Sunday, July 12, 2015

Why Companies Hire Poorly

A company should limit its growth based on its ability to attract enough of the right people.” – Jim Collins
When a company is buying an expensive piece of equipment, there is often a detailed process to justify the expenditure, study the alternatives, and gain approval.  Leaders throughout the organization are often aware of, or even involved in the process to assure it is done well and that the investment pays off for the company. 
Given the importance of the decision, this makes perfect sense.  What is baffling, though, is why so many organizations don’t place the same level of importance on hiring a new employee as they do on buying a new machine.  Although the amount of damage a poor hire can do on the organization is significant, the decision is often made quickly by a relatively small group of people.
Along with promoting and developing leaders, hiring is one of an organization’s most critical processes.  And as long as a company fails to recognize the importance of hiring, the chance of successfully driving and sustaining a culture of improvement is relatively small.
In my experience, there are four main reasons for poor hiring practices, and those organizations that tend to hire poorly often exhibit all four of them.
  1. Don’t Know How: Many organizations just don’t understand how to find and screen candidates effectively to assure they fit into the company’s culture.  Just like the work done on the shop floor, screening and interviewing are processes that need to be standardized and continually improved to achieve consistent results.  Without a standardized process – and associated training – there is no way to assure that people throughout the company are using the same approach or that improvements are in hiring are sustained.
  2. Don’t Realize it’s a Problem: Companies that do not track employee turnover most likely do not consider it important.  When continually reducing turnover is not considered important, employee satisfaction tends to be low and the associated costs tend to be high.  Besides the costs of rehiring and retraining new employees, there are significant losses resulting from low morale and the loss of knowledge when people leave.
  3. Hire When it’s Too Late: There is an understanding in most organizations that bringing on a new employee is costly.  Because of this, the search begins long after the need arises.  When a team cannot keep up with its workload, there is often panic to bring in someone immediately to get the work back under control.  This panic can lead to cutting corners, hiring quickly, and unfortunately, bringing in the wrong person.
  4. It’s Easy to Fire People: I have always felt that, if it was difficult to fire people, companies would take much more time to justify the need to hire a new employee and, when it was deemed necessary, would assure that the right person was ultimately hired.  In the machine example at the start of this post, companies tend to take more time to procure capital equipment because, once they make the purchase, they are stuck with it for many years.  If we approached hiring in the same way, the process would be taken more seriously and, most likely, produce much better results
Successfully achieving and sustaining performance improvements cannot happen without the heavy engagement of the people in the organization.  And there is little chance that people will become and remain engaged unless they feel respected.  Making sure that the hiring process results in bringing in a person who has the right skills and fits with the company’s culture and values demonstrates respect for existing employees as well as the person being hired.

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