Blogs | June 12, 2017

Hiring practices can limit earnings – but here’s one way firms can beat bias

Moving sideways to a new job can mean a step up in pay. But have you ever been to a job interview where no one knew who you were?


Imagine walking into a room not knowing the name of the person you are meeting and yet may hire in the next week. All you have is a CV and some work samples. After introducing yourself, you ask: “Can you tell me your name, please?”

This is the situation I deliberately put myself in when making the most recent hire to ING’s international consumer economics team. I may have appeared ill-prepared, but nothing was further from the truth.

A lot of work had been done beforehand to assess all applicants, with extra steps taken to eliminate the chance of natural and unconscious bias affecting choices. Interviews came later on, as a final check in a longer selection process.

Decisions, decisions
I first started thinking about how hiring decisions are made while writing about how people make decisions about money. This led me to psychologist Daniel Kahneman’s 2011 book Thinking, Fast and Slow. Kahneman was the 2002 Nobel Prize winner in economics, and there are clear similarities between the thinking traps people fall into when dealing with money and those that happen when hiring.

When in the Israeli Defence Forces, Kahneman reviewed the officer selection process, comparing scores from previous assessment panels with candidates’ final grades in officer school.

Perhaps surprisingly, he found little relationship between the two. Kahneman suggested there can be too many factors to make an accurate prediction about people’s performance, and that unconscious bias in favour of – or against – certain candidates might be part of the picture.

An example might be familiarity bias – when people tend to give a more favourable assessment to a person they know, or who is familiar to them in some way, perhaps because they have a similar ethnic background. This can feel like a less risky choice – even when it is not.

Instead, Kahneman devised a checklist for individual assessors to use when ranking candidates. Comments and predictions about future performance potential were ignored. Many of the assessors objected when Kahneman told them he had found no evidence of a relationship between candidate assessment and the long-term outcome.

“The interviewers came close to mutiny,” he wrote. They were confident – even overconfident – that their opinions must be better than simply adding scores on a checklist.

Studies show that, if the name of a person suggests certain ethnic origins, this person has less chance of an interview. This person will automatically be disadvantaged when applying for jobs – and may earn less as a result.

Gender bias is another, often unconscious bias, that many believe may be an important cause of pay inequity.

Don’t overlook the obvious
As a result, job applications to be assessed by hiring managers should have identifying details removed or at least hidden. This should reduce the chance of – intentionally or unintentionally – overlooking good applicants. The New York Times in 2017 reported that other research also confirms that interviewing alone is not the best way to select the most suitable person for a position.

We have CVs from applicants sent to HR rather than ourselves. This is worth it in case friends or colleagues apply. HR removes the names of the applicants and any photos from all CVs, giving them a number instead, which only the HR department knows.

This is an attempt to anonymise the process. Interviewers then independently and privately score each CV on several criteria.

The top scorers are then asked to send in some samples of their work, which are then independently and privately assessed by a wider judging panel. Only then are the best-scoring candidates invited for an interview, and a decision made.

The trick is in designing and organising such a hiring process. Doubtless, improvements are possible; nevertheless, we believe it increases the chances of a good hire. Better hiring processes can only help people do their best long-term – maximising their chance of good earnings, with an obvious knock-on effect for personal finances.

So if one day you go to a job interview where no one seems to know who you are, do not worry. It may be that the employer simply wants to give all applicants an equal chance of success.

Do you agree with current hiring practices at your place of work? Can companies improve the way they fill vacancies? Let us know your thoughts – contact us via ezonomics@ing.com or @eZonomics on Twitter.

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Ian Bright
Ian Bright

Senior economist at ING
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42 blogs

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