Recruitment insights

Two tried and tested ways to recruit all-star teams

2560 1280 Paul Breloff
Imagine you’re the coach of a basketball team (a dream that my high school self imagined all the time). How would you run your try-outs? Would you look at the list of other teams the athletes have played for, or awards they’ve received, or ask them about their aspirations to play professional basketball? Would you have them talk about a time they missed a shot and needed to bounce back?

Probably not. Most likely, you’d put them on the court and see how they play.

Sure, past experience and accolades matter, but resumes (in sports as in life) are rarely as good a predictor of performance as good old “show me what you can do.” The idea of selecting someone without gauging her or his performance seems nonsensical, but in the absence of a different framework, and with limited time to make decisions, this is actually how many small and growing businesses (SGBs) approach talent acquisition.

Hiring is hard

Startups around the world struggle with human capital. In fact, when Village Capital surveyed its portfolio of over 400 entrepreneurs, the respondents cited talent acquisition and retention as their number one barrier to growth, even higher than financing. And without following best practices, it can also be incredibly time-consuming: a report we published this year with FSD Kenya shows that for a single mid-level hire, Kenyan SMEs are spending around 18 hours screening CVs, and then 19 additional hours interviewing candidates — and if anything this number feels low!

I saw this dilemma firsthand while investing in fintech startups for Accion Venture Lab: Many organizations are so focused on raising financial capital that they are blindsided by the difficulty of running effective hiring processes, a necessity for scaling successfully. They would spend hours screening hundreds of CVs, interview some of the candidates (often selected based on university, brand name company experience, or personal connections), and make a decision based on who they liked the most. Not only is this method rife with bias, but it does little to predict who will perform best on the job.

What’s an SGB to do?

At Shortlist, we use competency-based assessments and structured interviews to hire high-performing, best-fit candidates for our clients (and also to build our own team). Aside from being tried and tested through our work with over 100 organizations, these methods are also backed up by countless studies, including this meta-analysis of over 80 years of research. Let’s take a closer look at these two approaches and how you can adopt them in your organization:

Assign work sample or competency-based assessments to test candidate ability: There are two ways to go about this: 1) Give candidates a sample assignment that mimics what they would do on the job (e.g., Excel exercise or social media drafts), and score their performance. Or, 2) Identify the core competencies needed to perform on the job (whether hard or soft skills) and create exercises that test them (e.g., present a fictional situation around reaching deadlines and ask applicants to prioritize actions, to assess for project management skills). At Shortlist, we use a mix of the two.

Here are some tips for implementing assessments at your organization:

  • Avoid making an exhaustive list of competencies and skills your ideal applicant would possess — instead, hone in on the top 3–4 that are absolutely critical.
  • Make sure you can objectively measure assessment performance — make a grading rubric, or create multiple-choice questions that have one right answer.
  • Implement this step (or at least part of this step) before an interview, not after. That way you’ll only spend valuable in-person time on pre-vetted candidates.

Start doing structured interviews: Studies show that judgments made in the first 20 seconds of a job interview can predict the outcome; interviewers often spend the rest of the meeting asking leading questions and interpreting answers in a way that confirms their initial hypothesis about the candidates. A great way to overcome these subconscious biases is the structured interview method, which keeps interviews consistent, predictive, and fair. These are the key elements of a structured interview:

  • Every candidate who is interviewed is asked the same set of questions, regardless of the interviewer, and interviewers agree in advance what they are looking for in a good answer.
  • Questions are explicitly linked to key competencies required to do the job, avoiding common “getting to know you” questions that perpetuate biases.
  • A standard rating scale is used by interviewers to grade candidate answers.

Why does this matter?

Getting hiring right is important for all organizations, but is especially true for SGBs. Let’s go back to the basketball example. With only five team members on the court at once, every player counts. Similarly, in a startup or small organization, every new hire is critical to building on your momentum and solidifying your team culture. On a macro level, looking past pedigree and refocusing on potential is the first step towards a world where everyone gets a shot at fulfilling professional experiences.

I hope this was a helpful starting point for you to reframe your hiring practices and find your next all-star! For more hiring tips and resources, visit our blog and follow us on Twitter.

Paul Breloff is the CEO and co-founder of Shortlist, which helps growing enterprises in India and East Africa hire based on skills and potential, rather than pedigree.

