Investing in Human Capital: A New Approach to Interviewing
Rethinking the Interview Process and Evaluating Candidates Based on Adaptability and Growth Mindset
🚀 DEVELOP: Unleashing Potential
Have you ever stopped to consider whether our traditional interview methods are the best way to identify top talent for our teams? Especially as we consider the rapid acceleration of AI-integrated office tools? As new leaders, it's crucial to find the right people who will not only excel in their roles but also grow with the team and company. In this week's edition, we're going to challenge the status quo and explore how shifting our mindset from "interviewing" to "investing" can help us uncover those hidden gems and build teams destined for extraordinary results. Let's dive in!
I have been working since I was 16 years old. I have gone through dozens and dozens of interviews, and I have given dozens and dozens of interviews. I am generally not a fan of this necessary evil, at least not in their current form.
I am of the mindset that the current interview procedures are artificial constructs that purportedly give the interviewer the ability to evaluate a candidate’s potential in less than one hour. Or perhaps, if the prospective organization is particularly nefarious, several hours and days of hoop jumping and vetting, with a bevy of questions like "tell me about a time…" or "walk me exactly how you did X…”, all focused on evaluating a candidate's past performance, and generally ignoring the candidate’s forward-looking potential. The logic being that a candidate’s articulation of past job performance is the strongest indicator of future job performance. Logic that I believe needs to be revisited.
It's worth noting that many organizations are already recognizing the limitations of traditional interview methods and adopting more progressive approaches. These new methods place a greater emphasis on assessing candidates' potential, adaptability, and their ability to thrive in different work environments. However, I believe that there's still room for improvement, especially in the rapidly changing world of how “office work” will get accomplished, and it's crucial for new team leaders and managers to explore innovative ways of evaluating candidates to ensure they're making well-informed hiring decisions.
Blueprinting a Better Way
In 2017, the International Journal of Business and Social Science published a six page article titled “Is Past Performance an Accurate Indicator of Future Performance in Evaluating Candidates’ Success in a Future Job?”
I highly recommend reading the whole thing as it elegantly captures the challenge of how to properly and effectively interview candidates such that the interviewer and the organization increase the probability that their screening process will yield an effective hire. Notable highlights:
“Although empirically supported research revealed that structured behavioral interviews offer greater predictive validity than unstructured interviews, the theory that past performance is an indicator of future performance, does not consider extenuating factors and conditions, which can determine whether candidates are able to repeat the same performance in a future job.
Culture: Since cultural values are unique and different for each organization, it seems logical that a candidate’s past performance success in one organizational culture does not necessarily indicate a candidate will be successful performing in another organizational culture in the future, due to the exclusive dimensions in every culture.
Individual Performance: Although each organization has its own strategic goals and criteria to measure and evaluate employees’ performance, it seems reasonable to conclude that human resource professionals need to consider,
whether candidates possess the ability to perform the same competencies in a future job, due to differentiation of organizational goals across various companies, industries and sectors.
Technologies and processes: Although the use of technologies and processes to deliver results is different with each company, the technological experience of each candidate is unique as well. The technological experiences of candidates as well as the technological sophistication of organizations, or lack thereof, can determine whether candidates can repeat past performance.”
In short, the study summarizes that actions taken, and the results that followed, were for a particular point in time in the past and under a specific set of circumstances that may not be repeatable for the company that the candidate is interviewing for presently.
The article suggests that “an alternative interview method, which measures skills in real time by performing tasks in the job description, has the potential to serve as a better predictor of success, more so than accepting candidates’ responses to validate experience, skills and abilities.”
This trend, where companies are given homework assignments to complete in the form of case studies, presentations, or actual proposals, while not universal, is growing. I’m on the fence on this practice of requiring “free work” as proof of competence, fit, and future potential, and I’m not the only one.
As a new team leader evaluating potential hires, it’s important to keep all this mind. You want to ensure that you're bringing on someone who is the right fit for the team and who has the potential to learn, adapt, and grow.
But how do you do this effectively, balancing the legacy method of using past behavior questions versus the newer practice of assigning homework, all in service to maximizing future potential?
It starts with shifting your mindset from being an interviewer to being an investor in human capital.
The Human Capital Investor
As a former financial cost analyst, I had the responsibility of evaluating multi-million cost proposals for investments in capital equipment like machinery and packing equipment. Tackling questions like, “Is it a good strategic fit and the right timing, and is it a good investment? Where I had to calculate things like payback period analysis, accounting rate of return, net present value, and internal rate of return.
In a similar vein, what if instead of seeing potential candidates as an increase in cost, we were to completely retool our mindset and treat the interview process as an opportunity to invest in human capital, where we analyze how the value of the prospective employee will grow over time, calculate their net present value, and assess whether they will deliver returns over time.
