future roles. While this method enhances accuracy, it is typically manually scored, limiting its scale.
Of course, one of the best ways to screen potential hires is to ask them to perform real job tasks — this is why aspiring editors are often given a piece of writing to spiff up, or photographers asked to share samples from their portfolios. Again, scale is a challenge — but here, technology can help, delivering simulations that test skills, such as coding or clinical diagnosis, at unprecedented scale and with far more minimal risk of bias.
But what candidates are able to do is just part of the equation — and it may not even be the most important part. Research shows that one of the most predictive components of success on the job is honesty. (Honest people, not surprisingly, are more likely to be conscientious and dependable — two big predictors of job performance.) Integrity tests, which can be purchased off the shelf and delivered at scale, are one of the best indicators of whether a candidate will do the job well. In other words, your parents were right: character matters.
Given all these better alternatives, its high time employers ditched the resume. Using one or more of the more accurate talent-screening methods would increase efficiency and accuracy, and have the added bonus of revealing some great candidates hidden by today's flawed hiring processes.
Cassidy Leventhal is a vice president at University Ventures and a member of the Forbes 30 under 30 list in Education.
Disclaimer: This article first appeared on Bloomberg.com, and is published by special syndication arrangement.