Looking to build your own all-star team? Let Shortlist help you; we offer a wide range of recruitment solutions that help companies build great teams.

Build your all star team with Shortlist

Past blogs in this series on hiring:

https://medium.com/village-capital/why-raising-talent-is-just-as-important-as-raising-money-e8a3c3d095b0

 

https://medium.com/village-capital/why-raising-talent-is-just-as-important-as-raising-money-e8a3c3d095b0

 

https://medium.com/village-capital/why-raising-talent-is-just-as-important-as-raising-money-e8a3c3d095b0

Upcoming blogs:

  • Martha D. Karimi and Manuela Müller, Founders, Edge Consulting — Onboarding, setting up for success in a resource constrained environment
  • Lyndsey Vandament, Kerry Nasidai and Sarah Ngima, Head of Talent Practice, Open Capital Advisors — Where do you want to be in 5 years? Leveraging SGB-tailored talent tools.
  • Rebecca Harrison, CEO and Co-Founder, African Management Initiative — Moving from entrepreneur and hustler to manager and leader: How to embed the management practices that will support your business at scale
  • Caroline Gertsch, Director, Amani Institute— Is your team performing to the best of its potential?
  • Ayla Schlosser, CEO and Co-Founder, Resonate — How can you use storytelling to drive results?
Hiring in Kenya

Hiring in Kenya: Three takeaways from our new report

1080 788 Simon Desjardins
“How much time are growing companies spending on hiring?”

“What is most challenging and time-consuming about the hiring process?”

“Can we quantify the benefits of making a great hire?”

As we help growing companies built high performing teams, these are a few of the questions that we keep being asked. Despite how basic these questions may seem, there’s actually very little reliable data out there to answer them, at least in an emerging market context. To begin to change that, we partnered with FSD Kenya and Open Capital Advisors to learn more about how small and medium-size enterprises (SMEs) in Kenya are hiring. We’re excited to release the report and share its findings with you. In case you don’t have time to read it in full, here are three takeaways:

1. Hiring is extremely time-consuming

During the decade we spent — before and after we created Shortlist — helping SMEs source and screen talent, we have become acutely aware that hiring is massively time consuming. From figuring out what to put in a job description, to sourcing candidates through multiple channels, to sifting through hundreds of applications, to organising and managing interviews, to all the follow-up needed to negotiate a final offer — the hours add up. But most companies that we’ve observed, including the ones we interviewed for this research, aren’t actually recording or analysing the time it takes them to hire, and consequently don’t know what it’s really costing them.

We found that for a single mid-level hire, companies are spending around 18 hours screening CVs, and then 19 additional hours interviewing candidates. Unfortunately, many hiring managers report feeling that much of the time spent before the interview stage is being wasted.

How can organisations screen and interview candidates more efficiently and effectively? A few solutions:

  • Rather than filtering candidates based on CV data, implement a competency-based screening approach to objectively filter out candidates who don’t possess the core requirements needed perform on the job. Much of this process can now be done online.
  • Generate discipline around what you will screen before an interview and how you’ll spend valuable interview time. Many assessments are more effectively administered remotely and scored by machine, equipping hiring managers to interview candidates who have already been pre-vetted in ways that can be tough to do in an interview setting. Cognitive ability, for example, is highly correlated to job performance across job categories, but is often harder than we might imagine to assess quickly in a short face-to-face setting.
  • Use a structured interview method to significantly increase the chances that your interview will actually predict on-the-job performance.

2. Too many high-level staff and non-HR employees are involved in hiring

When companies consider their hiring costs, they often only consider direct expenses, such as job board posting fees. In fact, we found that the key cost driver is time, and 85 percent of hiring time is spent by non-HR staff.

In practice, this means that non-HR staff are involved with screening CVs, because functional knowledge is needed for identifying the right skill sets and experience, though CV screening can be a futile task. Business managers often lead the interview process as well, and up to 3 interviews are often conducted.

We’re sometimes asked how business managers can spend less time on the hiring process, and we often provide the following guidance:

  • Define the “must have” requirements that will drive high performance (and by “must have”, we mean a maximum of 3 requirements, not 20).
  • Collaborate on designing an assessment that mimics a key task that a candidate would need to excel at if you hired them (not a theoretical exercise).
  • Agree in advance what will constitute a “good answer” to your interview questions, such that business managers don’t need to be present in each interview round.

