In my former life as a field manager and executive I would find myself working with plant locations that needed help. Maybe they were missing their sales and growth goals. Maybe they were missing their profit and quality objectives. Some were missing everything.
No two situations were exactly the same. But they all had two things in common… poor employee relationships and poor hiring and staffing decisions. When these combined, the locations were always characterized by high employee turnover. I learned very quickly that if we solved the hiring problems and improved employee relations, we nearly always cut employee turnover in half.
Cutting employee turnover has an immediate impact on operating costs. Expensive employee replacement costs are drastically reduced. Costly mistakes made by new employees nearly disappear. Lowering employee turnover allows managers to spend more time working with customers and coaching employees instead of recruiting and interviewing. Quality improves which reduces service costs and makes for very happy customers. What I didn’t know at the time, because of our accounting methods, was the impact that lower employee turnover was having on healthcare benefit costs and other operating problems related to health issues – like presenteeism and absenteeism.
Leaders have the responsibility to develop peak performing, “winning” teams. Whether we are running a small business or a department with a few employees – or a large operation with hundreds – the responsibility of developing people and improving performance is the same. Great leaders make good hiring and staffing decisions. They consistently select the right people for the right job.
Who we hire has more to do with the ultimate outcome of performance than anything else we do as leaders. More than anything else, our hiring practices and personal hiring skills impact our team’s success…or failure.
A poor hiring process increases employee turnover, which is death to any initiative to improve productivity. Bad hires don’t last – they leave or are asked to leave. Sometimes they leave when they realize they don’t like the job, the company, or the people. In these cases, the new hire “fires” the company. They’re asked to leave when they can’t learn, won’t learn, commit some violation, or demonstrate some character flaw. Then the company fires them. Under weak management non-performers linger on to become “deadwood”. In any case, they were miscast, and set up for failure from the beginning. Whose fault was that??
In most cases the company. The company may not have developed a hiring process – or the people using the process didn’t do their job. In the final analysis, a recent hire is out of work and going through the trauma and stress of job change, because of your mistake!
ATTRIBUTES OF COMPANIES THAT HIRE WELL
Many years ago I was asked to put together a standard hiring process and a training program to teach our managers how to use it. This was a major project and ultimately contributed to one of the paradigms enabling the corporation’s dramatic growth at the time. We all knew the problems created by poor hiring. If we were going to accomplish our ambitions, hiring well had to become one of our basic corporate competencies. With the help of the C.E.O., I was afforded the opportunity to visit several corporations noted for their excellent management teams to learn about their hiring and development processes.
I returned from each trip with fresh ideas about how to hire effectively and systematically. I learned about hiring processes, hiring tools, carefully honed interviewing skills, and much more. All of this information went into developing a hiring system of our own, which we called “Meticulous Hiring”, that is still in use today.
The systems and processes we developed had an immediate impact on the quality of new hires and early management turnover. The point is that effective systematic hiring has a huge impact on growth, profitability, turnover, and management development
While talking to managers and executives of the companies I visited, and observing their practices, I noticed some similarities in their views and attitudes about the importance of hiring well. These became the five guiding principles of hiring that we taught every manager, and that I still teach clients today. Companies committed to hiring well have certain common attributes….
Hiring is a disciplined process: Every company has certain processes critical to their business that are rigidly enforced. There are consequences for employees not in compliance with those processes. While hiring is arguably one the most important activities performed in a growing business, many companies do not approach it systematically. They have established procedures for processing orders, invoicing customers, handling collections, and even enrolling employees in their healthcare plan. But hiring is not done systematically. The function is – well… kind of ‘helter-skelter’. Every hiring need is handled in a different way with managers espousing their pet theories on how it should be done.
Great companies have effective hiring processes and like other important processes, they are rigidly enforced. There are consequences for managers not in compliance with the system. Great companies recognize the importance of hiring systematically and believe that hiring well is a key component of their strategic plans.
Hiring Standards are aligned to business strategy: Great companies have defined job requirements and hiring standards for every key position. They know what they’re looking for in candidates. They have identified and defined the key human skills and characteristics needed to succeed and help the company accomplish their objectives.
