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They are only one component of a broader process that makes up the Goldman Sachs recruitment experience. But now our goal is much more to share information than to assess candidates, because we want people to understand the firm and what it offers before they tell us why they want an internship or a job. Our structured interview questions are designed to assess 10 core competencies. We also want them to be as well prepared as possible for our interview process.

Our goal is a level playing field. We also give students a formal channel for escalating issues should technical problems arise, though that rarely occurs. Our data shows that they prefer Thursday or Sunday night—whereas our previous practice was to interview during working hours. We suspected that if the process was a turnoff for applicants, we would see a dip in the percentage who accepted our interviews and our offers. How can you create an assessment process that not only helps select top talent but focuses on specific characteristics associated with success? Research shows that structured interviews are effective at assessing candidates and helping predict job performance.

What do you do? Essentially, we are focused less on past achievements and more on understanding whether a candidate has qualities that will positively affect our firm and our culture.

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Our structured interview questions are designed to assess candidates on 10 core competencies, including analytical thinking and integrity, which we know correlate with long-term success at the firm. We decided not to pilot these changes and instead rolled them out en masse, because we realized that buy-in would come from being able to show results quickly—and because we know that no process is perfect. Should some be weighted more heavily than others?

Which interviewers are most effective? Does a top-ranked student at a state school create more value for us than an average student from the Ivy League? We already have indications that students recruited from the new schools in our pool perform just as well as students from our traditional ones—and in some cases are more likely to stay longer at the firm.

We receive almost , applications each year. That match may be made straight out of college or years later. Maybe, for some.

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Employers continue to hire at a high rate and spend enormous sums to do it. They often use outside vendors and high-tech tools that are unproven and have inherent flaws. Return to filling most positions by promoting from within. Measure the results produced by vendors and new tools, and be on the lookout for discrimination and privacy violations. Businesses have never done as much hiring as they do today. For most of the post—World War II era, large corporations went about hiring this way: Human resources experts prepared a detailed job analysis to determine what tasks the job required and what attributes a good candidate should have.

Next they did a job evaluation to determine how the job fit into the organizational chart and how much it should pay, especially compared with other jobs. Ads were posted, and applicants applied. Then came the task of sorting through the applicants. That included skills tests, reference checks, maybe personality and IQ tests, and extensive interviews to learn more about them as people.

William H. Whyte, in The Organization Man, described this process as going on for as long as a week before the winning candidate was offered the job. The vast majority of non-entry-level openings were filled from within. The recruiting and hiring function has been eviscerated. Many U. The subcontractors scour LinkedIn and social media to find potential candidates. The recruiters get incentive pay if they negotiate the amount down. At companies that still do their own recruitment and hiring, managers trying to fill open positions are largely left to figure out what the jobs require and what the ads should say.

When applications come—always electronically—applicant-tracking software sifts through them for key words that the hiring managers want to see. Then the process moves into the Wild West, where a new industry of vendors offer an astonishing array of smart-sounding tools that claim to predict who will be a good hire.

They use voice recognition, body language, clues on social media, and especially machine learning algorithms—everything but tea leaves. Entire publications are devoted to what these vendors are doing. Only about a third of U. Why do employers spend so much on something so important while knowing so little about whether it works? Survey after survey finds employers complaining about how difficult hiring is. There may be many explanations, such as their having become very picky about candidates, especially in the slack labor market of the Great Recession.

But clearly they are hiring much more than at any other time in modern history, for two reasons. The first is that openings are now filled more often by hiring from the outside than by promoting from within. Today the figure is a third or less.

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Since the restructuring waves of the early s, it has been relatively easy to find experienced talent outside. Less promotion internally means that hiring efforts are no longer concentrated on entry-level jobs and recent graduates. Now companies must be good at hiring across most levels, because the candidates they want are already doing the job somewhere else.

