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Article Written By:
Bill Schult, President of Believe & Succeed Inc.
Selection Impacts Your Bottom Line
The Importance of the Hiring Process
This article is written to provide you with insight into the importance of selecting and hiring the right person for the job. It is the single most important piece of any organization's success.
Included are guides to help you assess your selection and hiring process and costs. Most companies and organizations do not know the real cost of hiring and losing an employee. It is difficult because many of the costs are hidden or aren't thought of as a hiring expense.
Poor selection systems and techniques often result in a year-end bottom line that wasn't expected. Companies lose tens of thousands, even millions of dollars in bottom line profits due to high turnover costs and poor productivity.
Companies and organizations are beginning to realize the financial impact of poor hiring techniques on their financial performance. This is leading them to make more informed hiring decisions, resulting in hires who are more productive, easier to manage, get along better with co-workers and stay longer in the position.
What Makes It All Work?
Gerald Graham, Dean of the W. Barton School of Business at Wichita State University stated:
What are the three most important factors for success in management? I suggest the answer is selection, selection, and selection! Employee selection is so crucial that nothing else, not leadership, not team building, not training, not pay incentives, not total quality management can overcome poor hiring decisions.
The aim of selection (to find the best person for the job) may not have changed. But today's consequences of making a bad hire can be severe.
Robert N. McMurry Ph.D. said:
It is impossible to build a successful organization if the basic human material is of limited potential. He further stated, "It is better to hire people who already manifesting the desired attitudes than to attempt to rehabilitate candidates who have the wrong attitudes or lack positive motivations."
Bill Schult, President of Believe & Succeed Inc. says,
A new paradigm is taking place in American business. Successful organizations are realizing they will only be able to remain competitive and profitable in their marketplace by improving the Quality of their most important asset, people. He continued by saying, "Those who see this paradigm shift to Quality Selection as a passing fad will face losing their competitiveness and may even be forced to compete on price alone. This is not a great way to create profits and value for shareholders. Quality employees create value for your products and services for your customers and your shareholders."
Your Hiring Process Is the Key
Bad hiring decisions live in every organization and no amount of training or special treatment by management can make up for a bad hire.
The hiring step is critical in building any type of organization. It is amazing how little time or thought is given to this step. Too often an organization takes the first warm body it can find or settles for somebody who is less than the best. In these cases, a company will spend weeks, months and maybe even years trying to grind a square peg to fit into a round hole. It is just not going to happen. The person will be miserable, the organization will be very unhappy, and they will have invested a tremendous amount of money and time in trying to correct that person's weaknesses while at the same time losing productivity and even antagonizing its customers.
Studies have shown that companies often spend five to twenty times as much money on training a person as they do on hiring that person. If more money is invested up-front, it is more likely the employees they train will make it through the training process and eventually become successful.
It is amazing to see how much time people devote to selecting a car, a new computer, a set of golf clubs or making plans to go on a vacation. Yet, when they are hiring somebody who is going to be with them for a much longer time than any of the above, and is going to cost them a lot more money than any of the above cost, they don t give the selection process nearly as much time or diligence.
When shopping for a car, most people start out by looking at the ads in the paper, then talk to some friends about what cars they liked, who gave them the best deal, and what is the best deal. Then they go to one, two, or maybe even six or seven automobile dealerships. They may test drive two or three cars at each dealership to see which model fits them the best, what performance features they liked, and what color they liked. How many of you have spent that kind of time buying a car? Compare that to how much time you spent hiring somebody you might pay $20,000 to $200,000 a year for the next five years.
Often, when hiring, employers only conduct an interview. Some do reference checks. Some do background checks. Others use pre-employment tests. Still others use computerized interviews. There are many techniques that can be used. However, probably over 90 percent of all hiring decisions are made only by an interview. Not only are they made by an interview alone, but that hiring decision is usually made in the first three or four minutes of the interview. The interviewer then spends the rest of interview trying to sell the applicant on what a great company they will be joining.
The decision that is made in those first three or four minutes is usually a gut decision. How good is gut decision? Psychologists suggest that the average interview validates accurately 12 to 20 percent of the time. This means we are wrong 80 to 88 percent of the time when we use an interview alone to make a hiring decision.