Turnover and Lost Productivity: Links to Weak Hiring Practices

Question: What are some common symptoms of bad hiring and promotion practices? Answer: Turnover, low productivity, and high training expense. It is really common sense. Suppose you offered competitive jobs, competitive wages, and competitive benefits. Why would an employee who was fully qualified, highly motivated, and well managed under-perform or quit? They wouldn’t, right? Well, then why do employees turn over, under-perform or fail training? Could it be because they don’t have the right skills? Because they’re poorly motivated? Badly managed? This is not rocket science. Poor hiring practices always show up on the job. In fact, most people readily admit their hiring manager had no clear idea whether they could do the job or not when they were hired. Think about that: when pressed, most employees readily admit their hiring manager had no idea whether they could do the job before they were hired! So much for interview accuracy. Diagnosing Performance For a moment, let’s assume the employee’s manager is 1) smarter than a bowl of creamed corn, and 2) does everything he or she can to help the employee excel (yes, I know that’s a stretch, but give me a break here). We just want to look at employee performance. There are three phases to being employed: learning the job, performing the job, and finding satisfaction in the work. Of course, all three phases have some overlap, but let’s tease them apart for purposes of discussion. Learning the Job Learning the job usually makes heavy demands on a person’s cognitive ability. Not only is an employee expected to learn new information, he or she is expected to make job contributions. Information arrives fast and furious. It takes brainpower to process all this information. For example, one client of mine was experiencing a 20% technical training pass rate (even though applicants passed interviews and background checks and graduated from technical training courses). This was a clear sign that mental ability (MA) was not being measured in the hiring phase. When we added an MA test and balanced adverse impact against test scores, pass rates increased to 80%. We could have set the pass-point higher, but 80% met their planning goals and kept the applicant pool open. Don’t Burden Me with Facts Have you ever hired promising salespeople who (after being hired) brushed off the need to learn the product? They don’t seem dull, but these folks just cannot seem to understand that “selling” involves more than talking. I don’t know about you, but I expect a salesperson to help solve my problems, not dump a load of nonsense on my doorstep and leave. This kind of salesperson’s credibility vanishes like beer at a ballpark when prospects fire tough questions. It is a situation where both motivation and mental ability needs evaluation pre-hire. Finally, consider this. A large company that specializes in finding in your yard hidden gas pipes, electrical lines, cable, and so forth, has a 50% technical training failure rate. It costs them about $3,000,000 annually in hard cash. We tracked the problem to mental ability and motivation. The field was clamoring for help, but the VP of HR was immobilized with terror about using anything other than the “tried and true” interview. The problem went unresolved. Any reasonable person might wonder: 1) what kind of company has so much money they can blow $3 million each year? and 2) why was the HR manager not booted? Knowing What to Expect How many organizations talk fast, “sell” the job, and hire candidates before anyone changes his or her mind? What if the candidate does not like the nature of the work? The recruiter might be happy he or she made hiring quota, the hiring manager might check off another item on the to-do list, but the new employee will probably quit as soon as a better offer comes along. It doesn’t take a rocket scientist to predict that people who love their work almost always produce more than people who don’t. Anticipating job dissatisfaction requires showing the candidate a realistic job preview of the job. If a hiring organization says, “We can’t tell them that. They’ll never take the job!” then they had better pay premium wages, because unless they are the only employer in town, unhappy people tend to quit! Doing the Job I am amazed whenever I hear someone tell me their company does not use simulations. “Hmmm,” I think. “Does that mean you have no idea before you hire them whether salespeople can persuade, whether ‘service’ people can provide service, or whether managers can coach?” Applicants for any job with a major interpersonal component need to be evaluated for these. If managers tend to fail because they cannot coach subordinates (and they do, I can assure you), then why don’t organizations put applicants through simulations that evaluate coaching? The same can be said for selling and servicing. Fifteen years of observing managers, salespeople and customer service people participate in simulations has shown me:

  • Managers often destroy subordinate morale because they are either autocratic or “wimpy” (a technical term for refusing to confront a problem).
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  • Salespeople consistently blow sales because they won’t take the time to develop trust or ask questions.
  • Customer service people consistently lose customers because they do not empathize with problems and are inconsiderate.

