Use the Science of Decision Making to Enhance Your Recruiting Processes
These insights from behavioral economics can help inform the decision-making journey for job candidates. Recruiters may be able to build better trust and relationships with candidates, and that may put them in a place to make better-informed decisions.
Regardless of the industry, level of job opening or labor market conditions, the job search and selection process is all about decision making – on both sides of the desk. Candidates must decide to apply and interview. Recruiters must decide which candidates to phone screen and present to the hiring managers. Hiring managers must decide who to meet and what to ask.
The science behind decision making is relatively new, but has spawned Nobel laureates and better public policy. Lessons from behavioral economics can also be used to develop ideas to improve talent acquisition, making processes and relationships better.
What is Behavioral Economics?
To put it simply, behavioral economics is applying psychological insights to economic theory with the goal of better explaining why people don't always make the most rational or expected decisions.
The beginnings of this relatively-new field go back to the 1970s with Nobel laureates Daniel Khaneman and Amos Tversky. Their questions and models were turned into this new field with a focus on how people make decisions in the real world.
Khaneman theorized that the human brain has two systems to navigate the thousands of decisions we encounter every day. System one is for the familiar, the known, and it allows us to react quickly. Think of going to your usual grocery store; you know where everything is and can be out in 15 minutes. In our office we can refer to this as "work mode." For recruiters, work mode is discussing salary, interviews, and job offers.
System two is for new stimuli. With new stimuli, we need time to process the information. The process requires more thought, effort and time. Now, think again of going to the grocery store, but instead, going an unfamiliar one. That shopping visit will most likely take longer because the store layout and some products are likely different.
When interacting with candidates, it's important to be aware that they will be in the system two mindset; needing time to process information, ask questions, think, and decide. In this situation, try to break out of "work mode" (system one) and think from the candidate's perspective (system two). Why is it important to do so? Consider this scenario as an example: Who completes car shopping quickly and easily? Very few of us. Why? It's a big-ticket purchase with many options to consider, many questions to be answered, and we don't want to be rushed – just like considering a new job or job change.
Shortcuts
We all rely on rules of thumb to help make decisions. These are shortcuts based on past experience, underlying biases, and preferences that help us navigate a fast-moving world. In behavioral economics these are called heuristics. There are many heuristics, but a few are particularly relevant for talent acquisition:
Anchoring: Used when people estimate a number, like salary for example. One random number can arbitrarily affect how people evaluate other scenarios.
- 6 x 5 x 4 x 3 = ____?
- 3 x 4 x 5 x 6 = ____?
The placement of the first number has been shown to affect our estimate or guess. How can we apply this concept to recruiting? When discussing compensation, base salary comes to mind first for most candidates. Recruiters can use this opportunity to discuss total targeted compensation (TTC). TTC can help match an anchor number if a candidate currently lives in a more expensive market or it can help elevate the value of our opportunity.
Affect: This heuristic is about feelings. What feelings (positive or negative) are associated with a stimulus? Again, how many of us like car shopping? Your feelings could be based on past experiences. In comparison, take a moment to reflect on how stressful it can be to look for a job, interview, and contemplate multiple offers.
Think about your process and the candidate's experience. Time and stress have an impact on a typical rule of thumb. Don't assume these rules apply in the recruiting arena:
- Something takes too long = negative feeling
- Someone sells too hard = negative feeling
- No info on next steps = negative feeling
- No closure on process = negative feeling
Effort: Quality or worth of something is determined by the effort required to produce it. Think of a piece of assemble-yourself furniture. Because you assembled it, you may see it as more valuable than how others might estimate its worth. The big picture for recruiters is, candidates take the effort required to customize their resume, apply, and interview very personally and seriously. Respect that. Don't make a candidate complete an application just to have a conversation; all you need at that point could be just a resume and phone number. Perhaps that's the first step to apply. And consider following Enterprise's lead with a no black hole policy – everyone who applies receives a response from a recruiter.
Application of the above insights really comes down to how we frame the decision-making process for the candidates.
Commonly referred to as nudges, we can offer suggestions in hopes of influencing a candidate's behavior and decision making in predictable ways. Freedom of choice is still present; it's about the way we frame or design the choices. For example:
- Loss Aversion: This explains to our tendency to strongly prefer avoiding losses over acquiring gains. What could a candidate miss out on by not taking the next step? Maybe miss out on a better commute? Loss of opportunity for career growth?
- Crowd Following: Based on the common assumption that if it's good for everyone else, it should be good for me too. Need a candidate to finish their application? Try saying this, "90% of our candidates finish the application within two days." Need more leads from your employee referral program (ERP)? Try this, "75% of our staff has referred someone to our company this year," or say "$15,000 extra cash was paid to our staff through our ERP last year."
According to Beamery, 60% of applications go unfinished. What if we sent text messages to nudge candidates to the next step? Most applicant tracking systems have an opt-in feature allowing personal or automated notes to be sent to candidates simply urging them to take one next step. It is non-confrontational. And it works for colleges and universities to keep incoming freshman involved in the process, preventing students from ghosting before orientation. Georgia State University implemented a texting program to keep new students engaged in the orientation, financial aid, and onboarding processes.
A simple change in procedure can help shake up the status quo and may also help diversification efforts. In the 1970s the top five U.S. orchestras had fewer than 5% women and gender bias was at fault. In 1997 women in these same top five orchestra88s went up to 25% with some going even higher.
What changed? Blind auditions were implemented. Those auditioning played behind a curtain and decisions were made on sound and ability only. Applying this concept to recruiting – consider giving hiring managers anonymized resumes:
- Delete or block the applicant's name from the resume or application
- Require the initial review to be based on merit only
Companies using this approach now include Deloitte, HSBC, The BBC and more. GapJumpers is a company that helps clients anonymize resumes. Their data finds that this act increases the chances of minority and female applicants being offered a first-round job interview by around 40%.
One word of caution: nudges should be used to put the candidate's best interests first. They must be fair and transparent; never use nudges to mislead.
By applying some of these insights from behavioral economics to the candidate decision making journey, recruiters may be able to build better trust and relationships with candidates and put them in a place to make better and more informed decisions.
As you are applying these insights be sure to test and measure results. When you find the practices and insights that work best for you and your candidates, you'll see the difference – and your candidates may feel the difference with a better candidate experience.
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