‘Open hiring’ (hiring the first person who applies) saves time and can improve equity and reduce employee turnover. But it doesn’t work for every role.
Why use open hiring?
There are plenty of benefits to the practices of open hiring, and some companies have reported significant gains, including increased speed and reduced employee turnover.
Proponents of open hiring say that it removes bias. It means that people who have difficulty being employed have a shot at getting a job and getting their foot in the door.
This might include people with learning difficulties, criminal records, a disability, or people who face discrimination. Open hiring enables people who typically have trouble gaining employment to have a pathway into a job, as many of these people are in long-term unemployment, or have had lots of difficulty with being employed in the past.
This taps into an organisation’s purpose, and many see it as impacting society for good. It also improves diversity and inclusion within the organisation, which can help with the company brand.
‘It also improves diversity and inclusion within the organisation, which can help with the company brand’
This is a way of demonstrating your commitment because you can say to people, ‘we really are a diverse and inclusive business, and this is one of the ways that we implement that principle.’ Or, ‘we really do believe in bettering society, and this is one of the ways that we’re showing that we’re not just giving it lip service. It’s not just words on our website.’
Speeding it up
Another reason for using open hiring is that it’s really fast. As a hiring manager, I don’t have to go through a shortlist and interview lots of different candidates. I’m just taking the first person who has applied. I just give them a call and bring them into the workplace.
Usually, companies ask a couple of questions to ensure the person can fulfil the inherent requirements of the job. They’ll ask them questions like:
- can you lift this certain weight?
- do you have authorisation to work in this country?
- can you stand in for an eight-hour shift?
If you think about this, open hiring lends itself to entry-level roles, which brings me to my next point.
Leveraging entry-level roles
One question that you need to ask is – what are you hiring for anyway? I saw a sign in the window of a cafe the other day, advertising a retail assistant job. It said, ‘Immediate start. Award rates. You must work nights and weekends. Experience required.’
Now that job doesn’t really sound that appealing, does it? They haven’t really included any information on what’s in it for the candidate. But it’s not a manager role, it’s a retail assistant. So do they really need experience? Or do they need someone who is:
- good with customers
If you have those qualities, you can be trained in all the other aspects of the job, like customer service, how to use a till, how to take credit-card payments and how to open and close the store.
Sometimes hiring managers go for candidates with experience because that’s the easy way out. But if you think about it, for entry-level roles, what qualities do you really need? What are you hiring for? With open hiring, you’re widening the market of candidates because you’re saying, ‘we’re going to train up the first person who applies for this job,’ which is why it’s such a fast way to recruit.
Reducing employee turnover
The company that is often credited with creating the idea of open hiring (and this may be anecdotal) is a US business called Greystone Bakery. The business owners say they started this process because they wanted to help people who face barriers to employment. They called it ‘first in, first hired’ and reported a 60% reduction in employee turnover.
Their process was simple, they asked the candidate three questions.
- are you authorised to work in the US?
- can you stand for eight hours?
- can you lift over 50 pounds?
‘they had a 60% reduction in employee turnover.’
This is a great story from the US. I tried to research open hiring in Australia, and I could only find the Body Shop. Perhaps there are other organisations out there, and if you know of more I’d love for you to tell me about them.
The Body Shop has been doing open hiring overseas, but they have now started in Australia as well. The organisation says the first candidate to apply gets the next available opportunity across the entry-level positions at its stores and its distribution centre. The company’s website reports that in 2021, 25% of seasonal employees went on to become permanent hires within the company.
‘25% of seasonal employees went on to become permanent hires within the company.’
Things to consider before using open hiring
If you have entry-level roles to fill, where the main requirements are the physical aspects of the job and the authorisation to work in the country, open hiring can be a great option. But are there other considerations?
The first issue is – how do you reach applicants and how do they apply for the role? And how do you ensure this process is fair? You may need to consider questions such as:
- are you advertising the role?
- do employees need to apply through your website?
- does the person need to have access to a computer and the internet to apply?
- will you accept applications in person? For example, walk-ins to an office or retail environment.
