Selecting and retaining talent | Tools for the bottom line

In the July 17 issue of Business Week, columnists Jack and Suzy Welch boldly claimed that HR managers should share the importance podium with CFOs in any organization.

Think of it this way, they said. If you owned the Minnesota Twins (Actually they said Boston Red Sox but we're in "Twins territory" here.), who would you put your faith in, the team accountant or director of player personnel?

"Sure, the accountant can tell you the financials," they wrote. "But the director of player personnel knows what it takes to win: how good each player is and where to find strong recruits to fill talent gaps."

Now be honest. How many companies do you know where the CEO gives HR equality with the CFO? Does yours?

Probably not. HR rarely plays a strategic role in companies.

                 

Know the cost of lost talent

So the question follows: what must HR do to become a functional part of corporate financial management?

The answer: quantify.

Put your people and their performance in profit and loss terms. Quantify the difference between top performers and poor performers, the costs of vacancies and turnover, and the dollars associated with productivity increases, longer tenure, better managers and employee satisfaction.

Most of us in HR lack training and interest in finance and numerical reasoning. But as much as you may dislike it, you must learn to put valuations on all personnel activities even though they are difficult to enumerate. That's the only way your company management will fully understand the cost of lost talent and how employee retention boosts the organization's bottom line.

If you have trouble with this numerical challenge, see your company's CFO. CFOs are adept at placing valuations on activities difficult to calculate and can help you identify the costs (both direct and indirect) of replacing talented individuals in your company.

Who knows, these statistics may surprise you, too, and reinforce how important it is to select and retain talented workers…and find tools to help you do it.

Tips: How to identify and retain talent

So how do you target "people" dollars and keep them in your organization? These simple four steps can help:

1) Use prescreening to select for organizational fit.

To reduce turnover, ensure that the candidates you bring into your organization are willing to support and model your organizational values. You can always teach skills; it’s much more difficult to change attitudes that don’t fit your standards.

How do you uncover past behavior and indicate future performance? Use behavioral based questions. For example, to learn about a person’s approach to teamwork, ask them to tell you about a time they contributed to a team’s success and how they did it.

2) Use behavioral-based interviews to ensure job and skill set fit.

Research consistently shows that conventional, unstructured interviews provide only 14 percent of the information you need to make a good hiring decision. The same research shows that a more structured behavioral interview can increase this to 51 percent and, obviously, better predict how a person will perform in a given position.

Here are two behavioral based question examples:

• In hiring someone to lead, you might say, "Give me an example of a time when you were able to motivate a group."

• In hiring for a position needing someone with organizational skills, you might say, "Tell me about a time when you had to prioritize several key tasks."

3) Use job matching.

By job matching, I mean comparing your candidate to your proven top performers. Harvard Business Review studies show that if your applicant has all the same attributes, you will improve your hit rate from 14 percent (that rate you achieved with conventional interviews) to 75 percent.

These same studies show that people selected using job matching, outperform their non job-matched peers and stay in their positions two to five times longer.

And here's another tip: Use job matching not only when you hire but when you move people from one job to another or promote someone. Every time you place someone in a job, you'll serve your bottom line if you use job matching.

4) Hold 30- and 90-day conversations to improve employee retention.

Most employees leave organizations during the "honeymoon phase" or first 90 days of employment. If you want to retain them, you should do more than casually chat with them in the hallway. Rather, conduct 30- and 90-day interviews using structured questions such as:

• How do we compare with what we said we would be like?

• Tell me what you like. What is going well?

• Which employees have been helpful to you in your first 30 days? (And then use this information to recognize these employees for helping new hires learn the ropes.)

• Have you noticed anything needing improvement or do you have ideas that might be useful to us?

To sum up: Assess!

Essentially, selecting and retaining talent that fits in your organization boils down to one thing: assessment.

Assessing potential (and for that matter already-employed) personnel will help you put people in jobs where demands match their abilities, stimulation matches interest and where your people have the greatest opportunity to succeed.

Look how assessment tools can impact your hiring and retaining success:

• Assessing behavioral traits improves the hiring success rate to 38 percent.

• Assessing both behavioral traits and thinking abilities, assure the right people are hired 54 percent of the time.

• Add occupational interests, and successful results improve to 66 percent.

• Using an integrated assessment—one that measures behavioral traits, thinking, occupational interests, plus “job matching”produces the most impressive results, however. This method successfully identifies potentially excellent employees better than 75 percent of the time.

Begin today. Design a program to extend the average life of talent in your company—by even a few months—and then calculate for yourself the direct dollar impact. You will find you have reduced hiring, training, unemployment insurance, worker's compensation and management costs. At the same time, you will have improved productivity, job satisfaction and leadership, and retained valuable company knowledge and loyalty.

Remember, you have a significant investment in your people—in salary, benefits, recruitment and training. This investment can add up to hundreds of thousands of dollars per year, per person. Indeed, the total positive financial impact on your

talent retention initiative alone may well pay for your entire HR operation.



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