With companies tightening their belt, HR leaders have had to be more intentional about who they hire. But that doesn’t mean they don’t still make mistakes. Hiring blunders, in which the right person slips through the cracks or an underqualified candidate creeps into the fold, often occur and result in lost productivity and training and recruitment costs. The silver lining is that employers can learn from their hiring mistakes, says Claire Hughes Johnson, former chief operating officer of Stripe and the author of Scaling People: Tactics for Management and Company Building. 

Here’s an exclusive excerpt about closing the hiring loop from her newly released book:

“It’s almost impossible to track false negatives—people you rejected who would have been great for your company—but you can track false positives. At the micro level, when a hiring mistake happens, the hiring manager should do a quick retrospective on their process. Were there issues you should have caught in the process? Did you have the wrong desired capabilities for the role? Were there flags in the interview feedback or the references? Who conducted the interviews and reference calls? Was the onboarding thorough? Think about the role you played and how you could improve, and consider meeting with your recruiting partner to share your learnings and ask for their support to avoid similar mistakes in the future.

This individual learning is useful, but the real boon is to implement a company-wide, data-driven evaluation and methodology to improve your approach to hiring. As CEO of General Electric, Jack Welch reportedly tracked data that helped him ascertain who the best interviewers were and made sure that they trained other interviewers or were the only ones allowed to interview candidates.

The good news is that even a basic applicant tracking system, or ATS, can help you gather data to improve your process, including:

– Time in process: Are some roles or teams taking longer to hire? Why?

– Funnel performance: The recruiter equivalent of sales metrics. Are some teams hiring too few or too many folks relative to company benchmarks?

– Interviewer stats: Who interviews the most? What is the tenure and experience level of those interviewers? Is that appropriate for the candidates they’re evaluating? Are the interviewers decisive, meaning they indicate strong hire or no-hire choices? Are they discerning? Do they mostly recommend a hire?

Outside of your ATS, consider adding questions about the hiring process to your company engagement survey—or, if you’re growing fast, implementing a short “pulse” survey to identify parts of the company where the hiring process or the environment new hires create doesn’t honor your company’s principles or values or your desire for an excellent talent portfolio… 

One last note on false negatives: It might seem counterintuitive but consider surveying the people you reject—not those from the early candidate screens, but anyone who has gone through the first interview stage or beyond. Although these results probably won’t be ecstatic, they can help you improve your process for all candidates.”

Amber Burton
amber.burton@fortune.com
@amberbburton

Reporter's Notebook

The most compelling data, quotes, and insights from the field.

Will ChatGPT make the role of the modern manager obsolete? Most likely not, writes Paolo Confino in his latest piece for Fortune. 

"That’s because the role of a manager is uniquely human and requires core soft skills like collaboration, communication, and team-building, which are difficult, if not impossible, to teach generative A.I.”

Around the Table

A round-up of the most important HR headlines, studies, podcasts, and long-reads.

- Companies label rank-and-file employees as managers to avoid paying them overtime. The dubious practice costs workers about $4 billion a year. New York Times

- In a first for executive pay transparency, some public companies are detailing exactly how much their CEO’s stock options are worth. Wall Street Journal

- The increased prevalence of employee monitoring software has given rise to sophisticated and invasive methods like apps that collect biometric data and furniture that tracks sitting positions. Wired

- Japan’s job market offers a glimpse of what a world with perpetually low unemployment rates looks like. Economist

- Twitter laid off an employee right before she went on maternity leave, leaving her without health insurance while caring for a newborn. CNN

Watercooler

Everything you need to know from Fortune.

Falling flat. A flat organizational structure, like the one Mark Zuckerberg is trying to implement at Meta, is difficult to get right, especially for a mature company. It often leads to directionless employees, unresolved conflicts, and unofficial hierarchies. —Amber Stephenson

Work alone together. Some remote workers watch live streams of others working to help ease the isolation of working from home. —Chloe Berger

NYC’s super-commuters. To comply with their company’s in-office requirements, some New York employees commute more than two hours one way from areas like rural Connecticut and the Jersey Shore. —Jane Thier

Bonus cuts. UBS Group increased its CEO's pay by 11% last year while cutting the employee bonus pool by 10%. —Myriam Balezou