In every organization I have assessed, I have found the leading drivers of underperformance are organizational recruiting and staffing effectiveness and the C-suite is the main cause of poor practices in those areas.
Generally accepted accounting principles do not have an expense line item called “Cost of Dumb Hiring Decisions.” If they did, it might well be the largest expense line item for many businesses, and companies would have to show a loss. Without taking into account bad hiring decisions and retention of ineffective staff members, current financial statements do not show the revenue you will never have, the market sector you never captured, and the excess costs you incurred because you did not spend enough time up front to really plan each new hire and then give each hiring decision 100% effort.
As you may know, I am not a recruiter, and that is not the emphasis of this article. This article is about performance. The evidence is right in front of you on a daily basis. With only two people in the same position, you can get these varying outcomes:
- Double or triple the difference in individual output
- Double the time managing one person versus the other
- Tons of time dealing with employee issues caused by one person while the other spurs other employees to rise up and increase productivity
- One person is able to do all of the assigned tasks assigned for the position while the manager must reassign some of the other person’s tasks in order to get them done
- One person works long hours, as necessary, without being asked while the other person leaves at “quitting time”, no matter what extra effort might be needed
With so much evidence that hiring the right people can have a dramatic impact on growth and profits, and that by hiring the right people you dramatically reduce your own stress, I have made this a personal mission to make it a top strategic priority. When we work with a leadership team we ask leaders to rate their people on two dimensions: 1) consistently adhere to core values, and 2) meet or adhere to high performance standards for the position. Here is what we typically find:
- Management has few yardsticks with which to measure the productivity of their employees. They have to guess, so it’s usually a popularity contest.
- Management sets a low bar in terms of establishing standards for positions. We know this because the standards set are usually far lower than what the top performers achieve on a regular basis.
- A high percentage of people do not really adhere to core values or meet performance standards, and management has decided to accept this behavior.
- When we dig further into the accomplishments of people who management perceives as their top performers, we find that they may be performing well in some aspects (usually the pet peeves of the boss) but generally are not doing an exceptional job.
Here are comments and questions I hear from leaders that on a daily and weekly basis that tell me that they have left huge amounts money on the table over the years. If you are guilty of making any of these comments, it is time for organizational rehabilitation to maximize your firm’s value:
- If someone is not hired by the time I get back from vacation, I will be really angry!
- Why are you scheduling so many candidates for interview?
- Why are we screening out so many candidates?
- This recruiting process is too much work; just hire someone already.
- A friend of mine says this person is great, so let’s bypass the process and get him/her in here.
- That is not an important position; just hire someone.
- Even though this is a great candidate, let’s see some more before we make a decision.
- I know this person is not exactly what we need, but let’s hire them anyway. We can train and coach them to be what we want.
- Why are you spending so much time with candidates?
Examples of comments that would indicate that leadership has made this a priority would include:
- Too many bad candidates are getting through; let’s increase our screening criteria so we are interviewing better candidates.
- We are going to treat every position as critical so we do not damage our culture.
- We need to stick to our process or we are going to expose the company to unnecessary risk.
- I would rather take longer to hire the right person than knowingly hire someone that does not meet our requirements.
- What can we do to speed up this process without compromising it?
- After talking to candidates is there a mismatch in our criteria that is causing us to slow down the process. For example, are we offering competitive compensation for the requirements we have put out there?
- Does it look like we have created a position with requirements that have limited candidates? If so, how can we get creative to attract them to us?
- What can we do to modify or change placement of our advertisements to attract better candidates?
- Can you provide a report on the candidates we have had and reasons we have screened them out.