Blog - Insights to Growth

The Staggering Costs of a Bad Hire

May 31, 2015 by Karen Kennedy Leave a Comment

For most businesses 95% of the company’s value walks out the door every evening. Finding the right people is one cost, keeping people in their jobs is another, and when you need to terminate a “bad hire” employee, the dollars add up quickly.

A bad hire is defined a person who did not perform up to expectations and/or one who’s skills did not end up being a good fit for the role they were hired for. In a recent survey performed by Career Builder, 42% of companies reported that a bad hire cost them at least $25,000 in the past year, and 25% reported a loss of at least $50,000. FastCompany created a corresponding Infographic for the CareerBuilder survey.

Besides the direct costs of salary and benefits, bad-hire employees contribute to indirect costs in lost productivity/lost sales revenues, ill-will and disruption for customer facing roles, a drain on support teams and then you face the costs to recruit and hire a replacement employee. It’s no wonder hiring managers get a little cynical about finding good people when their attrition percentages increase.

In the aforementioned Career Builder survey, 21% of companies admitted that they hired poorly because they didn’t take the time to properly test and research the employee’s skills. I’ve sat with hiring managers who tell me that they are “on the fence” about a particular candidate and will “try them out for 90 days.” This casual attitude makes me cringe as if I am hearing nails on a chalkboard. If we extend an offer to a person we have a huge responsibility to be their biggest cheerleader, shepherd them within the company and give them every chance to do well. They should be a valued team member, not thought of in the same vein as a rent-to-own RV.

While many businesses may feel like they need to fill a position quickly, it ultimately pays off to take the time to fully vet applicants or wait until better talent is sourced. It will save a lot of money and stress in the long run, and make the company a happier and more productive place to work.

Culture DOES eat strategy for Breakfast

May 31, 2015 by Karen Kennedy Leave a Comment

Peter Drucker is attributed to saying “Culture eats strategy for breakfast.” Meaning, that no matter how good your strategy is, how much time you spend talking about your strategy, or in many cases, how many consultants you pay to make awesome PowerPoint presentations on strategy, your strategy is going to be useless without the right people demonstrating the cultural values and living these values.

If the company strategy is to deliver the best products and the best services to the customers but does not have the right people in the leadership roles, leaders with the actual skills and abilities to drive these values, there will be a disconnect. If a company spends the time and effort to create mission statements and large colorful posters with aspirational qualities on it – the executive team must live those qualities and be consistent in demonstrating those values.

I’m a big fan of the book Follow This Path: How the World’s Greatest Organizations Drive Growth by Unleashing Human Potential (Coffman & Gonzalez-Molina, 2002). I recommend reading the entire book, but in a two sentence summary of the findings are: “They (the companies surveyed) know that their most valuable resource is human-their employees and customers. And the best companies understand two important facts: people are emotional first and rational second, and because of that, employees and customers must be emotionally engaged in order for the organization to reach its full potential.” My take-away from the research within this book was that if I focused on just customer satisfaction I was solving less than half of my challenges. If I focused on my employees, getting the right people in each role, engaging them through specific metrics and goals, mapping out their career path, understanding what motivates, and providing a robust set of tools to make their work as efficient as possible, that THEY took care of 99.9% of customer satisfaction. Net-Net: if you take care of your employees, the employees take care of the customers.

It takes the right leadership team and the right team members, working together, to make this authentic company culture a reality.

Are People Like Horses?

May 31, 2015 by Karen Kennedy Leave a Comment

The importance of placing the right talent in the right role.

Jim Collins (Good to Great, HarperCollins, 2001) talks about having the “right people on the bus” and conversely, the “wrong people off of the bus.” Some people refer to “horses in the barn” and having a few “strong horses” when they talk about the human talent on their teams.

I grew up with horses being a part of our family. My dad was a Mounted Police volunteer in the ‘60’s-70’s in the rural town of Malibu, California. I had a short stint as a rider, competing in Hunter/Jumper categories. We had a few different breeds of horses and used them for various roles.

Think of all the different sizes, shapes, coat thicknesses, and abilities of horses. There are biological and geographical reasons for every breed. Thoroughbreds are considered a hot-blooded horse, known for their agility, speed and spirit. They are great racers, let them RUN. Clydesdales are workhorses and war horses that have been used to pull and plow. They are very strong and sturdy. The Mustang is often called “The Symbol of the American West” and are known for their rugged athleticism and qualities of endurance. The Friesian horse is a multi-purpose breed; they were used by armored knights in the 15^th and 16^th century as the breed had the strength to carry great weight into battle and still maneuver quickly. They also made for great carriage horses and riding school horses.

There are rare specialty breeds such as the Lipizzaner, used for spectacular horse dancing and the Andalusian breed for jumping. The pony breeds are great “trainers” for young people to gain experience on. There are miniature horses who look like and act like a horse, but are just for decoration…and they sure are cute.

People ARE like horses. Each of us has a unique set of talents and traits that make us perfect for a specialized role. We can race or pull a plow or jump over a steeple. Rare is the person who could do all of these or want to do all of these. Finding the right person for a particular job is akin to selecting the right breed of horse for the job that needs to get done.

Be smart in picking a horse, saddle up, and enjoy the ride.

Enough about you, let’s talk about ME

May 31, 2015 by Karen Kennedy Leave a Comment

It happens all the time. You have an opening on your team and you are in the interviewing process. You went through your standard behavior-based interview questions, poked and probed at several key competencies, and had some good laughs about favorite sports teams or in my case, favorite chocolate desserts. When you exited the interview, you thought “I like Bob/Jill/Joe/Kate…” You told your recruiting team who the not-great candidates were, “they just get it” or, “my gut says no.” Now you have a list of candidates that will advance in the process. Take another look. Are the candidates who are advancing, well, um, a lot like you?

We are all drawn to people who are like us. These people make us feel good, really good. Hiring managers are often leaders; the driven, passionate, make-it-happen-now kind of people, experts-in-a-lot-of-stuff people. We would love to have a whole company filled with people just like us. The reality is, project deadlines are missed, equipment is not maintained, finances are a mess, marketing sucks, and sales are down. All because the people we hired are just like us. They have the same skills and capabilities, they also have the same blind spots and hang-ups. No diversity in skills, thinking, learning and planning means that the business and customers won’t get what is needed.

Of course we need to find team members who we are compatible with, because we will be spending a lot of time with our co-workers. More importantly, we need to hire the person who has the skill set for the job we need done. A sales manager role requires a different skill set than an operations manager. A marketing director role requires a different skill set than a finance director. A receptionist role requires a different skill set than an IT help desk person.

Do you have a hiring process that is pragmatic and systematic in determining what is needed versus the who is apply? Have you given enough thought and validation to the skills for a particular role?

There is value in teams understanding that people who have opposite skill sets are needed to support each functional role – even if those people drive you bonkers, daily.

With a little planning, an open mind, and some science in the hiring process, it’s amazing how effective a team can be.