June 13, 2024

Optimizing the recruiting process – where can asset managers improve in the recruiting process? (and not just the applicants…)

By Dr. Wilhelm-Christian Helkenberg
Managing Partner of the executive search firm Heads! International

There is a lot of advice on how applicants can present themselves better in the application and recruiting process of asset managers and how they can find out whether a company and a position really suit them. The focus is mostly on application documents (online and offline) and interviews with the company.

However, the following questions are less frequently addressed: What can asset managers improve in their recruiting processes? How can they better determine whether an applicant is a good fit for the position and the company? How can companies present themselves better?

The answers to these questions are based on widespread mistakes that executive search consultants in the investment industry, but also in other sectors, observe time and again. Applicants experience them first hand. Many of these mistakes also depend on the corporate culture.

HR/recruiting managers are constantly striving to establish optimal and appreciative interview and selection processes as well as selection criteria and to improve these, for example through digital feedback tools. In many cases, they already exist. Too often, however, they are “slowed down” by established behaviors, deviations from the processes and criteria, the corporate culture or human weaknesses and the time overload of interviewing employees who conduct interviews in addition to their “actual” work.

What can a company do to improve this? (If it is currently hiring externally. Many companies currently prefer to fill vacant positions internally for good reasons – but this is not always sensible or possible).

The focus here is on:

the “candidate journey”, the overall character of the recruiting process
the candidate identification and approach (own activities on the market vs. support from executive search consultants)
he interview processes with the invited candidates
the selection criteria
a conclusion for the selection process.

1. “Candidate Journey” – overall process characteristics

The overall recruitment process is increasingly being defined and viewed as a “candidate journey”. This “journey” means a comprehensible and appreciative accompaniment from the job advertisement through the application and the actual selection process to the final decision to hire or reject an applicant. Prompt and transparent communication is becoming increasingly important and certainly influences the applicant’s decision-making process and is an important tool in the context of employer branding.

Onboarding, which concludes every successful recruiting process, should also not be neglected. Providing the newly hired employee with a mentor for the first few months ensures a quicker connection to the company and often prevents friction from arising in the first place.

2. Candidate identification and approach

Many larger companies in the investment industry have set up internal recruiting teams that not (only) organize the process with external executive search consultants, but also search for and approach candidates in the market itself.

In times of high recruitment demand, these teams promise cost advantages over Executive Search firms. However, if there is little external recruitment, they naturally represent fixed costs. Some say that internal teams understand the company better and are better able to communicate its culture and optimally coordinate internal processes.

The satisfaction of hiring managers often paints a different picture. They complain about unsuitable candidates and the lack of real “top people” among the candidates presented. Candidates often speak of standardized approaches that are not appropriate to the level of a position and of insufficient knowledge of the position to be filled.

Both complaints are not surprising and are not the “fault” of these teams: often based in the head office, e.g. in London, they usually search in many countries and for all functions/positions.

These teams rely primarily on social networks in which they carry out “active sourcing”. Candidates identified by search terms are contacted by standard (inbound) mail, then a “passive” response is hoped for – which only occurs in 20-30% of cases. If contact is made, no attention is often paid to cultural or “level-specific” requirements/characteristics in communication. An experienced manager in France, for example, is reluctantly approached from London with “Hey Jean, we have a great job for you”.

Often at the beginning of their careers, these HR professionals have not yet been able to build up long-term networks with candidates and “sources” who recommend good candidates. As a result, they do not know candidates and their skills before approaching them, figuratively shooting “buckshot from afar” into an undifferentiated crowd of candidates. They also have difficult access to top-level candidates. These candidates prefer to talk to consultants they trust and have known for a long time.

In times of tight executive search budgets, candidates from their own networks (“good acquaintances”) are often approached by hiring managers or employees of the company and integrated into the recruiting process. This can be an efficient process with happy results. However, there are some arguments against it: The market has never been systematically screened, a company never knows whether there might have been other available candidates who are better.

Unsolicited applications in response to advertisements or website postings are often used. The same applies here, especially as top people rarely send unsolicited applications, but want to be actively approached and convinced. In addition, hiring managers tend to “clone” themselves with candidates from their own network and are less critical when evaluating such candidates.

Interviews with a large number of unsolicited applicants who have only been pre-selected by reviewing the application documents also tie up a lot of hiring managers’ time. Shouldn’t their time be better spent on their tasks within the company rather than on interviews? Shouldn’t qualified pre-selection, e.g. by consultants, limit the number of candidates that a hiring manager has to interview to a few intensively pre-screened and suitable people?

