Failure is an Expensive Option
Bill Schult CBA, CBMA
Hiring A Players for your organization can result in a financial gain of 10 to 100 times their annual compensation.
To determine the tremendous financial impact of moving employees from your bottom half into your top half, consider creating three categories – Your Best, Your Second Best and finally the Not So Good. By conducting this exercise you will have created three categories of the same size.
Your Best, which comprise the top third, are those employees who are the bedrock of your organization. These people are the hard workers, who go beyond what is expected, who produce high quality results every time. These are the employees who need little direction, are team players, getting along well with everyone. It is these same employees who are often on a fast track for promotions. It is difficult to hire these high quality, top performing employees if your hiring process is flawed.
Your Second Best, are those employees who can get the work done with some direction, work well, for the most part, with others, are technically strong, work to get the job done in a crisis and often get promoted if there is no one else who is better qualified. Most times they will not be the first person considered for the promotion.
The Not So Good are those employees who just never seem to be a fit with the organization. It could be that they are in the wrong job, or they need additional coaching and mentoring to produce average results. These employees seem to be a magnet for conflict with other team members. These Not So Good employees are most times hired because they have interviewed well, come across as friendly and enthusiastic and look to have the necessary experience. For many organizations this group represents, at a minimum, one third of their entire employee count and this becomes a huge problem.
Hiring managers and HR personnel said that when the Second Best and Not So Good employees were hired, they appeared to have all the requisite qualifications. Yes, they had the right degree, the right skills and experience. However, something seemed to go wrong after the hire that led to their underperformance on the job and ultimate termination. Most times the inability to perform the job at a high level was the result of the employee not having the right behaviors and/or competencies necessary for successful long term job success. This translates into under performance on the job, little or no interest in the job, strained relationships with their manager, few team skills, poor work habits and a cultural misfit for the organization.
The expense of hiring Not So Good employees is huge. A method to calculate this expense is to look at what is termed the Average Profit Per Employee. For demonstration purposes, let's assume that the average profit per employee is $100,000. Remember that this example does not take into account the differences in jobs and salaries, but we can still make a good point.
Now consider that your Best performing employees produce at an average of 20% more than your Second Best or middle category, resulting in average profit per employee of $120,000.
Next, assume your Not So Good employees are 20% less productive than your Second Best, this means they will produce an average per employee profit of $80,000. This is $40,000 less than the average per employee profit your Best employee category delivered.
This means that for each Not So Good employee you replace with a Best employee, your organization would make an additional profit of $40,000. If this were your organization, you would realize an additional profit of $400,000 for 10 employees and $4 million by replacing 100 Not So Good employees.
Looking at the results of our demonstration, it is quite easy to endorse the implementation of hiring only candidates who fit the top third category. Making this happen will not or is not an easy strategy to execute. There is no rabbit's hat to pull the Best performers from, no magic bullet that will make it easy to begin hiring more top performers.
You need to know that the Best category of employees looks for jobs in a different manner than the other two categories. This category of employee will often learn about new job openings from a referral from a friend, neighbor or networking with other top performers. So, if your organization has made a decision to hire more Best performing employees, it would be a good business decision to concentrate your recruiting and hiring efforts in the above areas and rely less on job boards for your job candidates.
Should you want to continue using job sites to get additional job candidates it would make great sense to write a number of ads you think will appeal to the Best category of job candidates. Include such areas as potential for career advancement, opportunity to meet new challenges and to have an immediate impact on the organization's success. See which ad consistently attracts the candidates who become your Best performers.
The Best category of employees is typically looking to build a career and this may well be the main reason for their delivering top performance on a consistent basis. These candidates are in search of more information and the need to ask more questions in the hiring process in their quest to find a career. Their needs are in stark contrast to the Not So Good candidates who are simply looking for a job with a paycheck.
So, your organization needs to be mindful not to rush into job postings that are quite frankly, boring. Hiring the Best category of employees is more than just job postings, the interview or interviews. Take some time; build a solid hiring system that gives the Best category candidates a process that will allow them to prove they are a Best candidate.
Most hiring mistakes occur when we use only interviews to make our hiring decision. Yes, I know that structured, behavioral based interviews are all the rage in HR circles, but no one is talking about how candidates prepare for these interviews. You may not want to believe me, but the candidates often go the book stores for books like, "The 100 Best Answers to the 100 Toughest Interview Questions in their attempt to win you over and get the job.
What are you to do? Use an assessment like 51% of the successful, top performing organizations are doing during their hiring process. Compare your candidates to a validated and predictive success profile or use a well-developed competency model to help you determine if the candidate has the potential to be in the Best category of employee for your organization.
A well designed, validated assessment provides the most objective look you will get for every job candidate during your hiring process. Everything else is subjective and when you are investing tens of thousands, even hundreds of thousands in salaries and benefits for each employee in your organization, it is important to bring some objectivity to your hiring process.
You and your organization should make hiring into your Best category a goal for every department. You must do this if you desire to increase the talent within your organization, while increasing your Return on Investment per employee.