Aligning hiring standards with your business strategy avoids hiring mistakes and misfits. For example, suppose that K-mart is looking for a Vice President of marketing. And, let’s suppose they learn that the Vice President of marketing of Nordstrom might be available. What would happen if they successfully recruited and hired the Nordstrom executive to run their marketing efforts? Do you foresee any problems?
Of course there would be problems. While both companies are in the retail merchandising business, they have totally different business strategies. K-mart has an effective discount self service strategy. Nordstrom markets to customers who demand individual service and high-end products. Here we have two successful companies in basically the same industry, but with totally different cultures and methods of operating. The new K-mart Marketing Vice President would likely have a problem adjusting to their self service strategy and culture.
Leaders are held accountable: When hiring processes are established, leaders are held accountable to use them. Leaders must discard their personal hiring theories.
It’s important to hold leader’s accountable for the quality of their hiring decisions to avoid hiring mistakes.
In today’s world, it’s easy to lose individual accountability for hiring decisions. A popular hiring technique commonly used these days is “consensus” hiring. With consensus hiring a committee, or panel, makes the hiring decision. With this arrangement, no one can be held accountable for making a bad hire.
While I believe that panel interviewing is a good technique in some circumstances, and the use of hiring committees is important, they should not be allowed to cloud the issue of individual hiring accountability. Panels and committees should be used to provide the Hiring Manager with facts and information to help the Hiring Manager make better and more thoughtful hiring decisions. But one manager should make the decision, and that manager should be held accountable for the quality of hiring. In the end, this not only leads to better hiring decisions, but strengthens the Hiring Manager’s commitment to help the candidate succeed.
Interviewers are well trained: Companies with effective hiring processes view the costs of training interviewers as an investment – not an expense. Interviewers are the most important component of any hiring system, and they should not be forced to learn by trial and error. Their errors can be very expensive.
No one in your organization should conduct interviews without thorough training. Interviewing is an investigative process and investigative skills don’t come naturally.
Hiring well is an ethical standard: Take a brief moment and visualize the five most important things in your life. Certainly, the top two would be faith and family. But, think about the next three?
We all have different life’s values. But in my opinion, if you’re a manager, executive, or business owner – your business or career ranks somewhere in the top five important things in your life. Think about the last job change you made. It’s usually a pretty traumatic experience. So much depends on making the right choices. Stepping into the wrong job can affect your wealth, security, family life… and even your health.
Managers should take their hiring responsibilities very seriously. Hiring someone is one of the few instances where you execute raw power over someone’s future. Your hiring decisions not only impact the success or failure of your company, but they impact the destiny and the lives of good people as well. I believe that it is morally reprehensible to hire sloppily, or by chance, hoping that “things just work out”. Hiring well should become a personal and company moral ethical standard.
HIRING WELL ISN’T ROCKET SCIENCE
There are only two components to hiring well… First, you must understand the job that you’re trying to fill. You must identify the human skills and traits required to succeed in the job. Second, you must understand the candidate. Does the candidate possess the skills and traits that you’re looking for? Hiring is really not that difficult. You can’t make this complicated. Good hiring boils down to knowing what you’re look for, and using a process to assess the candidate’s qualifications. It’s that simple.
It’s absolutely amazing to me the number of managers and companies that begin a job search with a sketchy, or no idea of what they’re looking for in a candidate. Even for important key positions, some companies don’t take the time to figure out what the job requires. They’re hiring in the dark and I think you can predict the outcome of their hiring efforts.
Some companies understand what they need, but haven’t created a formal process for evaluating candidates and have people conducting interviews who have no idea what they’re doing. These folks make hiring decisions that rely solely on an interviewers “gut feel” using their pet theories to find candidates they think can do the job.
I’ve even talked to some companies that don’t do either… they have no idea what they’re looking for – they wing their way through interviews – and get any warm body who has time on their hands to interview and help check the candidates out.