- can an applicant apply by post?
- how will you keep track of which application was first?
Selecting the type of role
It’s also important to consider the type of role that you are offering via open hiring, as some role types are more suitable than others. If you consider the two examples mentioned earlier, the bakery and the Body Shop, it’s likely they would have a high volume of similar roles. As they get applications for these roles, they can add them to a list. Then they can say ‘okay, you’re first on the list, you can have the next job. You’re second on the list, you can have the second job.
This would not work so well if you’re only recruiting for one job each year. You would be giving unfair advantage to someone who happened to apply first.
Training hiring managers
According to my research, the Body Shop brings the first candidate in for an in-person chat with the hiring manager. During the chat, candidates are informed about the positions that are open, the company history and the roles and responsibilities. And they are asked three questions about their physical ability to do the role.
One of my questions is, what is the purpose of the chat with the manager? Because if you’re going to go through a process where you ask a hiring manager to run through questions with candidates, you’ll need to be really careful about how you train those managers. You would need to be very clear on who is in the decision-making role. In other words, is the manager deciding on the applicant’s suitability for the role, or is the applicant saying, ‘yes I’ll accept this opportunity’, or ‘no I won’t’.
Because if you’re requiring managers to ask questions, it seems to me that you’re going back into interviewing. It doesn’t seem to work that way at the Body Shop, but there may be a tendency for managers ‘having a chat’ with potential candidates to go into interview mode, because that’s what we’re used to doing.
My next consideration is safety. Even if you are asking someone if they’re physically able to fulfil a role, do you need to test it?
The legislation is different in every country, and perhaps this is a reason why open hiring hasn’t taken off in Australia. The Workplace Health and Safety laws in Australia put the onus on the business. You have an absolute duty of care to your employees.
The question is then – would it be considered reckless to hire someone without testing to see if they can do the job safely? It doesn’t mean you can’t implement open hiring, but perhaps another step is needed to undertake a pre-employment medical or assessment to determine if a person can physically fulfil the role and it’s safe for them to do so. Or if they can’t, what reasonable adjustments does the business need to make?
Many years ago, I remember a retail business that was struggling to find staff – this was before the GFC when we had very low levels of unemployment in Australia. At that point, the retail business was having trouble finding enough staff just to keep the doors open.
I remember one of the store managers standing outside, in an area where there were lots of university students. She was handing out flyers and saying, ‘Come in and do a work trial, just come and spend a few hours with us. You will get paid, because we have jobs for you.’
We didn’t call it open hiring back then, but it was a similar situation. So how successful was it? I don’t recall any of those people going on to have long careers with that business. That may well be because they didn’t use the ‘three questions’ process. You also need to let people know:
- requirements of the job
- what the company stands for
- expected hours
- expected days
- job description
- skills required
This gives the person a realistic expectation of the role before they come into work, because if we think about interviews and why we do them, that’s part of it. It’s not just judging that person to see whether they would fit the job, it’s also giving them all the information they need to make a decision.
You need to monitor the program to determine if it’s been successful. There are a few ways you can do this:
- talk to employees Talk to the people who have been hired through an open hiring program and find out what they think worked and what didn’t work.
- talk to managers Talk to their managers and ask the same questions.
- check retention rates Look at retention rates, checking to see if employees hired through an open hiring program stay with the business for a longer or shorter time, compared to overall employee turnover
It’s a Wrap
This is my last post for 2022, it’s time for a break over the silly season, but rest assured I will be back next year from 16 January. For our sister Find Grow Keep podcast, we’ve had over 2000 downloads this year.
The majority of our listeners are in Australia – a special shout out to Elizabeth who messaged me on LinkedIn to say that she’s been listening to the podcast every single day on her way to work, which was super lovely. But we also have listeners in the US, Singapore, UK, France, Canada, Sri Lanka, Malawi, Germany, Malaysia, New Zealand, Poland, Spain, and Belgium.
Our most popular episode this year was episode 37, Easy Calculation for Employee Turnover, which is also a blog post. It covers how to calculate employee turnover, and why you should.