What the “Wrong” Person Can Do For You!

Leadership

Oct 19

In an era when ‘lean and mean’ has become a corporate mantra for operations, a lean headcount of human capital highlights the importance of a selection process to ensure the right employee, with the right skills is recruited into the right job.

Reasons abound as to why the ‘wrong’ person may be hired for a job. From inexperienced hiring managers and inaccurate job specifications, to lack of hiring processes and rushed placement of an employee, the problem of placing the individual with skills inconsistent with the job they are to perform has a ripple effect impact upon the organization; ultimately leading to frustration, underperformance, financial losses and turnover.

“Quality is not an act, it is a habit.
— Aristotle

“Evidence is amassing that turnover rates are negatively related to financial performance” (Trevor and Nyberg, 2008). Negative impact upon financial performance not only presents one of the most damaging organizational ripples that arise from hiring the incorrect person, but also creates a dangerous proposition for any firm hoping to truly become ‘lean and mean.’ Even more concerning, having misaligned human capital within your organization creates a barrier to achieving performance excellence; a stumbling block to sustainability in a competitive world.

What other motivators can inspire youto take action and develop a systematic and effective selection process to increase the likelihood of hiring the right talent?

Consider a few of these facts for starters:

‘Failure’ rate for newly hired managers and executives in mid-size to large organizations averages a jaw-dropping 56% within the first 1-2 years in their role (1)
93% of searches that ended in new executive failure started with an inadequate job description that drove the hiring process – a job description that focused only on experience and skills and not company expectations (1)
Direct costs (recruiting, hiring, training) typically account for between 15% and 30% of total turnover costs (2)
Indirect costs, (the other 70-85% of turnover costs) which are hidden and more difficult to quantify, are related to such items as inefficiency of the new, leaving, and remaining employees (2)
In a 4 year study of employee turnover, employee turnover was associated with decreased performance as measured by profit margin and customer service (3)
Costs of turning over an $8.00 an hour employee range from $3,500 to $25,000 (3), while costs of turning over executive, technical, and academic employees range from averages of $400,000 to $900,000 depending on the complexity of the job(2), multiply that by the number of positions filled per year and you may find the numbers staggering!

It's a fair statement that all turnover has negative implications upon the organization. The question that begs answering is:

How much of that turnover can be mitigated via a sound selection process, rooted in objectivity, skills, and organizational need, focused upon placing the right person, with the right skills into the right job?

“Understanding the nature and costs of employee turnover is important. We know that turnover reduces revenue and increases expenses. We also know that turnover can be reduced through positive relationships between managers and subordinates and by fitting the right person to the job.

— Tracey & Hinkin (2008).

Finally, we musn’t lose sight that selection is only the first of many steps in developing an overall talent management process for your organization. Once you’ve selected the ‘right’ people, coaching and training programs are essential for firms to gain loyalty, increase productivity, create sustainability and move your firm further along the path to realize your ‘lean and mean’ operational dreams!

We know the impact of what the wrong talent selection can do for your organization, let's examine what the right talent can offer!

If you are motivated to find out how the talent management process in your organziation (from selection and hiring to coaching and development) can be enhanced for greater efficency andorganizational performance – call us for a free 30 minute consultation. Richard James & Partners will help you to assess areas of opportunity within your organization to provide the greatest financial return, become ‘lean and mean,’ and achieve excellence.

References

Boydell, J., Deutsch, B., & Remillard, B. (2006). You’re not the person I hired! A CEOs survival guide to hiring top talent. Authorhouse, Bloomington, IN.
Schloss, E. P., Flanagan, D. M., Culler, C. L., & Wright, A. L. (January 2009). Some Hidden Costs of Faculty Turnover in Clinical Departments in One Academic Medical Center. Academic Medicine, 84(1), 32-36.
Zeynep, T. & Huckman, R. S. (2008). Managing the impact of employee turnover on performance: the role of process conformance. Organization Science. 19(1), 56-68.
Tracey, J. B. & Hinkin, T. R. (2008) Contextual Factors and Cost Profiles Associated with Employee Turnover. Cornell hospitality quarterly, 49(1), 12-27.