The second reason hiring is so difficult is that retention has become tough: Companies hire from their competitors and vice versa, so they have to keep replacing people who leave. Most of those vacancies are caused by voluntary turnover. The root cause of most hiring, therefore, is drastically poor retention. Here are some simple ways to fix that:. Internal job boards were created during the dot-com boom to reduce turnover by making it easier for people to find new jobs within their existing employer. JR Keller, of Cornell University, has found that when managers could fill a vacancy with someone they already had in mind, they ended up with employees who performed more poorly than those hired when the job had been posted and anyone could apply.

The commonsense explanation for this is that few enterprises really know what talent and capabilities they have. Finding out whether your practices result in good hires is not only basic to good management but the only real defense against claims of adverse impact and discrimination.

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Other than white males under age 40 with no disabilities or work-related health problems, workers have special protections under federal and state laws against hiring practices that may have an adverse impact on them. As a practical matter, that means if members of a particular group are less likely to be recruited or hired, the employer must show that the hiring process is not discriminatory.

The only defense against evidence of adverse impact is for the employer to show that its hiring practices are valid—that is, they predict who will be a good employee in meaningful and statistically significant ways—and that no alternative would predict as well with less adverse impact. The fact that the vendor that sold you the test you use has evidence that it was valid in other contexts is not sufficient.

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In addition to the time and effort of hiring, my colleague Matthew Bidwell found, outside hires take three years to perform as well as internal hires in the same job, while internal hires take seven years to earn as much as outside hires are paid. Outside hiring also causes current employees to spend time and energy positioning themselves for jobs elsewhere.

It disrupts the culture and burdens peers who must help new hires figure out how things work. None of this is to suggest that outside hiring is necessarily a bad idea. But unless your company is a Silicon Valley gazelle, adding new jobs at a furious pace, you should ask yourself some serious questions if most of your openings are being filled from outside.

Employers are obsessed with new technologies and driving down costs. A different approach for dealing with retention which seems creepy to some is to try to determine who is interested in leaving and then intervene. Vendors like Jobvite comb social media and public sites for clues, such as LinkedIn profile updates. Whether companies should be examining social media content in relation to hiring or any other employment action is a challenging ethical question.

On one hand, the information is essentially public and may reveal relevant information. On the other hand, it is invasive, and candidates are rarely asked for permission to scrutinize their information. Hiring a private detective to shadow a candidate would also gather public information that might be relevant, yet most people would view it as an unacceptable invasion of privacy.

When we turn to hiring itself, we find that employers are missing the forest for the trees: Obsessed with new technologies and driving down costs, they largely ignore the ultimate goal: making the best possible hires. It costs nothing to post job openings on a company website, which are then scooped up by Indeed and other online companies and pushed out to potential job seekers around the world. Employers may simply be fishing for candidates.

Because these phantom jobs make the labor market look tighter than it really is, they are a problem for economic policy makers as well as for frustrated job seekers.

Companies should take ads down when jobs are filled. Trimming recruiters, who have expertise in hiring, and handing the process over to hiring managers is a prime example of being penny-wise and pound-foolish. This is based on the notion that something may be wrong with anyone who wants to leave his or her current job. The number one factor that would encourage the former to move is more money.

For active candidates the top factor is better work and career opportunities. More active than passive job seekers report that they are passionate about their work, engaged in improving their skills, and reasonably satisfied with their current jobs. They seem interested in moving because they are ambitious, not because they want higher pay. I know of no evidence that passive candidates become better employees, let alone that the process is cost-effective. If you focus on passive candidates, think carefully about what that actually gets you.

Better yet, check your data to find out.

It seems like a cheap way to go, but does it produce better hires? Many employers think so. A downside to referrals, of course, is that they can lead to a homogeneous workforce, because the people we know tend to be like us. This matters greatly for organizations interested in diversity, since recruiting is the only avenue allowed under U. The Supreme Court has ruled that demographic criteria cannot be used even to break ties among candidates.

Tata is an exception: It has long done what I advocate. For college recruiting, for example, it calculates which schools send it employees who perform the best, stay the longest, and are paid the lowest starting wage.

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Contrary to the popular belief that the U. Unfortunately, the main effort to improve hiring—virtually always aimed at making it faster and cheaper—has been to shovel more applicants into the funnel.