The Harvard Business School identified the cost of inferior selection of sales representatives, at 3X the rep's annual compensation, including expenses, training, benefits, wages and commissions/bonus. Thus a $60,000 per year salaried/commissioned sales rep hiring mistake actually costs the company more than $300,000. In hiring a sales representative, what is the cost of a poor hiring process?
The costs include, but are not limited to, time from dispatching the job order to hire. For instance, a sales territory is open an extra week, or month, or quarter, the reduced revenue and profits can be calculated according to the following formula:
a simple and true case study highlighting additional hard costs not easily
evident in the equation above.
When Lisa calls the hiring manager with an on-target candidate, he insists they have it handled using internal recruiting efforts. One month later, he calls Lisa and asks about the candidate. Discussing the hiring process, Lisa learns the hiring manager is interviewing eight additional people and five managers from around the country fly into the territory to interview these 8 candidates, plus Lisa's candidate. Five upper level managers fly into a city, stay in hotels and spend a complete day meeting 8 candidates when they only need one. At what cost? Six weeks have gone by. Has the company saved any money?
Based upon the example above he has already lost close to $60,000. If we attempt to equate the cost of one day of management hours of a software company, the equation looks like this:
$150,000 x 5 (managers) = $750,000 ÷ 200 (days) = $3,750.
Plus, what revenue generating activities could be accomplished instead of a complete day in front of 7 or 8 people they will never see again? How frustrated will these managers be by the end of the day?
Plus, the hiring manager has spent 10 hours minimum reading resumes and speaking to candidates over the phone. An additional 5 hours coordinating with the other managers. What activities could the manager have done instead? If I gave you back 2 full working days every 6 weeks, what would the time be worth to you?
Superior human capital practices are not only correlated with financial returns they are, in fact, a leading indicator of increased shareholder value. ...superior HR practices are a key to attraction, retention and to business outcomes themselves! Message: if a company’s goal is to improve shareholder value, a key priority must be to make its approach to human capital efficient and effective. Excerpted from Recruiter.com
And that’s only the dollars and cents of it! Consider the emotional impact of a poor hire on you and the hire, their family & friends, your staff, your customers. And if that’s not enough, all of this negatively impacts productivity and ability to attract the right people the next time.
AND THE CLINCHER IS . . .
This month the calls were all about The Leadership Genius of George
W. Bush. Thanks to all for your comments:
Clearly Bush has to bring in the right people first. People who can be left alone. Or does he? This is the chicken and the egg – how can he bring in people who can be left alone without being able to prove to them that he will leave them alone? Leave ‘Em Alone people are attracted to work where they’ll be left alone. Here’s the unique combination that makes up Bush’s leadership genius again. Bush has a long record of leaving staff alone, he publicizes it, he looks for people who’d be interested in it and he sticks to it.
* Bush Does Bring in the Right People In Chapter 4, you learned exactly how he decides who’d be right for a position, goes out and finds them and gets them to say yes, I want to work with you. So much of his success at this comes from his personal knowledge of and his interactions with the candidates and the people who might recommend candidates. Bush has been made fun of for choosing people he had personal knowledge of from his father’s administration (as though he couldn’t find his own people) and from his own as Governor of Texas (recycling!).
We’re mystified. If you are looking for people who you’re sure have your same core values and are able to be left alone doesn’t it follow, logically, that you’d feel the most confident with people who you, or someone you knew had worked with? Past staff, staff of other leaders whom you trust – this sounds like an internship for Bush’s administration. Of course he’s brought in people who weren’t his past staff or staff of a leader he knows well. But there aren’t many, and he follows his formula – research, personality fit, persuasion – rigorously.
* Bush Gives It to ‘Em Straight About How It’s Going to Work Bush tells staff, “My job is to set the agenda and time and frame work. To lay out the principles by which we operate and then delegate as much of the process to you as possible. The final decision often rests with me but your judgment has a big influence.”
He didn’t just do this one day and think, Cool, this works, and then expect staff to know. He had to tell them. He told them all the things they’d need to know about how his Leave ‘Em Alone system works. Because he’s a straight-talker, staff receive the information in a clear, concise and therefore understandable way.
He also tells them, “I rely heavily on you. I trust you to bring me quality information and advice and I’ll act decisively after weighing the options you present.”
And he tells them, “I’m not going to make decisions in your area of expertise but I am going to hold you accountable for your decisions.”
And he tells them, “You worry about doing your job. I’ll take care of the politics.” Then Bush stands up to the critics when they complain about something his staff do. And he tells them, “Always return each other’s phone calls first. It’ll foster good communication and make sure you seek each other’s advice and guidance.” Did it work? Bush says that many of his staff have told him that it set the tone and was key to the team approach they developed.
People believe him when he tells them about Leave ‘Em Alone during the recruiting process. They believe him when he tells them how it’s going to work. Why?
