Hiring and Keeping the Right People

 By: Rich Kramarik

There are few things in business more important than hiring the right people and keeping the right people. Without the right people, no amount of money can make a company succeed. Recent business trends point out clearly how having lots of money alone cannot create success.

 Many managers feel they have too much work to spend their time interviewing potential employees.  If you have this attitude, you need to realize that there are few things more important to your success than having competent people to support you.  With the wrong people, you cannot do your job well and will find your business or your career is short-lived.  With the right people, you can move ahead and you will have a team that supports your success.

 What can you do to ensure you hire the right people?  First, recognize that you need to understand the demographics of the person you want or need.  This means discovering if there is alignment between the person and the job as it relates to tenure, education, position, job location, industry experience, job difficulty, marital status and many more variables.  This is to say discover if they are a match to your need.

 Second, you need to peel the onion on what your demands are in terms of the person’s fit in the company.  These are things like:

1. Know your expectation of working style.  Are you a hands-on or hands-off manager?  Do you want copies of all the emails your staff sends or do you only want to see the really important ones?  Do you come in early or stay late – do you expect your staff to act the same?

2. Know your expectations of company’s culture.  Do you expect people to work at home, in the evening or on weekends and/or holidays? Do you expect people to dress in suits or is casual OK?  Are people expected to compete with each other, work independently or to work together? 

3. Know your expectations of the job position.  What is the official job description of the position you are hiring? For each skill, duty or requirement listed in the official job description, estimate how much time the person will spend using each one.

4. Know your expectations of the person who will fill the position.  Will the person work closely with others on your team? Are there certain weaknesses on your existing team that you expect a new person to fill?  Do you enjoy different personality types in your staff or do you want everyone to be the same way? 

Fig 1: Hiring and keeping employees requires different focus and strategies before and after the hiring action.

Why New Hires Leave in Less Than 12 Months

 The job of recruiting a new candidate does not just end by signing the offer letter. The real effort actually begins after that. What is today bringing many companies to become aware of this often ignored and overlooked fact is the growing realization that employees quit within the first two-three months of their recruitment, which is often termed as “honeymoon period” in corporate circles. The failure of an employee to stick around can damage the company in many ways. More energy is spent in damage control and motivating the rest of the employees. These three to four months translate into the salary of an employee who has left. With the cost of recruitment on the rise and the cost of replacement even higher, smartly managing employees during their early tenure has become a key retention strategy.

Fig 2:  Employee satisfaction drops sharply after joining the company and then grows steadily if management builds a sense of belonging ⁽¹⁾.

 Some companies have now implemented new retention strategies. They have started looking at managing the first 90-100 days as the most critical period from a long-term retention perspective. They are becoming sensitive to the knowledge that the first few months can make all the difference between an employee who has long-term commitment and the one who could soon explore other options. But even more importantly, this period can be the most critical one in determining the comfort level of these employees with the company, the quality of relationship between both and the time it takes for the new recruit to start becoming productive.

Fig 3:  A new employee’s satisfaction with salary is highly correlated to employee commitment ⁽¹⁾.

 On average, between three to four months salary of the new employee is the cost of hiring. This includes direct costs as attributed to salaries of interviewers, overheads, fees to consultants, subscription to e-jobsites, etc. This is exclusive of productivity, time loss, costs attributed to client interviews, etc.

 After recruitment, the approximate cost involved during the first two-three months is approximately 1.5 months salary of the employee, including direct costs on activities like induction, project orientation, processes, team bonding, personal development plans, skill upgradation, etc. The level of position and skill sets determines this amount, which varies from case to case.

 The first three months are very critical as they determine the employment longevity of employees or their commitment level. It is the time when the individual forms an opinion about the organization in terms of its culture, sense of belonging, difficulty of the work, the work environment, the organization’s truthfulness in describing the position and more.

 The period, therefore, differentiates between the converts and the non-converts, i.e. those who believe in and are optimistic about the strengths and future of the company and those who will soon seek a way out. If the first 90-100 days in the company have been good for the employees, it is likely that they would stay on for longer period. This time is also the most important to acclimatize new recruits and helps them in understanding the organization’s work culture and values. There is a direct co-relation between acclimatizing and productivity.

Fig 4:  A new employee’s satisfaction with working conditions is highly correlated to employee commitment ⁽¹⁾.

 Experts highlight the importance of understanding the significant factors that determine the failure or success of an employee during the first two-three months, in order to design the right programs for them. Some of the top factors determining the failure or success of an employee during the first two-three months include:

• Proper induction

• Role clarity

• Career path

• Compensation

• Handholding at project /department level

• Healthy interface between dependent support departments

• Work culture /healthy environment

• Recreation facility/activities

• Administration/finance related amenities

• Easy life/work conditions affecting indirectly like transportation, residence, etc.