3. A high-performing hire is exponentially more valuable than a low performer.

We all know what it feels like when we make an amazing new addition to our team. As soon as they join, we’re often instinctively aware they will have a net positive impact on the company. We wanted to back up that instinct by quantifying the difference high-performing employees make. We found that top-performing employees have a an exponential — not linear — effect on their organisation’s bottom-line, especially in sales or credit roles:

  • A high-performing sales agent can generate around two and a half times the margin of a low performer in the same organisation.
  • For one of the companies consulted, the difference between a high and low performer amounted to a difference of approximately US $30,000 in revenue per agent per year (in a business with sub-$1,000 transaction sizes).
  • High-performing loan officers can generate up to seven times the annual margin of low performers.

These figures show that for growing SMEs, hiring high-performers should be prioritised with great urgency. If this sounds obvious, you may be surprised to know that the vast majority of HR departments are measured based on cost-per-hire or speed-per-hire rather than quality-per-hire.

We recognise that this research isn’t exhaustive, but we hope it will at least begin to point to ways that you can help your organisation hire more effectively, and we would welcome your questions and input.

Download the full report here — Hiring in Kenya: Current Methods, Hidden Costs and the Value of Top Performers — and check out our Business Daily op-ed on the research findings. Want to spread the word? Share your favourite fact from the report on Twitter using #HiringinKenya, and tag us @Shortlisthires!

4 Hiring challenges and opportunities facing Indian companies today

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At Shortlist, I’ve had the chance to get to know dozens of fast-growing companies in India spanning sector and stage — from 6-person startups to a multinational advisory firms — and learn what’s working for them, what’s not, and what hiring challenges they are facing on a day to day basis.

The sheer scale of India’s market is overwhelming. Not only is there a staggering one million people coming into the job market every month, but there is also a lot of turnover — according to LinkedIn, India has the highest percentage of the workforce that is “actively seeking a new job”. Clearly this is an extremely liquid, massive market — but one that also has many frustrating inefficiencies.

These are the top four challenges that I’ve seen companies face when it comes to hiring. If these issues go unaddressed, they could seriously impact economic growth in India. But with every challenge comes an opportunity for improvement, so I’ve also included some potential ways that we can shift our thinking and practices to address these challenges head on.

Challenge #1: Separating serious candidates from the pack

In April, with the new financial year, professional across India gear up for the bonus and increment. Many professionals apply for as many jobs as possible leading up to their review, hoping to get an offer with even a marginally higher salary that they can leverage during negotiations with their current employer. It’s not hard to take this “spray and pray” approach, given that applying to a job typically entails nothing more than uploading your CV to a job board post, hoping that some employer somewhere will see it.

This system is detrimental to hiring practices in India for two reasons. First, it makes it nearly impossible for hiring managers to discern which applicants are genuinely interested in the role, and which have no intention of accepting an offer. It ultimately slows down the entire hiring process and leads to a whole lot of frustration for growing companies.

It also changes the mindset of recruiters. With the assumption that a candidate may not even interested in the job, recruiters find it hard to invest the time in reviewing each application thoroughly, let alone give a thoughtful response to each applicant. This perpetuates a vicious cycle: Candidates are used to employers not responding, so they do the only rational thing and apply everywhere they possibly can.

The opportunity: To separate serious candidates from the pack (or in this case, stack — of CVs), use applications that force candidates to have skin in the game. If a candidate is genuinely interested, they will invest the time to write a cover letter or complete a case study. Assessments like this not only weed out the applicants who aren’t truly interested, but are also much better indicators of ability and fit than a CV alone.

Many top corporates have built their own application portals with a structured system of qualification rounds. Companies like BelongShortlist, and Entelo (in the US) are using social media and other data streams to identify and engage “passive” candidates. Those who engage back consistently and proactively, particularly through multiple rounds of assessments, are most likely to convert into employees.

Challenge #2: Making sense of candidate CVs

There is no standard CV in India. Instead, when reviewing CVs for one job you’ll see everything from a Western-style, one page, achievement-based resume to 20 to 30 pages of everything a candidate has ever done — including primary school achievements! Partly as a consequence of the high volumes of applicants for any opening, candidates will often stuff their CV with as many keywords and buzzwords as possible in hopes of being picked out of a database or catching the eye of a recruiter.

