I consider myself very philosophical. But I do not like the proverbial chicken and egg question. And I get asked this a lot: What do you think comes first? A great company to work for or great people who work there? To me it’s just an exercise in futility because, at the end of the day, one doesn’t exist without the other. That is, without good people, it’s extremely difficult for an organization to be great. And vice versa. In 2009, employee turnover cost U.S. businesses an estimated $300 billion. The staggering cost of employee turnover can be viewed as simply the cost of doing business, however, additional damage occurs when turnover is compounded by poor hiring and management practices. (The Real Cost of a Bad Hire, TEK Systems)
Finding Great People
But that means you have to be deliberate and thoughtful in your hiring practices. It’s tempting to make rash hiring decisions because you simply “need a body.” But that wrong body in the wrong job can end up costing your company more in the long run. With today’s economy and operating costs, companies simply can’t afford to hire “bad eggs.”
The scarcest commodity in business is not customers or technology capital — its people. And the greatest challenge for recruiters and leaders isn’t just hiring people — it’s hiring the right people for the right jobs. When people operate in their “sweet spot,” they lead, naturally. You don’t have to tell them to lead. You don’t have to ask them to lead. They just do it. (Developing Great Leaders for Great Companies, Steve Olson, Generative Consulting)
- The cost of covering the position while vacant
- The cost of finding a replacement. In fact,
- The cost of getting a new person up to speed
And did you know:
- Replacement of an employee can range from two to seven times his / her salary
- Hiring and training costs can vary from 25 to 200% of annual compensation
- The more an employee earns, the more money it costs to replace him / her
(The Real Cost of a Bad Hire, TEK Systems)
Thanks to a survey published by Careerbuilder.com and illustrated by Mindflash’s infographic, “The Staggering Cost of Bad Hires“, we learn just how much bad hires cost companies, and what you can do to avoid them.
- Conduct great interviews
- Always check references
- Give your employee a great first day on the job
To this list I would also add:
- Be methodical. It’s better and more cost effective to take a longer time to find the right employee with the right skills rather than hiring the wrong employee / replacing a bad one.
- Culture fit. Ensure the person’s personality and work style fit within the company culture.
- Consider the EVP. The Employee Value Proposition. Ask yourself what makes someone successful at your company? What makes someone unsuccessful?
People are ‘not’ the most important thing…The ‘right’ people are. In fact, the ‘wrong’ people are your biggest liability.
Operating as a Great Company
Some people might argue that the greatness of a company is based on the greatness of its leaders. I don’t disagree. But great leaders must come from somewhere: great leaders are not born; great leaders are made. And any company looking for great leaders should look first at their own internal talent pool.
Operating as a great company means developing great leaders by lining up employees to their “sweet spot.” Putting them in positions that takes advantage of what they’re good at, what they like doing, and for which they have a genuine passion.
Laurie Bassi, Ph.D. co-authored a study showing a link between investments in training and company success. Her research demonstrated that companies that spend more on training on perform better financially than do those companies that spend less.
Her publication, Maximizing Your Return on People, identifies 23 HCM practices that fall within five broad HCM driver categories:
- Leadership practices
- Employee engagement
- Knowledge accessibility
- Workforce optimization
- Learning capacity
In general, improvements or declines in organizational performance can be tied directly to improvements or declines in HCM practices. It also includes a great self-assessment survey for estimating your organization’s HCM effectiveness.