Have you ever wondered why bias is so deeply ingrained and prevalent?

The answer is simple.

The datasets are biased.

For humans

Psychologists from Northwestern University have found that children as young as four show signs of racial bias, suggesting they pick up on cues to act intolerant from the adults around them from a very early age.

For AI.

The digital world is an incredibly biased place. Geographically, linguistically, demographically, economically and culturally, the technological revolution has skewed heavily towards a small number of very economically privileged slices of society.

Knowing the datasets for both are biased for the same reason, it is the wise boss, from team leader to CEO, who takes time to learn their own biases and also understand the various biases of their team.

Only then can they develop approaches and work-arounds.

The bottom line in business is that you don’t have to change minds, you just have to create processes that neutralize the effects.

Image credit: Paul Downey

Last Friday I shared my response to a founder who was having difficulties closing desirable candidates and touched on the need for a good hiring process; here is the information needed to create one for you company.

Key points to remember,

• process is good;
• bureaucracy is bad;
• authentic, transparent communications are the basis of good process

While a good hiring process is necessary, it is often one of the first to ossify into bureaucracy.

A good hiring process is

• transparent and painless for the candidate, and
• simple, easy to use and painless for the hiring manager.

But why a process? Why take the chance on creating something that so often turns into a bureaucratic nightmare? Why not just grab ‘em when you find ‘em?

Because you need a repeatable procedure that allows for the orderly acquisition of people, so the company can plan for and support its growth and, more importantly, land the candidates you want.

A good hiring process removes chaos and allows speed in staffing.

The best hiring process is flexible and, although based on a set of fixed principles, constantly re-invents itself based on changes in the real world.

Speed is the key.

Without question speed is the most effective, least expensive of all hiring practices.

This means there must be speed at all points of the process—any delays should originate only from the candidate.

Speed is key because people tend to judge what it will be like to work for a company/manager by how they are hired.

If the process is fast, smooth, and enjoyable, they will assume that decisions are made speedily, the company has little bureaucracy, and that working there will be fun—and they are usually right.

And vice versa.

Here are the basics of a good hiring process:

• The company’s operating plan and budget are the basis of the staffing plan.
• Know exactly what the job entails, what authority it has, and how it interacts with the team and outside departments, customers, vendors, etc.
• Based on number two, write a complete req and hire the first person who meets its minimum requirements (see Req or Wreck in the right frame).
• Be flexible and creative when sourcing.
• Involve your people.
• Interviews should be as culturally-relevant as they are work-relevant.
• Always sell the meat (projects, growth opportunities, chance to contribute and make a difference) as opposed to focusing on dessert (perks, money)

Do’s:

1. Do create a positive experience for both the hire-ees and hire-ers.
2. Do use multiple interviewers—they are harder to con
3. Do have a well-understood set of components including: media spending, recruiter use, relocation, sourcing, resume evaluation, scheduling, interviewing, negotiating, cutting and extending offers, closing candidates, deflecting counter offers, and pre-start actions in your hiring process as well as a flexible way to deal with each.
4. Do make sure that sourcing and headhunter policies reflect both company needs and the current labor market.

Don’ts:

1. Don’t “figure out” what you need by interviewing multiple candidates.
2. Don’t keep interviewing candidates in the hopes of finding one who embodies your entire wish list.
3. Don’t assume using a headhunter will automatically reduce your time and work.
4. Don’t have a start and stop hiring process—whether from whimsy or human bottlenecks.
5. Don’t buy people; those who join only for the money/perks/stock will leave for more money/perks/stock.

When all is said and done, the true purpose of a hiring process is to help the company compete for talent, which, in turn, allows the company to compete for customers.

Image credit: Jordanhill School D&T Dept

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Yesterday we talked about open communications and how powerful it is when part of cultural DNA.

Visual communication was recommended, with the caveat, “processes and information that can not be represented visually are probably too convoluted and bureaucratic.”

XPLANE’s Dave Gray seems to agree.

