As a small/medium sized business owner or leader, one of your many hats likely involves hiring. How successful have you been? Do you have a plan? Have you measured if that plan works?
The statistics are staggering: 50% of new hires are no longer with their company after just 18-months. With the average cost of hiring an employee at $4,150, it will cost $8,300 to have an average employee stay more than 18-months (not including wages). Yet, most of us continue to hire based on the candidate’s current skill set, not for their potential. The main reason we hire for skills over potential is because the practice saves us time now, where hiring for potential is a long-term investment. Below are 4 reasons why you should consider hiring for potential.
Reason #1: Skills can and will have to be taught, values cannot.
When looking for talent, we believe skills are important, but not the most important criteria in the search process. Hiring for cultural fit (or add) is more important to your company’s long-term success. A team of ‘A-Players’ or ‘All-Stars’ that do not work well with others will be out-produced by a cohesive team of ‘B/Role-Players’.
Even if you find the perfect resume of skills, there almost always is training that is needed during the onboarding period. Only 11% of employees fail at their jobs due to incompetence, while 89% fail based on their attitude or personality (LeadershipIQ study).
There will be times when you need a specific skill, especially to fill a short-term need. If possible, look to contract out this need. Contracting will cost more on a per hour basis, but you are not committed to that contractor long-term, which is especially important if you cannot find an employee that adds to your culture.
Reason #2: Limiting your talent pool and overlooking the best long-term fit
Most of us do not want to admit it, but our hiring practices are reactionary and unplanned, they typically look something like:
- Post a job using a slightly updated job description from the last time you hired for the position
- Pick the best 10 resumes based on skills or college prestige
- Phone screen and then bring in the top 3 to interview
- Select the individual that is the least risky from a skills or personality standpoint
You can increase the talent pool and the long-term success rate by focusing on values and cultural add. This does require more work upfront. You can no longer rely of the ‘typical’ job postings or interview questions. As the hiring authority, you need to spend time crafting an interesting job description, strong consistent questions, and listening for the signals that point to who the person is, what their values are and how dedicated to learning and personal growing they are.
Reason #3: Past performance does not guarantee future results
(As a recovering financial advisor, I could not resist the temptation to use that line.)
As authors/podcaster’s Adam Grant and Seth Godin frequently point out, humans are notoriously bad at predicting the future. If possible, it is best to combine analytical systems with traditional hiring methods. The ‘BUT’ in using analytical systems is that you need to ensure the methodology/algorithm has the correct set of assumptions and work to eliminate programmer biases.
Remember, your candidates/employees are humans, we change, one business setting or organizational structure may cause an employee to thrive, another may cause an employee to fail. Life stage also has an impact on employees as well. Only a third of people change jobs because of pay, that leaves two thirds of the people you are potentially hiring looking for an environment change, already leaving you with bad odds. You will have more success by over communicating your company’s culture and work environment and asking which environment/management style has the candidate succeeded in.
Reason #4: Use the monetary savings to build a first-rate training program
When you hire for potential there is another short-term benefit, you save money. If you are hiring for potential your primary objective is long-term sustainable success, with that in mind, you should use the cost savings to build a first-rate training program. A common thread in the companies that win ‘best place to work’ is they invest in their people. Training and development are not a cost, but an investment for future success.
Another reason you invest in training is because – life happens. You can be dangerous in your hiring practices, find the perfect cultural and skills fits, but your employees’ parents get sick, start a family, or follow the love of their life to the mountains causing you to lose the employee.
Short-term thinking will yield quicker results but will end up being more work over the long-term. We can help you set up a hiring and training plan to capture the right people that will help you execute your mission and create long-term sustainable success.