What’s more, many people don’t even write their own CV — there’s a whole business for this here in India! You can walk into any internet cafe in Bombay, give someone your qualifications and target sector and they’ll whip a CV for you. This practice makes it really hard for any differentiating details or personality to shine through on the page.

The opportunity: It’s no wonder that we think the CV is dead! Unfortunately, asking a workforce of 100 million professionals to reformat their CVs will be really tough. But what companies can do is stop relying on CVs in their own hiring processes. Instead, decide on the mandatory qualifications and core competencies that are absolutely necessary for success on the job, and use a standardized method to screen based on these factors.

Challenge #3: Knowing that candidates can do the job before you hire them

Most of the hiring happening in India is experience-based recruiting (“Does the candidate have at least two years’ experience in solar industry?”) rather than competency-based recruitment (“Can the candidate perform the tasks that the job entails?”). Sure, sometimes past experience indicates that you’d be great at a job, but you might be surprised to learn how often it doesn’t match up.

We saw this firsthand during a partnership with an international management consulting company. They were working with a number of recruiters, and as expected, some of the candidates that went through the Shortlist process were also brought to the client by other recruiters. Many of the candidates who had impressive experience were being advanced by the other recruiters, but when they took the Shortlist assessments they didn’t perform as well as others did. Ultimately, we were able to recommend a number of candidates who were hired — but on the basis of how they performed on our suite of assessments that measure demonstrated skill, not just where they went to school or worked.

The opportunity: Lazlo Bock, former Head of People Operation at Google, uses research to show that the single biggest predictor of an employee’s performance in the workplace is the “work sample.” This is to say — the best way to see if someone will be good at the job, is to see them actually do the job!

Sounds obvious, but it’s surprising how often an unstructured 30 minute “chat” with a candidate substitutes for a rigorous technical and capability assessment. Don’t you want your PR Manager to be able to write a good press release? Shouldn’t your Category Manager know how to create a demand forecast? Should you be waiting until the interview to find out?

Competency assessments including case studies or work simulations will increase the likelihood of hiring talent who will be high performers on the job. At my previous role as an Investment Officer at a financial technology venture fund of Accion International, we gave every single applicant a case study before the interview. If they couldn’t write an intelligent analysis comparing a handful of investment opportunities, there was no point in an interview. Today, companies like Mettl and Jombay are helping companies add more objective assessments to the hiring process to increase their hiring efficiency and success rate.

Challenge #4: Willingness to invest in talent and finding the right recruitment partners

This last challenge will be the hardest to tackle, but I think will result in the greatest change for Indian companies in the long run. Across the board, there is a mindset that talent is an afterthought, that hiring is a mere necessity of running a business, not the core of what makes its successful.

One way this manifests itself in outsourcing to any external recruiter who can fill an empty seat as quickly as possible. There are over 20,000 “mom and pop” recruitment agencies in Mumbai alone. The cut-throat commission-based model these agencies work on — one months’ salary if you successfully place someone — creates terrible incentives. Recruiters tend to send their clients the highest priced candidates for a role, not necessarily the ones who are the best fit for a role.

The opportunity: As with any fragmented market, technology and business model innovation will play a big role in consolidating the long-tail of sub-scale recruiters.

In the meantime, we hope that all companies will take a thoughtful approach to their hiring. Carefully consider the mix of processes you build in-house, the human resources you deploy, and the technology and trusted recruiters you bring on. Your in-house team shouldn’t be manually reviewing thousands of resumes — it’s 2017! Plan your hiring in advance — don’t start searching today for someone you needed yesterday. Think about how to incorporate assessments, work samples, and on-site interviews into your process.

And always remember — the lowest cost solution is often not the best choice. Shortlist estimates that closing a mid-level hire can take as many as 70 hours and cost as much as 2.5 lakhs (USD 3,700) in time and fees — and if you make a rushed or sub-optimal choice — you might find yourself having to start over.

We’ve had the privilege of working with dozens of clients who truly value talent. And you can see how it pays off — not just in their awesome team culture and employee retention rates, but also for their bottom line. I hope that more companies in India will turn these hiring challenges into opportunities and enjoy the same benefits for their growing businesses.