You tell me. What better way can interpersonal behaviors be evaluated if not by watching? Hopefully, your average employee is more intelligent than the philodendron in the foyer. However, if they (the employees) routinely make mistakes, make bad decisions, or hold long conversations with the office foliage, you should seriously consider evaluating mental ability pre-hire. Being smart enough to do the job is still the number one strongest predictor of job performance (up to a point: being too smart is not a good thing either). Leaving the Job: Other Factors Good managers in any organization have a few things in common: they treat subordinates in a friendly manner, clarify goals, give consistent feedback, are positive, develop and support subordinates, are trustworthy, empathize with subordinate feelings, are smart enough for the job, and are good planners. Are managers regularly selected for these criteria? No. They are selected because they were either good producers, held a managerial job at another company, or played a mean game of golf with the top brass (who were also selected using the same “rigorous” criteria). The last major factor affecting employee turnover and performance can be tracked to weak management hiring practices; that is, allowing “Horrible Howie,” poster boy for “The League of Incompetent Managers,” to systematically destroy employee morale. Bad managers are a collective train wreck. Legions of Horrible Howies destroy morale by being deceitful, not backing employees, looking out for themselves, acting inconsistently, treating subordinates like lackeys, or engaging in any number of de-motivating activities that confuse or discourage subordinates. By definition, if an organization relies solely on interviews and unvalidated hiring tools to hire employees, they tend to hire weak employees. Why? Because too many marginally qualified people get through the pre-employment screen. Rest assured, poor performance can only be weeded out in two places: before hiring or on the job. Which do you think is cheaper and more professional?

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10 Comments on “Turnover and Lost Productivity: Links to Weak Hiring Practices

  1. Dr. Williams, I certainly agree with everything in your article. There’s no doubt that poor hiring can kill a company. The problem is, everyone knows this. Everyone knows that Hiring Managers are notoriously poor interviewers and personnel managers.

    I enjoyed the article but was left frustrated because I was certain you were going to share how you had actually gone about implementing your solutions and solved this issue in one of your previous positions. Perhaps this is as much as you can share without consulting fees, but I was hoping for some practical examples of how a company (specifically an H/R dept) went about taking a very poor process with very poor hiring managers and made a complete turnaround.

    I know we have a poor process and many many poor hiring/decision makers but I’m also overwhelmed by the enormity of the thought of taking on such a project. Not afraid, but just really not sure where to start.

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  2. That is the problem with articles like these, Mike. It is like watching an operation and asking the Doctor how to do it. When I take on a project like this, here is what I do:

    1) First, I classify all jobs into a smaller number of job families (usually 10-12). A job family is a group of jobs requiring similar competencies. That takes about a day. When possible, I combine jobs to gain economies of scale.

    2) Then, I start working on the critical jobs by interviewing jobholders and managers. Since these folks use their own job-language, I have to translate their job details into competencies that I know can be measured. Depending on the legal exposure and political buy-in, I confirm everything with questionnaires. This takes 3 to 6 days for 1-3 jobs.

    3) Next, I review the final competency lists with top managers and decide among the myriad of hiring tests and tools, which ones will most accurately measure each competency. These could range from visio-spatial tests to abstract verbal ability to simulated customer interactions. This can take 1-2 days.

    4) Depending on the nature of the tests, I confirm their validity using either content or criterion, predictive or concurrent designs, or transportability. If I use behavioral interviewing, I put together questions and possible answers. This takes 5 to 10 days depending on the number of positions and types of validity required.

    5) Then, I train clients how to use the system in a highly intensive workshop that varies in time depending on the number of exercises and ability of the participants. This takes 5 to 7 days to prepare and deliver. Not everyone passes.

    6) I write up a report of what I did. This takes 3-5 days.

    So what do you get for all this?
    1) A standardized competency list for major positions that can be used for managing performance, training, appraisals, and hiring.
    2) A list that only needs to be updated as jobs change –usually every three to five years
    3) A comprehensive hiring system that ensures fairness to each applicant while assuring the organization the highest percentage of job-qualified empployees (usually the top ’25- percenters’).
    4) A visible reduction in turnover
    5) A visible increase in productivity
    6) A visible reduction in training expense
    4) A highly face-valid hiring system that impresses applicants with its comprehensiveness.
    5) A reduction in the number of jobs reqs from hundreds to a dozen or so.

    Now, the final question. Can I tell you how to do this? Let me say learning how to do this only took me 12 years, earning a Ph.D., practicing with other skilled consultants on dozens of different positions and organizations,some heavy duty research into the pros and cons of hundreds of legitimate tests, and two courses in statistics… believe me, it is a lot easier to work with a qualified consultant.

    PS. I can send a sample report if anyone is interested.

