How to Ensure New Hires Are a Cultural Fit

Senior leaders in insurance, financial services and other regulated industries know that a single mis-hire can carry heavy costs

Ensuring strong cultural fit is crucial for long term success, especially in regulated sectors. Effective hiring for culture fit can boost employee engagement and retention, while a poor fit can lead to higher staff turnover.

Senior leaders in insurance, financial services and other regulated industries know that a single mis-hire can carry heavy costs, whether disrupted teams or risks to compliance. But did you know that up to 89% of new hire failures come from poor cultural fit rather than lack of skills?

If you’re hiring staff whose values and behaviours don’t align with your organisation’s culture, you’ll quickly erode the return on your recruitment investment. Because new hires who share the company’s core values and ethos tend to be more satisfied, productive and committed, making them far less likely to leave.

But how can senior decision makers ensure new employees will thrive in their unique corporate culture? We’ll look at proven strategies for evaluating cultural fit in hiring, from interviews to onboarding practices, to help you scale effective teams without damaging your core values.

The Importance of Cultural Fit in Regulated Industries

Highly regulated sectors like insurance and financial services need cultural fit in order to work effectively. A strict adherence to ethics, compliance and customer trust is essential in these environments, so any new hire working against the culture can threaten the reputation of the company of its regulatory standing.

84% of recruiters now say that cultural fit is one of their key criteria when hiring.

But this focus pays dividends. Employees who fit their workplace culture experience greater job satisfaction, identify more with the company, and stay in their jobs for longer. If we consider that losing an employee can cost anywhere from 50% to 200% of their annual salary in rehiring and lost productivity, improving cultural fit in hiring can significantly project your bottom line.

How to Define Cultural Fit

This will mean different things for every business. It’s not about hiring people who look or think in the same way; it’s about aligning your company’s core values, mission and preferred ways of working. It’s the ethos behind your business, beyond the ‘what’ to the ‘how’ and ‘why’ things are done.

Hiring for culture fit doesn’t mean hiring a bunch of lookalikes that all think the same. Conflating culture with personal chemistry is dangerous as it can allow bias to creep in. It’s not about hiring candidates who share a hiring manager’s background or interests as this creates a monolithic workforce that lacks diversity and innovation.

Instead, balanced hiring should focus on “cultural alignment” rather than the rigidity of “culture fit”. Alignment indicates that candidates have shared values with the organisation but can also bring their unique outlook to complement and add to the culture. Some companies even go as far as talking about “culture add” instead, helping to enrich the culture of the business.

Defining your culture early helps establish the values and behaviours that drive success in your firm. You need candidates to thrive in your environment while still being wholly themselves.

How to Evaluate Cultural Fit During Hiring

That gut feel that you just liked a candidate? Nowhere near good enough. Avoid the implicit bias by conducting rigorous methods.

Behavioural and Values Based Interviews

Certain open ended questions can help you assess whether a candidate would align to your culture with relative ease. This could include asking, “Tell me about a time you had to make a decision that tested your integrity”. Past behaviour often predicts future behaviour.

Try to develop questions tied to your own values and score candidate answers using a consistent rubric or scorecard. This will help to ensure a fair process based on evidence rather than gut feel.

Values and Personality Assessments

Pre-employment assessments can also provide you with insight into a candidate’s fit. Personality questionnaires, situational judgement tests and cultural fit inventories provide you with data on how likely someone is to align with the company’s culture. Tests contain assessments that measure a person’s preference for teamwork over independence, risk taking vs caution, or alignment with specific core values.

The only caveat is to use these tools thoughtfully. As long as you have clear benchmarks based on your high-performing current employees’ profiles and be aware that some candidates might try to game the answers, it will work effectively. Assessments should only be one component of culture fit, used alongside interviews and other data.

Job Simulations

Simulating real aspects of the job during hiring can help evaluate the ways in which candidates approach problems in relation to company values. For example, an insurance firm could provide an ethical dilemma scenario to see if the candidate upholds customer fairness and compliance standards in their reasoning.

This is also useful for the candidate because it allows them to imagine the pressures and norms of the workplace, helping to self-assess their comfort levels. If they realise the culture isn’t for them, they can opt out before either party commits.

A combination of these evaluations provides you with a 360 degree view of the candidate. If they are skilled but undermine your core values or teamwork, they’re not the right hire.

Onboarding New Hires

Even after evaluating culture fit during the hiring process, onboarding shouldn’t neglect nurturing that cultural alignment. The aim is to provide every chance for them to succeed and flourish. You can improve new hire retention by 82% with a strong onboarding programme.

• Communicate culture from day one
• Assign culture ambassadors or buddies
• Reiterate values early in goals and feedback
• Create opportunities to socialise and observe culture

Your company’s culture shouldn’t be a pamphlet that sits in a drawer somewhere; employees should become immersed into the company’s mission, values and expected behaviours. Barclays embeds its new values across all staff through its comprehensive training programme to instil “the Barclays way” into its staff.

Whether this is facilitated through team launches, cross-department meet and greets or informal Q&A sessions, it all helps achieve the final goal. In regulated firms with a hierarchical structure, new hires can even be inspired by leadership’s perspectives on culture.

Finally, the most important point is to get feedback from your new hires. How did they find the onboarding experience? This can help you plug gaps about unspoken rules or not having enough time with their manager, for example. Your onboarding process should be continuously improved upon, as it’s just as much about listening as it is inducting.

Balancing With DE&I

This is now more important than ever. Critics of hiring for cultural fit will quickly point out that it can become a smokescreen for bias, rejecting those who are different. Leaders committed to diversity, equity and inclusion (DE&I) should see this is a legitimate concern.

The good news is that cultural alignment and diversity are not mutually exclusive; they should actually reinforce each other. A truly strong culture values diversity while uniting employees around shared values.

To strike the right balance, consider the following guidelines in your hiring process:

• Focus on values, not demographics
• Create diverse interview panels
• Focus on “culture add” as a mantra
• Train hiring managers on bias awareness

Focusing on personality quirks or backgrounds is not indicative of a diverse culture. Your defined cultural criteria should be based on values and behaviours that can be demonstrated by anyone. After all, 76% of job seekers say a diverse workforce is a key factor when choosing a company.

Advancing diversity should go hand in hand with hiring for cultural fit. Focusing on deep values and purpose often attracts people from all walks of life who believe in that purpose. At the end of the day, surface differences matter far less than the underlying mission.

Cultural fit could be your strategic advantage.

Where talent is precious and mistakes are costly, ensuring new hires are a strong cultural fit is paramount to your success. Hiring the right people the right way allows you to drive higher engagement, better retention and stronger performance, all leading to a more cohesive company reputation.

But achieving this requires deliberate and conscious effort at every stage of the talent pipeline. Even after the hires have been taken on, reinforce values from day one and lead by example.

Cultural fit should be seen as a living concept. Regularly revisit and reevaluating what qualities you need in new hires as your business evolves can help build a high-performing team that outlasts the competition. Not just in terms of aggressiveness and competitiveness, but on the more important emphasis of ethics and adaptability.

By ensuring new hires are a cultural fit, you’re building a people-first organisation. One that strengthens the very fabric of your firm.