It's important to recognize that while there are similarities in the evaluation process, the nature of human capital investments is inherently more complex and multifaceted than investing in physical assets. I.e. people aren’t machines.
People bring unique skills, experiences, and perspectives to the table, and their value as employees can grow exponentially with the right opportunities, support, and learning environment. I.e., people are MORE than machines.
In other words, I submit that employees are the only asset that truly appreciates and grows in value over time, as such we should treat the interview process as an opportunity to invest and ask investment-like interview questions that illuminate whether the candidate has a growth mindset—are they willing to learn from their mistakes and can they adapt to new situations? Markers that, I have observed, ultimately lead to higher returns.
Here are a few examples of creative “human capital investor”-type interview questions that I have successfully used in the past, and that can help you evaluate a candidate's potential to learn and grow, without relying solely on past performance or onerous homework assignments (not exhaustive):
What's a new skill or area of knowledge you've been interested in learning about, and why?
How do you approach problem-solving and decision-making, and what steps do you take to ensure that you're making the best possible decisions?
How do you handle ambiguity and uncertainty in your work, and what strategies do you use to stay focused and productive when faced with a challenge?
Describe an ideal collaboration scenario for me. What role would you play? How would you collaborate with someone who had a different perspective or approach than you? How would you navigate the situation?
What's something you've accomplished in your personal or professional life that you're particularly proud of, and why?
Imagine that you're tasked with leading a project that involves significant changes to the way your team currently operates. How would you approach managing the change and ensuring your team members are comfortable with the new processes?
If you were given the opportunity to develop a new product or service for our company, what would it be, and how would you go about bringing it to market?
Consider a situation where you're faced with a complex problem that requires input from multiple stakeholders. How would you facilitate collaboration and ensure everyone's ideas and concerns are taken into account when making a decision?
If you could choose one area of professional development to focus on over the next year, what would it be and why? How do you think this area of growth would contribute to your success in this role and within the team?
Pretend you're mentoring a new employee who is struggling to adapt to our company culture and expectations. How would you support and guide them in order to help them succeed within the organization?
Notice how the questions are more imaginative (i.e., by placing the candidate in the future), creative, and performance-centric, enabling you and the candidate the freedom to fully explore the possibilities of the role.
I have found that there are individuals that look at a job description and say to themselves, "I can do this!". Then there are those select few that look at the same job description and say, "watch this..." and they completely redefine the role: pushing the boundaries of the possible and elevating the collective IQ of all those with whom they interact. Look for those types of candidates: curious, imaginative, resilient, adaptable, and willing to take on new challenges.
And while I understand that the cost of recruiting new employees is not cheap, I posit that by shifting our mindset, and our approach to vetting, we can increase the value of our human capital. And isn’t that ultimately the point?
The key to building a successful team lies in identifying individuals who possess not only the technical skills but also the growth mindset and adaptability needed to thrive in a dynamic work environment. By embracing the "human capital investor" mindset and incorporating creative, future-focused interview questions, you can better assess a candidate's potential to learn, grow, and contribute positively to your team. Remember, investing in the right people is crucial for achieving extraordinary results, and it all starts with how we approach the interview process.
As you move forward with your hiring efforts, challenge yourself and your HR business partner to retool your interview questions, focusing on candidates' future potential rather than solely relying on past experiences. By doing so, you'll be well on your way to building a team that is not only capable but also eager to push boundaries and achieve greatness together.
What is the one thing that you can do tomorrow to challenge yourself and your HR business partner to retool your interview questions so that they are future forward versus past recipes? Investment focused versus cost focused?
Jose — Thanks for the proposed interview questions. Those would be motivating to answer! I was reflecting on your post and thought about Predictive Index, and its focus on behavioral characteristics. https://www.predictiveindex.com/learn/support/history-of-the-pi-behavioral-assessment/ I agree the interviewing process should point towards behavior "here" and in the future versus "there" and in the past. Keep up the insightful writing!
In the past, when I interviewed for Catalyst/Mindshare, I interviewed 1000s of candidates and I am ashamed to say that I would ask challenging technical SEO questions to see if the candidates knew their subject matter expertise. Many of the people that I hired, went on to become the Heads of Mediacom, Mindshare, Maxus, MEC and GroupM.
Then I went through a phase where I couldn't get a job for 3 years because I kept failing the interviews where they asked me behavioral questions. I felt so demoralized that I changed my interview process entirely and it has reaped nothing but dividends.
I look at the resume and ask the candidates as a "friend," if you could do anything you wanted, what would you do? What excites you at work and what bores you? Are you technical or creative or content focused? My focus here is more people-fit, can I get along with this person? Is this person teachable? Is this person trustworthy.
Fast forward to now, at my current company, I've hired 9 people in the past 4 months and they have blown past my expectations, are teachable, great culture fit and I am able to invest in them as human beings, not simply as a resource.