How Much Money is Your Company Losing Every Day<br>Due to Bad Hiring Decisions?

If you have a turn-over rate of 20% or more, you are losing thousands, even millions of dollars every year. Most employers are not aware how much it costs every time an employee leaves or is let go. This is because these losses, in terms of dollars, are difficult to quantify. But the truth is, bad hiring decisions equalsí high turn-over, and high turn-over equals reduced productivity, and reduced productivity equals reduced profits. Itís that simple.

In addition, any company that experiences this constant turn-over is also losing money because of low moral. Employees are acutely sensitive to issues of instability, and when there is turn-over, there is concern amongst employees about the stability of their own jobs. This perception, even if it is not true, breeds low moral. And, do you know what low moral breeds? Reduced productivity! Itís a vicious cycle.

When employees are unhappy, concerned about, or unfulfilled in their jobs, they will usually do just enough to stay out of trouble and under the radar, which means you are not getting a high level of performance out of your people.

I have been an executive recruiter for over 20 years, and as you well know, industries at times can be volatile in terms of job stability. There are ups and downs and sometimes lay-offs are unavoidable. But, from my experience, a good percentage of lay-offs can be avoided with a little more forward planning.

Over the last 20 plus years I have come to understand some of the secrets behind why good hiring decisions are hard to make.

First of all, every day thousands of employees receive promotions into management positions for the first time. The majority of these new managers have little or no experience managing and motivating employees, much less handling the sensitive issues that can arise during the hiring and firing process. Even the majority of experienced managers have never had formal training or been given established staffing guidelines. This responsibility becomes a new part of a managerís job description. Managers are just expected to magically know what to do.

In addition, most companies are not pro-active in their recruiting practices. They are re-active, usually functioning in panic mode trying to fill surprise openings. Unfortunately, the same entrepreneurial spirit that has made many business owners rich and successful, hasnít always served them well when it comes to having systems in place to make good hiring decisions.

Having been privy to much of what goes on behind closed doors, one secret I have discovered is when a hiring manager makes a decision to hire someone, they are making that decision based upon discrimination. Yes, I said discrimination. What I mean by this is because all of us, as human beings, come from different experiences and backgrounds, we make decisions based upon those, often subconscious, life experiences. We tend to hire people that we feel comfortable with or feel we have something in common with. Because of this, most hiring decisions are made on a subconscious, emotional level. Just because you connect with a candidate who reminds you of your beloved Uncle Frank, is this the best person for the job? Maybe, or maybe not. Obviously, you need to know much more about this person before you can reach a solid hiring decision. But, the truth is, people get hired every day for this reason alone.

So, how do you go about making better hiring decisions? There are actually some very easy solutions that donít take a tremendous amount of time or money, but it does take an open mind and willingness to approach the interview process in a new way.

First of all, you need to identify what personal experiences and hidden agendas, (which are subconscious desires and needs), motivate your hiring decisions. What do you like and dislike about people? What qualities do you admire in others? If you take the time to make a clear assessment of what turns you on and what doesnít, you will uncover some of your hiring patterns. These patterns may be dictating your decisions, good and bad.

If you understand that you tend to have a prejudice against people who are overweight, or have a tendency to overlook older job applicants, you can make the conscience decision not to screen these applicants out. You just might find an incredibly talented employee that you may have otherwise screened out early in the process.

Some managers, because of their hidden agendas, are ill equipped to hire or manage anyone. One example is manager who is afraid to hire good people out of insecurity. They are afraid an employee might out shine them in some way. Interestingly, these are the managers who project the biggest egos! So, my point is, not every manager can make good hiring decisions, unless they change their entire personality, and we know that isnít going to happen. Hopefully, you can identify these people in your organization and assign them to a job that does not entail hiring and managing people.

The most critical information you need to know, but is often overlooked during the interview, is who the candidate is. Most of the time the emphasis is put on what the candidate can do in terms of qualifications, not what the candidate thinks and believes, and, most importantly, what motivates them.

I have always found the differences between people fascinating. Who you are and what you are about is the most interesting thing you can share with others. If you can learn who someone is, you will be able to understand their interests, desires, needs and motivation for doing what they do and how they do it. If you know who someone is, you will have a powerful tool that will give you the insight to make better hiring decisions. It will also make you a better, more compassionate manager once your new hire is on board.

When conducting a search for a client, my standard practice is to ask for a formal written job description so I will have the specifications and professional qualifications for the position, but it is only a small part of what I really need to know. The only way I can identify the type of person a client really wants to hire is to ask for the information off the record. The key here is to know who, not what the client wants to hire.

Many employers who have a constant turn-over in their organization often believe it is just the price of doing business, and in all honesty, a number of these employers donít really care if there is turnover. They are not concerned about their hiring practices or how well their employees are being treated. They are more focused on making money than motivating and keeping their employees. But, I believe if these same employers realized how expensive bad hiring decisions can be, they would start acting as if they cared; especially if they knew good hiring practices could increase profits and put more money in their pockets.

Byline:
Suzanne L. Rey has been an executive search, and Training and Development Consultant for the California building industry over twenty years. Her company The Rey Edwards Group, Inc. has consulted for the Real Estate Development and Home Building industries since 1982. She is author of a new book based upon her years as an executive recruiter, ìSecrets from a Body Broker ñ A Revealing, No-Nonsense Handbook for Hiring Managers, Recruiters and Job Seekersî.