Are you hiring C+ instead of B+ employees?
invaluable tips in the hiring process
May 2010 by Lou Adler, sourced from www.ere.net
Are you hiring C+ instead of B+ employees?
Editors Note: the points raised by Lou below are invaluable when looking at your hiring processes. Plus, you can immediately improve your strike rate of hiring B+ employees by using our BIR Solutions Profiles Assessment tools, in particular, the Profiles XT. Give us a call to find out more 1300 783 3091300 783 309.
Earlier this year I presented a financial model that demonstrated that on average, hiring a C+ person instead of a B+ person costs a company somewhere between 50 and 100% of the person s annual compensation. This becomes a huge waste of resources if you do this more than once. For example, if you re hiring just one $60,000 C+ person instead of a B+ person, the net loss is $30,000-60,000 per year. If you re hiring 1,000 people and a third of them are ranked C+, collectively they re costing your company $10 million-$20 million in pre-tax profit each year. You don t have to be a financial analyst to suggest that your CFO and CEO might be interested in this level of recruiting and hiring malfeasance, as well as your stockholders, among others.
Now to make matters worse.
At the ERE 2010 Spring Expo in San Diego I contended that we were in for a near-term hiring tsunami of major proportions, forcing companies to hire the C+ in droves. As the recovery accelerates, new hiring needs, an increase in voluntary turnover, and sideliners rejoining the labor pool will start a mad scramble to fill seats with anyone who looks like C+ person, much less a B+. In the national employment report issued on May 7th two-thirds of this tsunami forecast came true. The other third will become apparent in the next few months. It will cost your company even more mega-bucks if you fall into the trap now being set.
Practically speaking, there might not be much you can do about it, since most companies have mistakenly set up their hiring process to only hire C+ level people. In fact, in doing this they ve also set up their processes to prevent the B+ from even entering the building, other than through the back door. Of course, your company was not so na ve. You knew the last few years were aberrations. You knew that anyone could hire above-average talent in a below-average economy, especially when the supply of talent exceeds demand. But things are different now.
Q1, 2010 was a tipping point. The excess of supply of talent will quickly reverse course, and finding enough B+ level people to fill your new jobs will be much more difficult. Worse, replacing a B+ person who voluntarily leaves for something better with someone of equal caliber will be near impossible.
To put some foundation to this over-the-top scenario, let me offer this definition of a B+ person: technically qualified, consistently delivers high quality results, can overcome most obstacles without making excuses, will take on tough projects, can work 24/7 in spurts, can deal effectively with all types of people inside and outside the company and the department, often takes the lead when problems occur, self-motivated, and doesn t need a lot of direction. Add, if the person is a manager, a B+ managers hires only B+ or better. This is a great person. Imagine the cost of losing one, or not hiring one for each position in your company.
Now consider the criteria these B+, or better people use to compare opportunities and select which one to accept. It probably consists of these factors, but feel free to edit the list based on your company s experience and the jobs you actually fill:
Selection Criteria of Top People (B+ and Better)
Now, I d like to prove my contention that most companies are not targeting these people. Instead they target the how the C+ level person looks for another job and selects one over the other. In the process this approach precludes the B+ from consideration. To gain a sense of this, just answer the following questions about your companies hiring and recruiting processes.
While a few companies have effectively resisted the push to confirm to increased bureaucracy, most haven t. They still use some mash-up of ill-conceived hiring ideas designed by the wrong people to hire the most available person, not the best person. The business and financial cost of this misguided process is far greater than the short-term satisfaction of getting a position filled on time, but somehow this impact is hidden from view. Just sum the total compensation of the C+ people in your company to gain a sense of how much this is costing your company every years. Maybe put it on chart and track this to measure your company s overall hiring performance. So whether you want to track the cost of hiring a C+ rather than a B+, or not, it s time to grab hold of your wallet. If you don t, before you know it will be empty.