Why Organisations Have Never Invested More in Hiring – Yet Continue to Miss the Best Talent
Dr Vassilia Orfanou, PhD, Post Doc, COIO, LUDCI.eu
Writes for the Headline Diplomat eMagazine, LUDCI.eu
The Most Expensive Decision Companies Barely Audit
Every year, organisations approve major investments only after financial modelling, legal review, procurement scrutiny and, in many cases, board oversight. The logic is straightforward: poor capital allocation destroys value. Yet some of the most consequential investment decisions a company makes receive far less disciplined examination.
A senior appointment can redirect strategy for years. An engineer may determine whether a product succeeds. A sales leader can reshape market share, while the wrong manager can weaken performance across an entire team. Hiring is therefore not merely an administrative transaction. It is an investment in future productive capacity.
Despite this, recruitment is still commonly judged through operational measures: time-to-hire, cost-per-hire, vacancies filled and process completion. These indicators matter, but they describe how efficiently a process moves. They do not necessarily reveal whether the organisation selected the person most capable of creating long-term value. LinkedIn’s 2025 research on quality of hire captures the gap clearly: 89% of talent-acquisition professionals said measuring quality of hire would become more important, yet only 25% were highly confident that their organisation could measure it effectively.
That disconnect matters because labour markets are becoming harder, not easier, to navigate. The World Economic Forum’s Future of Jobs Report 2025 found that 63% of employers regarded skills gaps as a major barrier to business transformation. At the same time, employers expected 39% of workers’ existing skill sets to change or become outdated by 2030. Organisations are therefore recruiting into a market in which the skills they need are changing rapidly, while the systems used to recognise those skills remain heavily influenced by past experience, familiar credentials and established job histories.
The Recruitment Paradox
Recruitment has never appeared more sophisticated. Applicant tracking systems organise huge application volumes. Structured interviews seek consistency. Competency frameworks create common criteria. Psychometric assessments attempt to create an equilibrium to the first impression or intuition. Artificial intelligence promises faster screening and better matching.
Many of these developments are necessary. Global employers cannot manually process every application, and recruitment decisions must be fair, documented and defensible. ISO 30405:2023, the international standard on recruitment, appropriately emphasises planning, stakeholder management, candidate experience, evaluation and organisational learning. The problem is not that recruitment has acquired process. The problem emerges when process becomes a substitute for judgement.
Peter Cappelli’s Harvard Business Review analysis of modern hiring made the paradox difficult to ignore – organisations have increased the overall recruitment process and the respective expenditure without consistently improving outcomes. The central risk is that companies optimise what is easiest to measure rather than what is most strategically important.
A recruitment team can shorten hiring time and still select poorly. It can reduce costs and still overlook exceptional candidates. It can satisfy every internal policy and still produce a workforce that is too homogeneous, too risk-averse or insufficiently equipped for future change. Efficiency is valuable, but only when it serves effectiveness.
This distinction is often obscured because hiring errors are measured asymmetrically. A poor appointment is visible: performance disappoints, colleagues compensate, the employee leaves and recruitment begins again. A missed appointment is invisible. No dashboard records the candidate rejected by an automated filter who later becomes a high performer elsewhere. No financial statement captures the innovation that never entered the company. Bad hires create recognised costs; missed hires create opportunity costs that organisations rarely see.
Beyond HR: A Question of Organisational Governance
When candidates encounter slow communication, repeated interviews or arbitrary requirements, criticism usually falls on Human Resources. That response is understandable, but incomplete. HR seldom designs the recruitment system alone.
Executives determine workforce priorities. Finance controls headcount and salary parameters. Legal and compliance teams define risk controls. Procurement influences technology vendors. IT integrates the platforms. Hiring managers shape job specifications, interview candidates and frequently retain the final decision. Boards set the broader expectations for governance and organisational risk. HR coordinates this system, but the system belongs to the organisation.
Recruitment outcomes therefore reflect organisational design. A business that rewards speed will build a faster process. A company that fears litigation will emphasise consistency and documentation. An organisation competing through innovation should, in principle, design for curiosity, learning ability and constructive difference. Yet many firms claim to seek originality while using recruitment criteria that favour familiarity.