In this respect, companies should consider very carefully which positions they fill with internal teams or from their own network. The criterion of searching for executives with external help and non-executives through internal teams is not enough. A distinction should at least be made between roles that are important for the company’s success and reputation and less important roles. The important roles may well be specialists without management tasks. In the investment industry, for example, these are senior sales/funding managers or senior portfolio managers, etc.

3. Interview process

Interviews are still at the heart of most recruiting processes in asset management. However, it is precisely here that a number of weaknesses can be observed time and again.

Typical weaknesses are

Interviewers prepare inadequately for the interview and do not take the task particularly seriously – especially interviewers from areas other than the hiring department. Reading the CV (often in the elevator on the way to the interview…) is often the only preparation. There is often inadequate discussion of the requirements of the role, and there is hardly any preparation for the criteria to be applied and the questions to be asked.
The interview is correspondingly superficial: In most cases, the CV is asked in more detail, but specific questions about the candidate’s qualifications and objectives are not asked. Interviewers – on the (correct) assumption that applicants want to learn a lot about the position and company – talk about this and therefore often have the greater share of the interview. Some interviewers also talk more about themselves than they talk to candidates about their experiences and lives.
In the investment industry in particular, the discussion about leadership ability and strategic thinking is dominated by the assessment of specialist knowledge and professional experience – even when hiring executives. Of course, it is easier to ask for specialist knowledge than to question the candidate’s attitude and ability to solve critical management situations or strategic problems.
Because the aim is to find out the candidate’s professional suitability, many interviews give the impression that the candidate is the “examinee” and is applying to the company, rather than the company applying to the candidate. However, in these times of a shortage of qualified applicants at all levels, this is at least of equal value. With this in mind, interviews should be conducted in an appreciative manner.
Every interviewer asks more or less the same questions. There is no prior agreement on the focus of the individual interviewer’s questions. The exception is HR, which focuses primarily on cultural and human factors such as willingness to perform, team spirit and motivation, while the line examines technical aspects.
Questions to candidates are often not asked “openly” (“What exactly would you do?” – creativity or solution orientation must be shown here). Instead, solutions are already put into their mouths (“Surely you would do this or that, wouldn’t you?”). How meaningful is an answer to such a question?
Some companies tend to have candidates – even for management positions – interviewed by the teams the candidates are to join or lead. However, what sounds positive in terms of team spirit and a corporate culture based on partnership often produces mediocrity: teams do not want top performers as “stars” in their midst because they fear higher demands and “standing out” from their team.
The results/evaluations of the individual interviews are often not systematically, promptly and professionally compiled and condensed into an overall assessment. Interviewers throw themselves back into their work after the interview, HR often only receives an undifferentiated judgment days later, e.g. “I thought he was good”:
There is usually no discussion of all interviewers in order to compare ratings and rank the candidates. Instead, HR has to summarize the (often meaningless) responses, and the hiring manager often decides largely alone anyway.
The feedback, especially the rejections, to the candidates is correspondingly poor. “Unfortunately, we have decided for another candidate who fits the requirements profile even better”. No candidate can do anything with a statement like that and is not given any starting points to improve themselves. It doesn’t leave a good impression.

How can this be improved?

There is no simple, perfect solution. Multiple, even minor improvements to the set-up and flow of the process do. What is certain is that it takes more time and commitment than is often invested today.

Strategy consultancies, for example, have long been forming cross-divisional “interviewer core groups” consisting of interested, voluntary employees. They are selected, trained in interview techniques and in the positive, consistent presentation of the company and have the conduct of job interviews in their objectives. Hiring managers only interview at the end of the core groups´s interview process. Of course, many of these core group interviews can be conducted online. The core groups understand the processes and criteria designed by HR, take them seriously and adhere to them, as they often have an intrinsic interest in recruiting. However, what works for strategy consultancies can only be established in larger companies at best and requires someone (in HR) to manage and coordinate this group.
Interviewers should coordinate who asks what questions. Information about the position and company should be limited to a maximum of two interviewers.
It is difficult to filter out personality characteristics in an interview. How do you find out how stress-resistant a candidate is? Interviewers should at least receive interview guidelines for this purpose. They should also point out that they should always insist on concrete examples of what an applicant says.
Small, prepared case studies (not long ones, but short ones that the interviewer presents and discusses with the applicant during the interview) can make an applicant’s approach to situations transparent. They should be readily available in the interviewer’s head or in a list.
Professional and personal selection criteria should be limited to a few and ranked according to importance (a maximum of three to four “core requirements” – no one can really ask 15 criteria from the position description in an interview). Of course, interviewers must know the criteria and their weighting.
Standardized summary routines (questionnaires, but rather online or obligatory feedback rounds of all interviewers) with an indication of the degree of fulfillment should be established in order to arrive at a summarized assessment of all and a clear ranking of the candidates.