Structured interviews

Everyone should be using structured interviews — here’s why

1080 565 Simon Desjardins

Interviews are often less predictive of on-the-job performance than we imagine, a problem we wrote about here. Despite their ubiquity, unstructured interviews — where we ask candidates different questions in different sequences that may or may not be tied to job requirements — have been debunked as an effective predictive technique.  The interview process is vital to the hiring process and using structured interviews may be a better approach.

Structured interview 101

Decades of research tells us that using a “structured interview” is more than twice as effective than its unstructured counterpart in predicting on-the-job performance, and even more so when combined with competency-based assessments. The evidence is clear, and yet it’s extremely rare to see structured interviews employed in practice.

The idea behind a structured interview is underpinned by the objective of keeping the interviewer focused on questions that can predict performance and reducing the variance of scoring that exists when different interviewers prioritise different attributes in a candidate. They are best suited to interviews for junior and mid-level roles involving multiple interviewers.

Anatomy of a structured interview

  • Candidates are asked the same questions, in the same order, by every interviewer.
  • Questions are explicitly linked to key competencies required to do the job.
  • A standard rating scale is used by interviewers to grade candidate answers.
  • Interviewers agree in advance what they are looking for in a good answer.

When used correctly, the structured interview reduces the risk of bias affecting the interview outcome, increases consistency in ranking candidates, and minimises the interview time.

The key to using this concept effectively is crafting predictive questions and understanding that you’ll only have time to ask a few. Forcing ourselves to prioritise which two or three competencies actually drive 80 percent of the performance in a given role is a good place to start.

Reducing the time we spend on the interview process

We often hear hesitancy to adopt structured interviews because they can be perceived to take more time. “We have to hire 50 people this month. We don’t have time to implement a new structure,” is a common justification. Some may be surprised to learn that adopting a structured interview process actually reduces average interviewing time, particularly when more than one interviewer is involved. This is achieved both by reducing the pre-interview preparation period (because the questions are already prepared and optimized for an efficient interview) and by reducing the time to make a final hiring decision (because interviewers are clear about what they’re looking for).

Pathway to building a predictive question bank

Ultimately, building discipline around data collection throughout the interview process will help move beyond improving just our “hire rate” to something far more valuable: improving the rate at which high performers are selected. Hasty bullets written in our notebooks from 6 months ago are all but impossible to link to the ultimate performance of a candidate down the line (“What did we ask her again?”). If we have consistent interview data — meaning which questions were asked and what the responses were — we can baseline those questions with their teams to identify which interview questions and corresponding answers are most predictive of identifying high performers. We’ll also be able to pinpoint which questions are ultimately uncorrelated and can be dropped in the future.

Why are structured interviews so rarely used?

The ultimate benefits of a structured interview process can take months to materialise. Responsibilities are spread across multiple people on the team. Half a year may have passed by the time the candidate has been onboarded and we’ve had a chance to evaluate performance. The original interview seems like a distant memory at this point. Taking a decision to adopt a structured interview process will probably require a push from senior management along with commitment to enforce the practice.

We often have a related challenge of convincing hiring manager colleagues to change their interviewing practices, particularly when our colleagues don’t necessarily perceive interviewing to be a process in need of fixing in the first place.

At Shortlist, we have worked with clients ranging from start-ups to large multinationals. We also design competency-based assessments to further enhance screening outcomes before a candidate even reaches the interview stage.

Not all organisations will transition off of the unstructured interview as a screening tool, but the evidence to do so is clear. It’s time to implement a better way to interview.

About Shortlist Insights

Shortlist Insights helps companies build capacity to improve how they recruit and manage talent. We combine best practices from industry experts, research, and our experience to deliver practical and tested solutions and thought leadership. Ultimately, we help our clients build a competitive people advantage.

Related: Unstructured Interviews: Less Predictive Than We Think

unstructured interviews

Unstructured Interviews: Less Predictive Than We Think

1080 651 Simon Desjardins

Interviewing effectively is surprisingly tough. It’s a process that sometimes seems straightforward and yet often leaves us feeling like we haven’t quite gotten the clarity we were hoping for out of an hour-long session, or that we’ve simply made a gut decision. The main reason for this feeling lies in fact that many people use unstructured interviews, which makes it much harder to reach a conclusion about whether the candidate would actually perform well or not.

In this series, we will explore some central challenges we face in the interview process, and highlight best practices and tools to make immediate improvements.