 Another focus area for companies is clear communication regarding responsibilities as well as defining career path for the recruits. The focus is to ensure that the employee has a well-defined role and responsibility, long-term career plan with measures, development plan which clearly details “how” and “when” and match personal aspirations and organizational needs. Employees need to see value adds in the form of career progression, salary, and involvement in the organizational development process areas.

 Another critical factor is to pay as much attention to softer issues like workstation, meals, transportation, general friendliness, as the attention paid to the training and skill set enhancement programs.

 In summary, the success of employee hiring and retention is highly dependent on the clear focus on company needs and environment prior to hiring and the implementation of a focused new hire support system for the first 100 days after the hire.

 Citations:

 ⁽¹⁾ Feinstein, Andrew Hale, “A Study of Relationships Between Job Satisfaction and Organizational Commitment”, Research Paper, University of Nevada

Hiring and Keeping the Right People Case Study

By: Rich Kramarik

We have a couple of stories to share with you this month. 

The first is an accounting firm.  This firm has 8 employees and revenues of three million dollars.  This firm had been experiencing a problem with turn-over.  The CEO was using good interview techniques and involved other members of the firm in the interview process.  In a couple of cases clients were used to interview the candidates.  This firm was using every bit of good judgment and process to screen candidates.  But, yet they experience a high level of turnover.  The reasons were all over the map.  In one case the new hire just was not as productive as expected.   In another case the new hire just didn’t get along with clients.  And, in yet another case the new hire was very argumentative with other employees. 

We worked with this CEO and could not find any substantive changes that we thought would help.  We started looking at how new employees were introduced into the firm and how they were trained and supported.  We found that the nature of the business was the problem.  This firm did contract accounting services and by the nature of the business new hires were out of the office and working in the client offices immediately after hiring on.  Through interviews we discovered that the employees were uncomfortable and felt disconnected as they “got thrown to the wolves.”  We work with the CEO and new support plans and work procedures were implemented.  As new employees came on board, they were assigned a “buddy” who worked with them at the client location half the time.  This helped the new hire get comfortable with both the client and accounting firm.  The “buddy” was also responsible to “train” the new hire in the office for two weeks before the new hire went out to client locations.  This was not dead time, but rather on the job training working on client work but at the accounting firm’s office.  The CEO also implemented one-on-one coaching sessions with new hires that were held on a weekly basis for the first 90 days of employment.  These coaching sessions were to help orient the new hire to the company culture and they were used by the CEO as a safety valve or venting session.  The CEO found these coaching session invaluable in helping both of them to resolve issues before they got out of control and became commitment reducing concerns.  The result of the new approach is that the CEO has not lost a new hire for nine months now.  This is retention that is already longer than the past experiences.

A second situation is an engineering firm with 20 employees and ten million dollars in revenues.  The CEO said he was loosing his employees to competitive firms.  He said he was tired of training new hires and then loosing them.  With the permission of the CEO we interviewed several employees – both new hire and long term employees.  We found some interesting environmental facts that pointed to the problem.  We heard that employee expectations were not being met.  The employees felt that they didn’t have adequate equipment and materials to perform their work.  They also felt that there was disparity from employee to employee in the quality and capabilities of the equipment that the company made available to employees.  We heard that employee assignments were constantly changing and that client demands often were accepted by management and the implications were longer work hours and lost family time.  We heard much more, but this is enough of an example to show the problem.  These items alone point to a poor work environment, but that was not the problem.  These employees said that during the hire interview process the CEO made statements that led the new hires to believe they would have state of the art equipment.  They said that the CEO said they had a culture of working a 40 hour work week.  These employees also said that they had talked to friends who were working in other companies and that the environment was much better. 

The CEO said that demands from clients and fear of loosing business were driving some of his actions.  He also said that poor revenues lately were impacting his ability to spend on equipment.  Our CEO was also surprised to hear that his competitors were providing a better work environment.  We helped this CEO implement some changes that have helped with his attrition problem.  He did some work to script his interview questions and comments about the company.  This helped him avoid his enthusiastic descriptions about the company that tended to overstate the real situation.  We helped him put plans in place to stage the purchase of new equipment.  He was able to schedule work hours in staggered sessions that allowed some sharing of the new equipment.  The biggest change the CEO made was to share more information with the company employees on the business environment and to implement a more open listening style.  This CEO is working hard to change these company culture issues and the results so fare is that he has not lost any employees since he started this new focus.

In summary, our clients are getting our help to get their focus on working “on their business” rather than working “in their business” and when they do – they find excellent results.

Brought to you by:                                                         [BACK]

            Bob De Contreras                                                  
            Rich Kramarik