The Millon Inventory of Diagnostic Criteria (MIDC) showed “Gov. George W. Bush’s main leadership strengths were the important political skills of charisma and interpersonality, which will enable him to connect with people and retain a following.”
In job after job, Bush’s “hands-off” leadership system builds confidence and trust among his staff. They see it as he lives it.
Excerpted with permission from
The Leadership Genius of George W. Bush, Chapter 5,
courtesy of Bruce Tulgan, founder of RainmakerThinking, Inc.
Untraditional libraries are cropping up all over:
* The Library Hotel in New York City is a book lover’s fantasy: Guests can choose form 6,000 volumes. The hotel’s 60 rooms are decorated with books by topic, from the arts to religion, science and history. Ted Koppel stayed in the Journalism room. And one-time guest Neil Armstrong? Astronomy, of course.
* Cracker Barrel eateries offer audio books at 400 locations in 38 states, for a small fee. Just return them at another Cracker Barrel on your road trip.
* You get highlighted and enlightened at the Ultimate Image Hair Salon and Free Lending Library in Lancaster, PA. Hundreds of books were donated by clients and staff.
* BookCrossing, a free Web-based book club (bookcrossing.com), aims to make the planet a lending library. Members leave registered books in public places to be picked up, read and then left again. Readers share comments and track books online.
* Country Inns & Suites lend books that guests return on their next visit to the 295-hotel chain.
Excerpted from USA WEEKEND, Jan.30-Feb. 2, 2003 issue
Performance appraisals are one of the least liked and most dreaded responsibilities that any manager has to endure.
They're worse than terminations. After you fire someone, they're gone; but after a performance review, they're still around. Staring at you. Resenting you. Challenging you and sometimes even subverting your ability to manage the group
Ronald M. Katz is of a different opinion. He believes that performance management can be an enjoyable and rewarding process. Yes, enjoyable. He'll even go so far as to say that he thinks performance management can be as enjoyable as the Thanksgiving Day Parade. Keep that thought in mind as he describes a six-step approach (use the acronym PARADE to remember it) that can alleviate much of the worry and dread associated with performance management:
Think of setting objectives as a road map with a set of directions. The road map is your organization, and the directions lead employees to their goal. If people don't know where they're going, how can we ever expect them to get there? How will they know when they've arrived? It's also critical to get employees' input on their own objectives if we want to increase their commitment to achieving those goals. If people feel that they have a voice in their assignments, they will frequently work harder toward the success of those assignments.
Assessment & Feedback Ongoing
If the performance review is the only time that managers talk with staff about how they're doing, and especially if employees feel that this one meeting has tremendous impact on their salary increases, the meeting takes on enormous proportions. Most employees, when questioned as to what the once-a-year review reminded them of, responded, "A trip to the principal's office." When asked what they want out of the performance review meeting, both managers and staff most often respond: "No surprises." They don't want to have it sprung on them at the last minute, when they no longer have the opportunity to do anything about it. They want to be treated with respect and as partners throughout the performance cycle.
Then sit down and write the first draft of the performance review. Some organizations offer the employee the opportunity to create a first draft as well. Then the manager and the employee sit down to review the employee's progress.
Deliver it clearly
This advice on clarity goes for both good news and bad! When it comes to good news, some managers avoid it because they're afraid to tell an employee she has done a good job. "What if I have to fire her someday?" they ask. If you have to fire that employee someday, you will have a good reason why. You'll be able to explain it to the employee because you will have developed the necessary communication skills.
More often, managers feel a need to hide the bad news. They're afraid to hurt the employee's feelings, they fear an argument, or they just don't like to talk about someone's shortcomings. Many managers feel that if the employee hasn't done as well as expected, this is a poor reflection on the manager. If someone's performance has been subpar, managers owe it to the employee, the organization, and themselves to inform the employee.
By glossing over employees' performance deficits to spare their feelings, managers are actually exposing the company and themselves to great liability. If managers have been doing the assessment and feedback throughout the year, there is little likelihood that there will be any confrontation at the review meeting. Tell people straight out what they've done well and where they need to improve. They'll respect you for it, and your credibility and standing as a manager will rise because of it.
Send him off to complete the development plan that he’ll follow in order to meet the objectives.
Set up a separate meeting at which you will discuss his development plan. This is a terrific way to let the employee know that you support him and are willing to invest your time and the organization's training dollars in his growth in the company. The performance management process is actually the organization's best retention tool. Too often, when employees get a less-than-stellar appraisal, they take it as an indication that this is the beginning of the end. This is the first step on that dreaded "Documentation Trail" that can only lead to the door. Let them know that you believe in them and their ability to improve. Your willingness to work with and invest in them is a wonderful turnaround tool to effect an attitude adjustment.
Adapted from an article by Ronald M. Katz at workforce.com
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