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Hiring as a Competitive Advantage
August 07, 2007
By William Cavalier
Unless you are casting extras for a crowd scene in Ben Hur, hire only exceptional people who love the work if you want a profitable company with a sustainable competitive advantage. If your workforce is not well selected you will have an inconsistent sales force, a low customer service rating and reduced profit margins due to higher turnover costs. But finding these passionate individuals proves difficult when the conventional hiring process of resumes and interviews doesn't consistently and predictably produce highly productive employees.
The Conventional Hiring Process
Posting a help wanted ad on a job board, reading resumes and interviewing candidates offers no competitive advantage. And, more importantly, recent studies have called into question the effectiveness of conventional hiring tools.
• Resumes: New York-based executive recruitment firm Sunny Bates Associates estimates that 40 percent of all resumes aren't all together aboveboard. A study published in the Harvard Business Review found that "educational qualifications, gender, age, ethnic origins or experience didn’t predict success."
• Interviews: A University of Michigan study found that a typical job interview only increased the likelihood of choosing the best candidate by less than 2 percent.
• Candor: According to a Blessing White study, 56 percent of employees seldom or never share their career plans with their employer.
Need to Know
Those questions that begin with "who," "what," "where" and "when" relate to whether a person can do the job. These questions are often answered in a resume and many employers don't look deeper.
The more important questions about employees are "how" and "why." "How" relates to those hardwired behaviors a person brings to the job—such as energy level, decisiveness, sociability or reticence. The "why" talks about a person's occupational interests and answers whether they will have a long term, enduring interest in the job. "Why" questions address candidate creativity, technical interests or whether they have a heart for people service.
Focus On Employee Productivity
Hiring as a competitive advantage is a two part process. First you must identify which employees are your top 20 percent contributors to productivity, sales and profits. Second you must measure the skills, behaviors and interests that make them effective.
Let's keep it simple. Productive employees are not made productive by elaborate compensation plans, group-think training programs, motivational seminars and convoluted benefits packages. They just show up and get the job done if they like the work and can do it well.
Hire Better Than Your Competition
A competitive advantage hiring process:
• Uncovers important information about applicants that points to productive behavior.
• The data used is accurate, reliable, cost effective and legally defensible.
• Is statistically sound.
• Is repeatable and predictable.
• Consistently identifies candidates that meet your specific standards of customer service and sales productivity.
• Over time hires mission critical employees that are demonstrably more productive than those hired under a conventional hiring processes.
Process In Action
• A mental health hospital with 370 employees suffered from worker turnover that reached 68.7 percent annually. The hospital used resumes and a hiring board to approve candidates. In an effort to reduce hiring and training costs, the hospital measured specific aptitudes, occupational interests and behavioral characteristics of a statistically significant number their top performers. With this benchmark added to their existing hiring practice the hospital reduced turnover by 52 percent reduction the first year, saved more than $300,000 in training and onboarding costs and increased the quality of patient care.
• A leading foodservice and hospitality company employing over 400,000 people worldwide implemented an assessment program in an effort to improve employee satisfaction. With this specific and measurable tool they were able to raise employee satisfaction to 79 percent compared to an industry benchmark of 56 percent.
• The State of Georgia benchmarked their top agents who collected past due child support payments. Agents hired with the benefit of a new hiring profile collected on average $200,000 a year more than employees hired under previous method. The agency has saved Georgia an estimated $100 million since 2001.
If you can't measure it, you can't manage it. Define your hiring process and measure its impact on turnover costs, employee satisfaction, profit per salesperson, market multiple and market capitalization. Continually adjust the process as your data increases and your business needs change. You can grow your enterprise value quickly and remarkably if you make your hiring process an effective competitive advantage.
William Cavalier is President of Lone Star Group, Inc. which helps clients consistently and predictably hire, retain and promote top performers. Go to www.JOBFIT.biz to learn more.
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