    Wendell

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  3. I believe this article will of interest to you. It is a best practice example of how audi changed it’s hirng process. I am a former employee of the Gallup Organization. This article talks about the psychological aspects of hiring and not so much the technical

    How to Hire the Cr?me de la Cr?me
    Hint: Profile your top performers
    by Stefani Lako Baldwin

    The room is roasting. The salmon order never arrived. That smell means something in the pan is burning. Before the night is through you will have sweated, altered the menu, and instructed employees. You may not have a show on the Food Network or a cookbook at Barnes & Noble, but according to The Gallup Organization, you have the talents that separate a great chef from a good one.

    The best chefs are, at their core, generals. The kitchen is a battlefield: It is about command, following orders to the letter, while simultaneously showing flexibility. The chef commands even while teaching; he is creative even while engaging in repetitive motions.

    The great chef choreographs this martial ballet with intrinsic skill. You can teach anyone how to make a souffl?, but getting that souffl? right every night, on time, and selling enough of them requires talent — which raises the issue of how you hire people with that talent. Although some traits of great chefs are job-specific, many of Gallup’s findings provide insight into hiring creative people for any type of workplace.

    IN CREATIVE OCCUPATIONS, THE RECIPE FOR GREATNESS GOES BEYOND RAW TALENT.

    For all businesses, a bad hire is bad for the bottom line. Yet bringing great employees into the corporate fold tends to be more about luck than good hiring skills. This was certainly true for a multinational corporation with restaurants of various sizes that sought a systematic way of hiring the best chefs for its restaurants. Enter Gallup and the selection profile: a way to find the talents inherent to all great employees. Jan Miller, senior managing consultant and selection practice leader at The Gallup Organization, says companies typically know which employees are their great ones but want to learn how to hire more of them. In creating a selection profile, Gallup builds a model of the strengths and talents of a company’s best performers.

    While many organizations engage in pre-employment testing, Gallup researchers study a firm’s best performers and determine what separates the great employee from the average one. The characteristics of that separation become a Gallup selection profile.

    To determine the attributes of a great chef, Gallup conducted focus groups made up of the client’s best employees. Gallup asked these outstanding chefs to talk about their work and backgrounds. Then, from their responses, Gallup compiled a list of traits and themes that were common among this group, and developed questions to ask a larger group of chefs. This larger group consisted of chefs at various levels of performance. Rather than asking the questions in a focus group, Gallup asked each chef individually to answer a series of questions in a person-to-person interview.

    To boil this information into a profile, Gallup researchers used answers given most frequently by the best chefs to denote what common threads are found among this group. Ultimately, Gallup ended up with its Chef Theme Definitions, a list of attributes an employer should look for when hiring chefs.

    Great chefs, for example, have a deep and enduring passion for food. Anthony Bourdain delectably described eating his first oyster in his best-selling book, Kitchen Confidential, like this: ‘Now, this was a truly significant event. I remember it like I remember losing my virginity — and in many ways, more fondly.’

    When asked to name the three most important skills in the kitchen, Christopher Schlesinger, chef-owner of East Coast Grill in Cambridge, Mass. and author of four cookbooks, including License to Grill, rattles off three Gallup findings: teamwork, communication and sense of urgency.

    Gallup also found out that truly great chefs don’t simply order their kitchen staff around — they also teach their art to others. Great chefs are adept at juggling so many varied tasks in a shift that failing to teach the other cooks how to maintain quality will ultimately hurt a restaurant’s bottom line, says Nancy Jessup, executive chef at Mangia, a corporate caterer and specialty foods store in New York City.

    But what truly distinguishes a great chef from a good one — and great creative individuals from merely good ones — has nothing to do with food and everything to do with numbers: Great chefs understand that the restaurant business is about money, Gallup determined.

    Indeed, the great-chef selection profile shows that for any creative position an organization needs to fill, talent must be combined with good business sense. Adds Gallup profiler Miller: ‘What stood out for me was the business nature. Great chefs have the ability to make money with their food.’

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  4. Hello, Jeremy…I appreciate Gallup’s information, but it glosses-over some very important facts. Worse, it may lead people to the conclusion there is a simple answer to the hiring problem. Let’s take a sports analogy, for example.

    A GREAT player has talents and skills to play the game at an great level. EXCEPTIONAL players have the talents and skills to play the game at a great level, PLUS they have attitudes, interests and motivations (AIMs) that sets them apart from other great players.

    In other words, you cannot become an exceptional chef if you first cannot make great food. Everything else builds on that fact. Nothing else (great teamwork, great leadership, great financial savvy, and so forth) will offset food that tastes like fine doggy cuisine.