The results in all of these cases are bad hires, mis-fits, workers compensation claims, high turnover, legal hassles that accompany terminations and… high healthcare costs and the risk of serious insurance claims.
The fundamentals and components of hiring well are easy to learn but cannot be compromised. While the components are easy, there are no short cuts. You must understand the job requirements based upon a Job Analysis. Then you must translate the job requirements into a list of hiring standards. Finally, you must have effective hiring processes staffed by people that know what they’re doing.
An effective hiring system starts with understanding the job. Hiring employees by guesswork, gut feel, or pet theories could put them in harms way. The job could physically exasperate a health problem. You could be setting the employee up for failure, causing job dissatisfaction and stress which leads to turnover and needless claims risk. The foundation of an effective hiring system is “The Job Analysis”. We must analyze the job to determine the human requirements for success while avoiding the trip wires to failure.
I cannot overemphasize the importance of a good job analysis. It is the most important step in designing a good hiring system. A haphazard approach dramatically increases the odds of poor hires, turnover and trouble. Getting your system right depends upon getting your job analysis right!
Unfortunately, some leaders short-cut this step or by-pass it altogether thinking there’s some big mystery about it. They lack confidence. Candidly, I admit that job analysis is the most difficult step in designing your hiring system. It’s also the most time consuming. You may need a little outside help to get started but with a little training and practice most managers can quickly learn.
The difficulty of conducting a job analysis is exaggerated. The secret to job analysis is commitment, a little knowledge, and a planned structured approach…and that’s what we’re going to talk about in this section.
The Approach: We’ll start by selecting a team of “subject matter experts”. A team of five or six works just fine, but you can have a few more or less. Subject matter experts are managers and employees who have a vested interest in the job – people that are impacted by a new employee’s success or failure in the position. These could be managers responsible for the job, or successful employees doing the job. Members of the team should be knowledgeable, open minded, and able to reach consensus. They should understand how to participate in a brain storming session.
The team’s objective is to identify as many job requirements as possible… write them down and tape them to the wall. It’s a brain storming session so anything goes. If any member thinks that a requirement is important it should be added to the list. This is not the time for questions or debate. Don’t worry about legal concerns or redundancy. That will all get straightened out later. The idea now is to get every requirement that your team can think of on the list and taped to the wall.
To prevent total chaos, and to keep the session organized, I use a special agenda. The team looks at the job from three perspectives and answers three key questions about the position….
• First – “Obvious Risk Factors”: Are there any risks involved that would prevent the new hire’s success? Is there any factor or situation that would heighten the likelihood of failure? Are there past mistakes we don’t want to repeat?
• Second – “General or Conventional Requirements”: From past data, experience, and intuition— What does it take to succeed in your culture, and in this specific job?
• Third – What “Behaviors” should candidates possess to increase the likelihood of success? When you think of employees who have been successful in the job, what behaviors make them stand out from others?
I begin the job analysis by talking about past hiring mistakes. What was learned from bad hiring decisions? Are there “Risk Factors”, that are obvious causes of failure? A few examples that I’ve experienced have been the long drive to the office, the amount of Travel, the emphasis on selling new accounts, or the weekend work requirements. There are many more and I’m sure that you’ve experienced some common reasons yourself. The key word in this step of the analysis is “obvious”. Your hiring system should include a way of avoiding hiring people who obviously can’t succeed in the job.
There are two situations that that should always be on your list of risk factors to avoid. One is cultural incompatibility. Some people will never by happy working in your company’s culture. Maybe the pace is too fast, ethical standards too high, or the types of customers you serve. The other is compensation compatibility. Your total compensation package must satisfy the candidate’s financial needs. If it doesn’t, the candidate is a high risk for job dissatisfaction and turnover. Avoid hiring candidates not compatible with your culture or your compensation package at all cost. They’re a sure bet for failure.
In the next step of the analysis, we explore and discuss the General or Conventional job requirements. I use a little more structure in this step to guide the discussion. I call it the “PEMS” model. Using the PEMS model as an outline for our discussion we explore the….
