The end of The Sixth Sense offers a startling reveal, and then it shows us the subtle clues that we missed as the movie progressed. If you were like most of us, the reveal was a shocker. Of course, that’s because we had an unknowing bias framing the story for us – and that bias had us misinterpreting the narrative (i.e. spoiler alert – that Bruce Willis was alive and well).
How does this connect to the hiring process?
In spite of our best efforts to create an effective hiring process, there’s an enemy at the gates – psychological bias. While there are strategies for dealing with it, such as building a scorecard to evaluate candidates during the interview, psychological bias can still rear its head. Here are 4 biases to avoid to ensure that you don’t sabotage your finance or accounting hiring process.
Bias #1: The House Money Effect
What happens in Vegas stays in Vegas, except when it comes to hiring bias. The House Money Effect refers to how our past experiences of loss or gain affect our decision making. Win big, either as an organization or individual, and you might be prone to making a riskier hire. Lose, and you might select the candidate who offers greater stability.
Intrigued? Watch this video about The House Money Effect.
Bias #2: Choosing vs. Rejecting
How we frame a decision profoundly affects which path we take. Let’s say we’re looking at resumes or LinkedIn profiles. Specifically, if we’re in a choosing mindset, which creates feelings of positivity, we are much more likely to overvalue a candidate’s positive traits. If, on the other hand, we are culling resumes based on a rejecting mindset, we might miss a great candidate because we’re focused on his/her negative traits (lack of a specific technical skill, or not enough years of experience).
Read more about “Choosing vs Rejecting” (and what you can do about it) by clicking here.
Bias #3: The Endowment Effect
You lovingly restore a car over a period of years. The car is only worth $100,000 in the current market. And yet, if someone offered you $100,000 for it, it’s unlikely you’d bite. Welcome to the Endowment Effect where we overvalue things or people we’ve invested energy in.
What is the impact of the Endowment Effect on hiring?
- Companies overpay or overinvest in current assets
- Companies over-hire in an effort to replace the departing individual – remember, when Martha or Dave started in the role 3 years ago they weren’t the Martha or Dave of today.
Watch this video to learn how to mitigate The Endowment Effect.
Bias #4: Warmth and Competence
The brain likes to make decisions quickly. We do it without a lot of conscious thought. When it comes to liking somebody, we are drawn to two qualities – warmth and competence. Competence is fairly straightforward – how capable is someone in a given domain? Warmth is a bit more complicated and when we’re making a choice, we can weight its importance more heavily. It’s often defined by how similar we think the other person is to us. Perhaps it manifests as a gut feeling, “I like this person. They are easy to get along with.” Unfortunately, likability is not a strong predictor of success if it’s not paired with competence.
Solution: Develop a scorecard that is used by each member of the hiring team during the interview process. Build it by sourcing input from those most affected by the hiring decision. This will inject objectivity into the hiring process and help everyone reach a decision more efficiently.
Watch this short video for insight into warmth and competence and the hiring process.
You don’t have to watch The Sixth Sense to understand that our psychological biases can shape our reality (and lead us to make costly hiring decisions). Whether it’s the Endowment Effect, or our willingness to make riskier choices if we experience a win as an individual or company, hiring bias is the enemy at the gates. By recognizing that it exists, however, we can strategically make better choices, saving us time, energy and money in both the short and long-term.
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No one should walk the job search or hiring road alone. At Clarity Recruitment we help others realize their success through a process that marries proprietary technology with unwavering commitment. Contact us today to take control of your career, or to partner with us to hire well.
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