New Jersey Enterpreneur - Small Business, Entrepreneurs and Venture Capital

How many businesses have a disciplined process for inventory control? How many manage their finances with a repeatable process? How many have documented procedures for safety? Production processes? Service requests? If I asked for a show of hands, almost every business owner would agree they have defined structures and on-going rules for these and other business issues.

Now, how many of you have a disciplined process for hiring employees? Can you describe step-by-step exactly how your selection process works in the same way you talk about inventory control? More than likely very few would raise their hands positively in response to this question.

We commonly say that each employee leaving your company costs you about 150% of salary or more. If you have 100 employees with an average salary of $40,000, then each person who leaves costs $60,000. If your turnover is at the national average (14%), you are losing 14 people a year. Attrition is costing you $840,000 annually. Reducing turnover by just 4% or four people could put $240,000 on your bottom line.

So why aren’t you tracking, measuring and improving your hiring process? Why aren’t you being just as disciplined about who you bring on board as the inventory that comes in and out of your factory? Usually managers think that the hiring process is too “soft” to measure. They’ll tell you that people are mysterious. To punch holes in that logic, here are 12 questions for putting objective measures around your hiring process.

1. Where do your best candidates come from for each position? Use that source over and over once you’ve figured it out.
2. How long does it take you to hire someone? Can you reduce that time?
3. Are you doing background checks to weed out the deadbeats?
4. How about pre-employment testing? This can be used to measure skill, aptitude, motivation and personal fit.
5. What does your job description look like? Your employment application? Do the two match up with each other?
6. Do you use a consistent interview guide? Are each of your interviewers asking the same questions and making judgments on the same criteria? Are you keeping notes about each candidate on the interview guide?
7. Do you do drug testing? Credit checking?
8. What’s your orientation process? Can you figure out a way to help new employees get productive faster?
9. If you do make a hiring mistake, do you address it immediately?
10. Have you provided interview training for your managers?
11. How are your managers treating employees? All kinds of research shows that people don’t leave companies, they leave managers. Are you letting a poor manager get by because it’s tough to do something about it? Are you measuring manager effectiveness? Are people skills one of the most important criteria on which you select or promote managers?
12. Do you provide regular feedback to employees on their progress? How about records or documentation on top performers?

These steps and measures aren’t any more difficult than any other business process. They can be counted, recorded and analyzed. When you start doing this as you do for other business processes, you’ll be surprised at the impact you’ll have on both retention and productivity.

Susan T. Gauff is Founder and CEO of The Growth Solutions Group, a human capital consulting firm based in Princeton, NJ. Ms. Gauff is the developer of Predictive HiringTM, a proprietary process that typically doubles the odds of hiring the right employee the first time, every time. For more information visit www.PredictiveHiring.com or call (609) 577-7370