The statistics about interviews are both counterintuitive and somewhat alarming: the chances that unstructured interviews will accurately predict a candidate’s performance is less than 25 percent. You’d actually be better off flipping a coin, and would have saved several hours in the process!

Anatomy of unstructured interviews

  • Candidates are asked different questions by each interviewer.
  • Questions are not necessarily linked to key competencies required to do the job.
  • Candidates are not assessed using a standardized rating scale.
  • Interviewers haven’t aligned on acceptable answers beforehand.

With dozens of studies across multiple geographies and timelines showing them to be one of the worst ways to predict on-the-job performance, the evidence against using unstructured interviews is overwhelming. Yet we continue to rely on them almost exclusively to make hiring decisions. What’s going on?

Limiting the effects of bias

Bias plays a huge role in how we rate candidates in an interview setting. Humans are naturally and strongly predispositioned to favour people who are like them, which is a hazard when our objective is to build diversity on our teams.

Compounding this problem is our susceptibility to “first impression” bias, where we consistently end up asking easier questions of people who form a strong first impression, and harder questions for those who don’t. In their now-famous study, Tricia Pricket and Neha Gada-Jain showed how snap judgements made in the first 10 seconds of an interview could predict the outcome of that interview.

Mere awareness of these biases does little to counteract them, even for experienced interviewers. Asking candidates to complete a competency-based assessment process before the candidate reaches the interview stage adds a layer of objectivity to the screening process and can help put interview results in context.

Linking interview questions to competency requirements

Unlike unstructured interviews, great interviews start with the interviewers aligning on what competencies and other requirements will actually drive performance in a given role. It may sound obvious, yet we often see a majority of an interview being spent asking questions without a clear competency in mind.

Brain teasers, for example, are a perennial favourite, though they have been shown (most conclusively by Google’s HR team) to have no correlation to performance. By a similar token, academic scores (and by extension — questions about them) have equally little bearing as predictors of performance, unless we’re hiring people immediately after they graduate.

Asking questions that actually force a candidate to reveal a key trait can be risky without preparation and thought. For instance, if we wanted to understand a candidate’s “motivation to join,” we might be tempted to ask the basic question, “Why do you want to join our company?” This question, however, is easily answered by a clever candidate who has done their research. A less obvious but more revealing question, such as “What preparation did you do in the time between when this interview was scheduled and today?” might give us a much more meaningful data point on the same subject.

Interviews and the Stanford prison experiment

Back in 1971, Stanford University psychologist Philip Zimbardo led a set of experiments that changed what we know about human behaviour. Zimbardo arbitrarily assigned participants to play the role of “prisoner” and “guard” in a role play exercise, and the inhumane behavior of the “guards” revealed the extreme psychological effects of perceived power. The results were replicated many times across multiple countries and cultures.

Interview rooms aren’t prison cells, of course, though much of what was learned in those studies applies to this context. Given that employers have a job to offer, we sometimes assume a position of authority in relation to the candidate, and act accordingly, without realising it. Imagine, however, that we’re interviewing a top performer who has multiple employment options. In this situation, we’re being interviewed as much as we’re interviewing. Leaving five minutes at the end to answer a candidate’s questions won’t be enough to properly address concerns and communicate why the candidate should join us.

Interviews driving improved performance

Admittedly, interviews tend to be high stakes environments for both parties. We’re under pressure to make the perfect hire. The candidate is nervous. Skepticism, hope, and bias are at risk of permeating every exchange. If you leave time to “sell” the candidate at the end, we’re down to 40 minutes at most to ask five to eight questions. Given the exponential impact that high performers have on organisations, these 40 minutes are crucial.

Putting more thought and structure to that time will separate you from the vast majority of other hiring companies, including your competitors how are using unstructured interviews.

If unstructured interviews don’t work, then what’s the answer? In the next article in this series, we outline the basics of the “structured interview” and when combined with competency-based assessments, will save time and significantly improve the outcomes of the interview process.

About Shortlist Advisory

Shortlist Insights helps companies build capacity to improve how they recruit and manage talent. We combine best practices from industry experts, research, and our experience to deliver practical and tested solutions and thought leadership. Ultimately, we help our clients build a competitive people advantage.

Related: Everyone should be using structured interviews — here’s why