Are you always trying to hire top performers?
My guess is that you would enthusiastically say "yes!"
But, in reality...and I mean be honest with yourself...what
percentage of new hires actually turn out be top
performers? I'll bet it's a lot less than you were shooting
for.
There are a lot of reasons why this happens, and for those
of you who know me and read my blogs and articles, you know
that I am a strong believer in using pre-hire assessments
to know you are "really" hiring.
But, in this article, I am going to focus on how much it
costs you when you hire average performers versus top
performers. You will be blown away when you see this.
My hope is that it wakes you up and you say, "I've got to
make sure I really do hire top performers...not just talk
the talk."
OK, here we go...
A study (1) was done some time ago that resulted in a model
that employers can use to calculate just how much it costs
when you have less than top performers.
For example, if you are looking at your management and
professional workers, the study found that top performers
produced 48% more than average workers! That means if the
average salary of a manager or professional employee is
$60,000, it's costing you 48%, or $28,000 a year, by hiring
an average worker instead of a top performer! Let's say you
are a small company with only 10 people at this level-that
mean the potential exposure to your bottom line could be up
to $280,000 per year if you only have average employees!
That could have a devastating effect on your ability to
stay in business long term.
It gets even worse if some of your employees at this level
are less-than-average-performers (non-producers). They
produce 96% less than your top employees! For each of
these, your cost using the same average salary above would
be a whopping $57,600!
What about your skilled workers?
Well, for skilled workers, the study found that the top
performer is 32% more productive than the average performer
and 64% more productive than the non-producer!
And, if you have unskilled or semi-skilled workers, the top
performers outperformed the average worker by 19% and the
non-performer by 38%!
The following summarizes these numbers:
**Management / Professional Workers**
'Average' workers output = 48% more than 'Non-producers'
'Superior' workers output = 48% more than 'Average'
'Superior' workers output = 96% more than 'Non-producers'
**Skilled Workers**
'Average' workers output = 32% more than 'Non-producers'
'Superior' workers output = 32% more than 'Average'
'Superior' workers output = 64% more than 'Non-producers'
**Unskilled / Semi-Unskilled / Semi-skilled Workers**
'Average' workers output = 19% more than 'Non-producers'
'Superior' workers output = 19% more than 'Average'
'Superior' workers output = 38% more than 'Non-producers'
Let's look at an example of how this plays out for a small
company with:
* 50 Unskilled / Semi-skilled workers with an average
annual wage of $20,000
* 25 Skilled Workers with an average annual wage of $40,000
* 10 Managers with an average annual wage of $60,000
The cost of having 'Average' versus 'Superior' performers
using the assumptions about their average salary would look
like the following:
Unskilled -- ($20,000 x 19%) x 50 = $190,000
Skilled -- ($40,000 x 32%) x 25 = $320,000
Management -- ($60,000 x 48%) x 10 = $288,000
Total Potential Exposure = $190,000 + $320,000 + $288,000 =
$798,000 or 31% of the total payroll!
What these numbers tell you is that unless you are hiring
top performers, you are pouring money down the drain. No
matter if your company is large or small, the potential
impact to your bottom line can be huge. It's even larger if
some of your employees are 'non-producers'.
Every time you replace an average performer with a top
performer, you have a positive, measurable financial impact
on your bottom line. Your challenge is to make every effort
you can, whether it's hiring, promoting, or developing
people, to focus on choosing top performers.
So, what can you do today to help you assure you
dramatically improve the odds of hiring top performers?
Hire or promote people who fit the job and the company.
What does this mean? I'm talking about using assessment
tools to help you determine just how closely a candidate
comes to meeting the profile of your top performers already
on the job. I'm not just talking about their skills,
education, prior work history and the other pieces on their
resume...I'm talking about their fit with the job and with
the company based on the following:
* their learning style, which is tied to their cognitive
abilities
* their core behavioral traits (this is different from what
they say about their personality using tools like DISC and
Myers-Briggs--which should never be used for hiring because
they have never been validated for predicting success in
the job)
* their occupational interests.
Using this information along with reference checks and
background checks will dramatically improve your chances of
hiring top producers who fit your company's culture and the
job--really important for productivity and retention.
In fact studies have shown that without doing these things,
you only have a 15% chance of hiring the right person
versus at least a 75% chance if you use these tools.
After all employees who are top producers and who enjoy the
company, their fellow workers, and their job will find it
hard to think about leaving.
If you are going to use assessment tools, make sure the
tools you select are continuously being tested for their
validity and reliability in predicting success on the job.
This is critical! Even the Department of Labor says so!
Follow this method in your hiring and promoting process and
you will prevent losing real dollars. The increase in
productivity per employee and the reduction in expenses due
to costly turnovers will result in a stronger and stronger
bottom line over time.
(1) Source: "The validity and utility of selection methods
in personnel psychology: Practical and theoretical
implications of 85 years of research findings"
Psychological Bulletin, Sept 1998, Vol. 124, No. 2, pp
262-274.
----------------------------------------------------
Mike is an internationally recognized expert at helping
employers meet their business objectives by teaching them
how to get the right people into the right seat on their
bus. Employers face continuing challenges in hiring,
developing and retaining their best employees. Mike guides
his clients through this maze. To experience how this is
done, sign up for a free job analysis survey for one of
your open positions at http://www.eSessements.com .
No comments:
Post a Comment