The Physical Requirements- These are the most “tangible” obvious requirements. They involve human physical abilities, experience, and situations. These might include lifting, professional appearance, mobility, traveling, job history, etc.
The Emotional Requirements- These relate to the amount of “stress” inherent in the position. Jobs requiring decision-making, meeting deadlines, dealing with conflict and change, usually have stress related with them. To be successful in these jobs, people must maintain control and stay cool and calm under pressure.
The Mental Requirements- These involve the type and degree of intelligence, education, academic background, and special training required.
The Social Requirements- These requirements have to do with “people” skills and the amount of interaction with others. Some jobs require high interaction. Other jobs are performed in solitude. Some jobs are better suited for extroverts…other jobs for introverts.
As your team tackles each of these questions, there may be some redundancy. Not to worry. Job analysis is a “brainstorming session”. There’s no lengthy discussion or debate on any team member’s suggestions. There will be time to question and clean up the list later. Besides, redundancy may underscore the importance of the requirement. The goal is to gather as many ideas as we can on paper.
As we grow into adulthood, we develop behavior patterns which reflect our personality. These behavior patterns are rigid and usually require a major life event to change them. Business leaders are not equipped to reshape personality or behavior patterns. Some managers try. I call them…”Armchair Psychologists”.
Armchair Psychologists believe that they can change and reform people. They believe that they can change the candidate’s personality traits and behaviors to satisfy the job requirements. Effective leaders, on the other hand, use a different approach. They’ve learned that it’s much easier to hire someone suited for the job. They hire candidates who have demonstrated the required behaviors in their past.
This brings us to one of the most important principles in hiring. It’s so important that I call it “The Golden Rule of Hiring”. If you have identified the behaviors that lead to job success and the candidate has demonstrated those behaviors in the past, you have the best predictor of future success. If the candidate was assertive in the past, it’s likely that he’ll be assertive in the future. If the candidate demonstrated good organizational and time management skills in the past, he’ll be organized in the future. If he had a strong work ethic in the past, he’ll have a strong work ethic in the future. Why? We know that past behaviors predict future behaviors.
After your team has exhausted their ideas and input on Risk Factors, Conventional Job Requirements (PEMS), and Behavioral Requirements, you will notice that your meeting room has changed… you’ve “wall papered” one or two walls with notes captured during your job analysis. In my experience, clients usually capture for 100 to 200 job requirements. This is far too many to construct a practical hiring system. You have to condense the list to about fifteen to twenty-five requirements. This leads us to the next step… developing hiring standards.
DEVELOPING HIRING STANDARDS
There’s a lot of information on the wall. The job now is to translate that knowledge into a much smaller list of hiring standards which will become the foundation of your hiring system. Hiring standards are a refined list of job requirements. Hiring standards are the “yardstick” we use to measure and size up candidates’ ability to do the job and their chances of succeeding. After determining hiring standards, they should be carefully documented with clear definitions and descriptions of them. They should be well understood by everyone involved in the process, especially interviewers.
Condensing job requirements into hiring standards looks a little overwhelming with all of that information taped to the wall. And without an organized approach it can be. I use a simple four step procedure to help my clients through this process.
First… As your team was analyzing the job you may have listed some things that you felt a little edgy about because of legal concerns. This happens occasionally. After all, job analysis is a brainstorming session and you’re not experts in labor law. This is the time to consider legalities. If you and your team even suspect that anything on your list is illegal, eliminate it.
Second…eliminate redundancy. You should line out any duplicate requirements that came up during the session. There will always be some redundancy because many of the requirements that come up in your discussions fall into several categories. As a rule of thumb, the more often a requirement comes up in different categories just under scores its importance. You’ll also find similar requirements expressed in a different ways. Some of these can be restated into one standard that encapsulates their meaning. For example, the team may have listed professional appearance, self confidence, and friendly as requirements. They might be consolidated into one standard… personal impact.
Third… Consider the importance of the requirement and debate its relevancy Look at the remaining Job Requirements with a discerning eye. Developing hiring standards is serious business. They will drive your hiring system, and your system will be built around them. You will be making life changing decisions based on them. Your team should ask…”Is this requirement really important? Does it really contribute to job success? If the requirement isn’t important…eliminate it from the list.