This is why recruitment should be understood as human-capital governance rather than a narrow HR function. The latest ISO recruitment standard explicitly includes reviewing and learning, not merely completing the hiring cycle. The same principle appears in Google’s guidance on structured interviewing, which recommends consistent questions and grading rubrics to improve the evidence available for decisions. These approaches work best when the organisation treats recruitment as a system to be tested and improved, rather than a sequence of tasks to be completed.
When Recruitment Becomes Risk Management
Modern recruitment has gradually assumed a second purpose: controlling organisational risk. This shift has legitimate foundations. Anti-discrimination obligations, data protection, equal-opportunity principles and candidate expectations require greater discipline than informal hiring can provide. AI-based tools introduce additional responsibilities. Under the European Union’s AI Act, systems used for recruitment are classified as high risk and are expected to meet requirements concerning data quality, risk mitigation, information and human oversight. The Society for Industrial and Organizational Psychology’s guidance similarly argues that AI-based assessments should face the same scrutiny and validation standards long applied to conventional selection tests.
The difficulty begins when risk reduction crowds out value creation. Every system optimises for the incentives placed upon it. If recruiters are rewarded chiefly for closing vacancies, speed becomes the priority. If agencies are paid for placements rather than durable performance, volume can eclipse quality. If hiring managers are punished for a visible bad hire but never held accountable for missed talent, the safest candidate becomes rationally preferable to the most promising one.
This is not proof that structure is harmful. Decades of personnel-selection research, including Frank Schmidt and John Hunter’s landmark meta-analysis, show that methods differ substantially in their ability to predict performance. Structured interviews and work-sample approaches can contribute far more than intuition alone. The governance failure occurs when organisations adopt tools without testing whether those tools predict success in their own context.
Defining Systemic Recruitment Malpractice
The term “malpractice” must be used carefully. This article does not use it to allege professional negligence by HR practitioners. It describes a systemic condition:
| Systemic recruitment malpractice occurs when organisational policies, incentives, technologies or decision frameworks repeatedly reduce the probability of identifying, attracting and selecting high-value talent, even while the organisation remains compliant with its own procedures and with the law. |
The distinction is important. A process can operate exactly as designed and still produce weak outcomes. A documented process may not necessarily the best process in every case scenario. A consistent decision can be consistently wrong. An automated decision can scale poor assumptions as easily as sound ones.
Seen in this light, the recruitment paradox is not that HR professionals have forgotten how to hire. It is that organisations have gradually asked recruitment to satisfy many rational demands – efficiency, fairness, compliance, scalability and risk reduction – without creating equal accountability for the one outcome that matters most: whether the people selected improve the organisation and take it a step further.
The next part of this series will examine how that failure appears in practice: ghost jobs, interview theatre, poorly governed AI, excessive screening, culture-fit bias, predetermined appointments and candidate ghosting. These are often treated as isolated irritations. Together, they reveal something more serious: a recruitment system can become highly efficient at processing people while becoming less capable of recognising potential.
References
Cappelli, P. (2019). Your Approach to Hiring Is All Wrong. Harvard Business Review, May – June 2019. (Accessed 21 July 2026).
European Commission (2026). AI Act: Regulatory framework for artificial intelligence. Shaping Europe’s Digital Future. (Accessed 21 July 2026).
Google re:Work (n.d.). Use structured interviewing. Google re:Work Guides. (Accessed 21 July 2026).
International Organization for Standardization (ISO) (2023). ISO 30405:2023 – Human resource management: Guidelines on recruitment. Geneva: ISO. (Accessed 21 July 2026).
Lee, H. (2025). Solving the Quality of Hire Riddle: 3 Key Steps. LinkedIn Talent Blog, 15 April. (Accessed 21 July 2026).
Schmidt, F.L. and Hunter, J.E. (1998). The validity and utility of selection methods in personnel psychology: Practical and theoretical implications of 85 years of research findings. Psychological Bulletin, 124(2), pp. 262–274.
Society for Industrial and Organizational Psychology (SIOP) (2023). Considerations and Recommendations for the Validation and Use of AI-Based Assessments for Employee Selection. Bowling Green, OH: SIOP. (Accessed 21 July 2026).
World Economic Forum (2025). The Future of Jobs Report 2025. Geneva: World Economic Forum. (Accessed 21 July 2026).