    The problem in most organizations is their inability to evaluate whether a chef or player is great or not. Most applicants want us to take their word for it in an interview. Too much error and mis-information there.

    If you want to evaluate a chef, you have to taste the food; if you want to evaluate a player, you have to watch them play; and, if you want to evaluate an employee, you have to determine if they are smart enough, can plan and organize work, have effective interpersonal skills, and have AIMs that will drive them to excellence.

    Until people are measured, evaluated and selected based on these factors,nothing else makes any difference.

    Wendell

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  5. When the discussion turns to selection and pre-employment screening, I always ping in to both strongly agree with Dr. Williams that scientific selection and following the Uniform Guidelines can and should be done, and also to strongly disagree with him that a great player can be foretold by watching them play, or that greatness in employee performance is always or even often a matter of selection at all.

    As usual, (since it?s the most recent example) I give you the 2003 Dallas Cowboys. Under coach Campo, a bunch of also-rans. Same group of guys, pretty much the same competition if not better, and under Coach Parcells; they become a force- expecting to win every time.

    In my opinion, selection in creative and knowledge roles cannot be done to a higher level without a thorough understanding of the existing team and leadership. A track record of past performance may mean nothing, or everything, depending on the situation that a person is being placed into. The evolution that we are seeking will come when we can begin to predict the interplay between personalities and track records- so that we can tell how a candidate might respond to a certain group and manager.

    Anybody been watching The Apprentice? Absolutely fascinating to see how people composed of a given constellation of skills, knowledge, and attitudes respond to different leaders and team members. Any selection method would be irrelevant to some of the outcomes if the whole dynamic was not taken into account.

    So select carefully- no need to stack the deck against yourself, but don?t think that excellent selection somehow naturally translates to excellent outcomes; it?s a fallacy that we all can fall prey to when looking backwards at both successes and failures.

    That?s why they great coaches will go out and beat you with their own players, or yours, and perhaps use totally different management styles to do it.

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  6. I’m not sure of the point here. Both Martin and I seem to be in violent agreement that:

    1) Performance excellence starts with determining ability to do the job. The closer the ‘tests’ are to the job, the more accurate the prediction.

    2) The majority of organizations do a terrible job of determining applicant ability. They cannot accurately determine whether a person can solve problems, make sales, plan, or be highly motivated by interviews alone. Players don’t get to play (or stay) on the football team unless they can demonstrate the skills to play.

    3) Extraordinary performance arises from people who already demonstrate excellent skills. People with ‘two left feet’ need not apply. However, the bigger the ‘pool’ of excellent people, the higher the percentage of extraordinary performers.

    4) Managers (and a host of other factors) can utterly destroy performance, regardless of employee ability….’Too bad, managers are seldom selected based on their ability to manage.

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  7. From an ATS vendor standpoint, I agree with Mike that finding a single, inexpensive, best of breed vendor in both fields, while meeting the rather substantial legal defensibility requirements for validated assessments, is a tall order.

    Also, considering the breadth of assessment domains, finding great ones for your industry may be a challenge.

    What we have evolved is a system to allow end users to upload most any assessment or result that they want into the ATS; they can transcribe proven items for direct use or develop their own as needed. Each user also has a different idea about when in the process to assess- and how to divide the modes both by time and stage- sometimes job by job, or department by department.

    I think selecting an ATS that allows you to install your chosen assessments would probably be choice number one, if that best of breed vendor is not obvious for all of your needs; that also gives some flexibility going forward should your model change.

    With Best,

    Martin

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  8. Assessments are a great tool to determine who the best candidate for your job. To simplify what Assessments will do is to say a resume only shows what a person has done while Assessments will show you what a person is capable of doing.

    The combination of an Applicant Tracking System with either Skills Based or Behavioral Based Assessments will increase the number of good hires any organization can make. It’s important to partner with a company that can provide both ATS and Assessments. It’s even better to partner with a company that has developed the ATS and Assessments and can market both tools in a package with a successful track record and one that will not break your budget.

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  9. I’d be leary of any company that says they have effectively developed BOTH assessments and an ATS. The ATS company-developed assessments I’ve reviewed don’t have the validation history and performance predictability that would meet ‘best practices’. The assessment company-developed ATS’ I’ve reviewed are lacking in technical and functionality requirements preferred by many recruiters. You’re best route will be to go with an expert in each field and having the technology people behind each program to make the technical integration. This allows for customization of each program to the company’s needs by both vendors.

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