Fourth… The last step is prioritizing the remaining job requirements. I use a very simple prioritizing system. Instead of ranking our standards from most important to least important, I use a two tier classification system. Hiring standards should be classified as “Must Have”…or “Preferred”.
A must have standard predicts failure. If a candidate does not meet a must have job standard, we know he’ll fail. Would you hire someone you knew would fail?
Must Have hiring standards are knock outs. They are rigid and never compromised. You should not be willing to train and develop candidates lacking these requirements. If a candidate doesn’t meet a must have standard, he should not be considered for employment – – no exceptions.
Preferred hiring standards predict success. These standards are just as important as your must have standards, but they’re not used as knockouts. The difference is your willingness to train and develop candidates in these areas. A candidate lacking a preferred requirement must have the ability to learn. If not, they should be rejected.
Compromising hiring standards
Sometimes there’s tremendous pressure on managers to compromise hiring standards. In my former life as an operating executive, my managers would often send me totally unqualified candidates that they were recommending we hire. When I talked to the manager I typically heard this excuse… “The market’s bad. It’s different here. I can’t find good people”.
This happened most frequently in good economic times with periods of low unemployment. These managers had a “Tight Labor Market Mentality”. Low unemployment caused them to compromise their hiring standards. They were allowing economic conditions to drive their staffing strategy and hiring standards. Bad decision!
The talents required to run and grow your business should drive hiring decisions – not the unemployment rate. Granted, in times of low unemployment, recruiting talent may be more difficult, expensive, and require some creativity. But your hiring standards must always drive hiring decisions – not economic conditions.
Hiring standards should be the “rock” of your hiring strategy. Enforcing them will bring about needed business change. When my manager insisted that he “couldn’t find good people”, it wasn’t a hollow excuse. But he should have realized that there was a reason he was having trouble finding candidates. In this case, it was his recruiting strategy. His “tight labor market mentality” revealed his dependence on a large number of unemployed people to generate qualified candidates. His recruiting methods needed to be more aggressive and to search for candidates that were currently employed. That might require bringing in some outside recruiting help.
In good economic conditions, the price of talent increases. Enforcing the standards might have required him to raise starting salary. The point is, enforcing hiring standards will flush out problems and force you to question existing strategy and tactics from time to time. On the other hand, compromising standards only covers up the root cause of hiring problems.
Here’s another word of caution. There is nothing wrong with hiring unemployed candidates, assuming they meet your hiring standards. But the business world has changed. In the past, in hard economic times, companies eliminated jobs based on employee tenure – “last in first out”. Tenure earned job security. The trend today is different. Companies value talent and want to preserve it. So in tough economic times, companies release marginal performers first. There is not a hard and fast rule, but recruiting strategies targeting only the unemployed have an added risk of attracting more non-performers.
The dynamic nature of hiring standards
While hiring standards should be rigidly enforced, they are never static. They are subject to change. There are multitudes of reasons for changing them. New technology, changes in your market, changes in strategy, or changes in other internal systems can all impact your high standards. They are dynamic and will require updating from time to time. But there must be a formal procedure for bringing about any change to any standard. The CEO or business owner has the right to assume that the existing hiring standards are in force and being used, unless he approves any change.
Up to this point we’ve been carefully defining qualifications of a hirable candidate. You have “your arms around the job” and clear hiring standards. You know the mistakes to avoid. You have must have and preferred hiring standards. By carefully defining and understanding the job, you’ve taken the first step to stabilize your workforce and lower employee turnover. You know what you’re looking for in candidates. You’ve set the stage for increased performance and lower healthcare costs. The issue now is…how can you determine a candidate’s qualifications? How can you determine how well a candidate satisfies your hiring standards and requirements? That’s the primary objective of a Performance Hiring Process and effective interviewing which will be the subject of my next article.
Performance Leadership, LLC 6504 Clawfoot Ct. Maineville, OH 45039
William E. Miller, Performance Leadership, LLC