'Extreme hiring' is a new phenomenon explored by Nicole Perlroth on Forbes.com.
"Psychological scrutiny and rigorous simulations are fast becoming a requisite part of the interview process," she says.
"The downturn has shed a decidedly unflattering light on subjective hiring practices," adds Perlroth. "Even the standard application-interview-résumé-and-reference-check formula has come under fire for being too soft and unreliable."
According to research firm Aberdeen, in a survey of 517 businesses, two-thirds said they evaluate executives using a combination of behavioural, cognitive, critical and psychological tests, and 46% use simulation tests to assess candidates.
Perlroth describes one of these simulations carried out by Mutual of Omaha: "It's Andrew Noon's first day on the job, and already he has had to discipline a worker, thwart a departmental turf war, cajole two recalcitrant employees, convince an irate customer not to cancel a contract and present his strategic plan for the next three years to the company's chief executive, complete with flip charts.
"…At least three trained observers are listening to Noon's every voice mail, reading his every e-mail and watching his every move."
To prepare for this test, the 35-year-old candidate spent weeks studying fictitious figures, charts, products, employee biographies and company histories. But that's not all:
"He also took three personality tests, each consisting of 200 to 300 questions designed to uncover his levels of sociability, creativity and ambition and to identify any 'derailers' – talent-management-speak for the dark side."
These tests and simulations, carried out in this case by Development Dimensions International (DDI), can cost $25,000 per candidate. According to Amy Lewis of the Human Capital Institute, "That's considered a bargain… especially when you consider the financial impact of a bad hire."
According to figures quoted by Lewis, 40% of external appointments fail within two years, and a bad "corner-office hire" can cost ten times their base salary.
Matthew Paese, vice president at DDI, says: "Most organisations recognise, at some point, that you have to regard decisions about people as risks. It's not unlike a bad investment decision."
Noon, the subject of the simulation test described in the article, said: "It's stressful. You know you're going to be stretched, but it's also very realistic."
Extreme Hiring
Nicole Perlroth, Forbes.com, 06/05/10
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