4. Selection criteria

Which criteria determine suitability naturally depends on the respective function and the company and cannot be discussed in general terms.

Here we will look at criteria – often applied unconsciously – and possibly their weighting, which – in addition to position-specific “core requirements” – often play an important role in the selection process, but distort the true suitability of candidates for a particular position.

Top qualifications from top universities (at the extreme: “Ivy League” business schools) are often in demand. However, especially in roles where communication skills and sensitivity are core success factors, the reputation of the educational institution should count for less. In management consultancies, for example, graduates from HSG St. Gallen or WHU (who are of course also highly educated!) are sometimes more successful in the long term than Wharton or Harvard MBAs. If the university is used as a selection criterion (often in the pre-selection of candidates), the success factors of a role should be compared with the strengths of a university, and top universities should not be equated indiscriminately with the future top success of a candidate.
It was mentioned that in investment management, professional knowledge and experience often count more than strategic thinking, people management and problem-solving skills (which are more difficult to assess), even in management positions. A corresponding focus should already be clear in the position description and really taken into account in the interview process.
(Over-)emphasizing technical expertise often leads to “1:1 appointments”: Preference is given to candidates who currently hold a comparable position. “Lateral entrants” from other functions (or even industries) that require comparable core skills are screened out. There is a belief in greater accuracy, but new perspectives and creative solutions are neglected. This thinking naturally promotes “chimney careers”. For example, the best portfolio manager becomes Head of Portfolio Management and then CIO – but as a member of the Management Board or the CEO, he or she also has corporate strategic responsibility, for which a chimney career is only qualified to a limited extent.
The reputation of the current employer is overrated and occasionally impresses. Top names are seen as a guarantee of success. In the investment industry, candidates from top Anglo-American firms are often required for sales roles. However, sales managers from smaller, less well-known companies are often much better at selling, as they have a much harder time getting appointments and need to be more convincing professionally. The demonstrable track record, taking into account the “difficult conditions” of a possibly small, unknown address, should count here.
“Cultural fit” is important and promotes efficiency and company positioning. However, if it is misinterpreted as “ equality” and people from other cultures and with different socialization, different behaviours and unusual looks are – usually unconsciously or secretly are sorted out, it endangers team diversity, creativity and better performance.
The fact that female and diverse candidates with the same qualifications are preferred is probably generally accepted and normal. The fact that sometimes male candidates are not included in the process at all – which does happen, usually unofficially – or that better men are screened out because the company wants/needs to increase the proportion of female managers and this is stipulated in the hiring manager’s target agreement, can lead to problems later on. A plea for better qualifications regardless of gender is shared by many career women.
International managers are still viewed critically in German companies, regardless of international corporate activity. Of course there are roles, e.g. in local sales, that require fluent German. Often enough, however, the desire for more convenient communication in committees and cooperation sorts out international candidates who do not speak fluent German. Naturally, this is also not made transparent.

It is difficult to prevent this unconscious or secret application of such criteria in the selection process. Every interviewer and decision-maker must be aware of these abusive interpretations. And an open, transparent discussion process about the candidate evaluation among all interviewers/decision-makers prevents such mechanisms.

5. Conclusion

The perceived quality of the selection and interview process is not the first criterion by which a good candidate decides for or against a company. The meaningfulness of the task and of the company’s activities (especially with regard to sustainability), opportunities to make a difference in the position, the company’s products/services (often also with regard to meaningfulness/sustainability) as well as salary and work organization (home office, etc.) usually come before the application process, even before the overall perception of the “candidate journey”.

However, the selection process often determines whether a candidate will look at these characteristics of the company as intensively as is necessary for a positive decision after the selection process. And a better process makes it easier for a candidate to find out how well a company suits them. Misjudgments not only affect the candidate, but also the company.

Conversely, optimized processes and selection criteria enable the company to present itself positively – or better: truthfully – to the candidate and also to find out the actual suitability of a candidate more accurately. Optimizing the selection processes is therefore in both parties’ interests, including the asset managers, who should invest here.