Every company has a culture, but it can take time to learn, and the stated culture can often differ significantly from what people actually experience.

At XPLANE we have created a visual map of our culture, to guide our teams in daily decision making and help them make choices that are consistent with what we stand for and who we want to be.

Smart; very smart.

What does your culture look like?

Image credit: HikingArtist

Actions have consequences—mostly unintended.

One of my clients in Texas acquires houses out of foreclosure, rehabs and rents the properties, then sells the properties to investors.

Yep, they “flip” houses—one of the emerging business models in this new economy. The secret sauce in this business is in acquisition and resale, not in the rehab.

This company acquires houses through county foreclosure auctions, which are an amazing example of the unintended consequences of government regulation.

At every step in the foreclosure and auction process, the government regulations are clearly designed to protect an abstract concept of fairness. As a result, the process inflicts the maximum financial damage possible on the unfortunate homeowner, who is already losing a house.

Foreclosure processes are controlled at the state and county level, so we’ll use Texas as the example, although many other states are even more peculiar.

Big problems often start small, then grow.

To give some perspective, each month Harris County (Houston), Texas has around 4,500 bank foreclosures and 500 county tax foreclosures. This is about ten times more than 18 months ago. That’s growth on the scale of the internet—or health care.

After a hundred years, things may change…

Texas foreclosure laws, mostly written in the past 50-100 years, require that all foreclosure auctions must be conducted on the first Tuesday of every month, on the county courthouse steps, in an “open outcry” auction. Rain, shine, or holidays, eager bidders convene on the courthouse steps every first Tuesday to search for bargains.

But this is not just one auction. Harris County has eight precincts, each with several constables, and each constable conducts his own tax auction. To add to the confusion, trustees, who hold the property title for the foreclosing banks, also must conduct their auctions, at the same time, and on the same courthouse steps.

So, on the first Tuesday a property investor will find ten to fifteen constables and thirty to fifty trustees all auctioning off foreclosed property in open outcry, at the same time. It’s more like a flea market than an auction.

Texas law specifies the method of notification. Foreclosure notices must be posted on the courthouse wall by the 18th of the month preceeding the auction. An investor has only two weeks to review 5,000 properties, estimated a market price, and make a personal inspection.

Texas law also specifies the method of payment – cash or cashier’s check – and the bidder qualifications. A bidder can bid only for himself. Stand-ins are not allowed. So an investor may find 10-20 properties of interest, only to discover that they are being auctioned by different people, in different places around the courthouse, at the same time.

Constables and trustees do not identify the property by its street address, but use a tax ID number – a string of 14 digits, with no alpha characters or other breaks, so there’s yet another challenge for the potential investor in identifying his selected property, attempting to listen to a soft-spoken constable amidst many other auctions.

Government regulations tilt the playing fields.

Finally, Texas law specifies the remedies for a buyer at the auction who may make a mistake. There are none. Once the bidding is done, the county cashes the cashier’s checks and the investor owns the property.

No possibility to recover from any mistake. It’s a huge opportunity for investors with lots of cash, lots of time to do the homework, and with nerves of steel. As a result, bid prices are very, very low.

It looks almost as if the state of Texas designed a process to minimize the bids on foreclosed properties at auction. While each of these regulations made some sense at the time, they look very dated now and one significant unintended consequence is to destroy any homeowner equity remaining in the foreclosed property. Another major unintended consequence is to shift the advantage heavily to full-time investors with lots of cash—the “fat cats” who have the time and knowledge to game the system.

It’s easy to poke fun at the process; but that’s not to the point. If we investigated government-run insurance, government-run construction projects, or any other government operation, we would find exactly the same situation.

Regulations create exceptions and processes that experts can exploit.

More regulations create more exceptions, more experts, and more gains.

Is there any solution for the unintended, unfair consequences of government regulation?

Next week we will explore goals, judgment, and transparency. Can these play a role in reducing unintended consequences? What are their unintended consequences?