Candidate Effectiveness Potential (CEP) is the one metric that you can rely on in your hiring process. How did we get to it in our company - and what makes it such a good indicator?
Hiring is a tedious process that takes time and devotion, and as such it should be measured and improved upon every time.
After the candidate goes past the interview stage we dedicate some time (usually up to a week) with them. They are treated as equal team members, working on tasks that find the way to production, spending time with the team over lunch, having fun and getting to know each other better. During that time, we try to evaluate the candidate against number of key performance indicators, which help us identify the best fit for the company.
After utilizing this process for a while — and checking it against candidates who fail, and candidates who turn out to become great colleagues — we actually came to an astonishing conclusion. All we ever needed to focus on during in-house testing of our candidates was one thing, and one thing only:
How much of your energy does the candidate consume in order to deliver the needed value?
The ratio of delivered value vs. consumed energy to deliver it is what defines the candidate’s potential. In an effort to have a fancy metric of our own, we named that Candidate Effectiveness Potential, and it has a rather simple formula:
The paradigm aligns pretty well with the well-known skill/motivation matrix, and is basically our startupish version of it, focused only on energy consumption as a function of delivering value.
High value/energy ratio and low value/energy produce same CEP value, however with one big difference that results in “no hire” outcome. You don’t have the time nor established processes to teach people how to produce value. Instead, you can only guide people who are capable of producing value to become more accountable, seek minimal guidance and micromanagement.
Reasons behind consuming too much energy are widely diverse. They span from (negative) ones such as lack of motivation to ones that are result of not being comfortable enough (or being paralyzed) to assume accountability and (just) do things. But here’s the thing – you’re not interested in reasons at the moment. You just want to know how much energy do you have to invest to get the output, which is exactly what CEP tells you. It doesn’t matter how you operate – whether you email the tasks to the candidate/employee, or sit right next to him. You get exactly the same answer to the question – “do I need to iterate 10 times to get what I need, or answer tons of questions and still get it wrong?”.
Three Reasons You Need CEP for Your Startup
1. If you want to build the flat-structure company, this hiring metric will get you there
Distribute decision-making power and discourage consensus seeking. This hiring process is a part of producing people who are highly independent and result-driven.
2. Rallies entire company’s culture around efficiency
Technology is a fast-moving business. Today, your “itch” for senior PHP developer with experience in socket programming might become obsolete when you pivot. You need people who think, learn, grow quickly, and quadruple skills every fortnight. Who understand the context, and find the way to hack the problem.
3. Simple, efficient, cost-effective way to significantly improve your hiring
You can fall back to the CEP indicator if you’re inexperienced in hiring. It is subjective enough to “work” because there are no “process” elements in it. Quite simply, it comes down to this: “does (s)he consume too much of my energy?”
These findings point to a new approach to hiring, one based on principles that directly affect the company culture and structure and with that results. By substituting a wide range of complex decisions with a single metric, you can get to a very accurate candidate assessment, very quickly.