Many companies measure their success by revenues, income and other traditional accounting yardsticks. The problem is that the accounting approach measures how you did but not how you should have done. For example, take a company that grew 20% last year, and had $10 million in revenue. Its management team was weak, so it lost an additional 20% growth, missed out on another 5% in net margin, and had unnecessary turnover of 10% in client base. So this same company (assuming a 10% net margin) could have seen another $800K added to their bottom line. The one secret ingredient was “people.”
The reality is companies are making big mistakes in their hiring practices. They say things like “I have gotten my money back on this salesperson because we got enough deals to cover his/her salary.” This ignores the fact that the person did not reach quota, sucked up a lot of management time and energy, hurt company reputation, and created a hole in the organization when they suddenly left. Had the company hired correctly, the “A” player would have met quota, still be there, and have a lot of momentum right now.
“A” players are those people in the top 10 percent of talent available at the pay grade you have defined, for the tasks you want them to do, and willing to do it in your market. In many cases organizations are already paying for “A” players, but the lack of discipline in their people processes allowed them to hire “B”s and “C”s. Here are some good ideas to follow to dramatically improve your people processes:
- Move away from behavioral interviewing and use the “Top Grading” process for interviewing.
- Use assessment tools in your hiring process.
- When promoting employees use the “Top Grading” process.
- Have at least 2 KPI standards for every position, and if people are not able to meet them, redeploy or replace those people. For help on KPI there is a website www.kpilibrary.com.
- Do performance reviews annually and define whether someone is an “A,” “B” or “C” player. If they are a “B” or “C”, decide how they can become an “A.” If they can’t, it is time to let them go.
Contact us for help with your hiring process.
Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please visit his website at activategroupinc.com or contact Howard Shore at (305) 722-7216 or [email protected].