We often come across the term in organizations' talent management strategy that People are our greatest asset, and if developed in the right manner, can be our defining competitive advantage. However, this is not the case.
Companies and organizations across all sizes, industries, and sectors invest a significant amount of time and resources to hire, motivate, train, retain, and eventually let-go employees. Glassdoor estimates an average company in the United States spends about $4,000 to hire a new employee, taking up to 52 days to fill a position.
Once an employee joins your company, MIT Sloan suggests it takes them 8 to 26 weeks to achieve full productivity. Similarly, a recent study by Mellon Financial Corp. states that a company loses anywhere between 1% to 2.5% of their total revenue to bring a new hire up to speed.
What follows next are various employee engagement and motivation schemes and programs ranging from motivational sessions and workshops to team outings and retreats. A plethora of research articles exist that emphasizes the benefits of a highly engaged workforce, productivity being the front-runner. A study by McLean & Company estimates that a disengaged employee costs your company approximately $3,400 for every $10,000 in annual salary! Despite active initiatives to boost employee engagement scores, if an employee chooses to leave your company, you are looking at revisiting the hiring and on-boarding process all over again. Not to mention the negative impact they have on your company’s intangible aspects such as team dynamics, culture, and morale.
After a five-year research project, Jim Collins, in his book Good to Great found that great companies first got the right people on board and then figured what to do. Inspired by his book, the focus of this article does not lie in finding the right ways to retain people in your company; it lies in bringing and keeping the right people.
With the right people on board, the problem of motivation mostly goes away as they don’t need to be micro-managed or fired up. When people join your company because of who else is in it, providing a direction becomes much more manageable. The right people will be self-motivated by their inner drive to contribute towards and be part of creating something great. Hence, “People” are not your most important asset, the “Right People” are.
Great vision without great people is irrelevant
While many companies invest time in formulating incentive schemes to boost employee recognition and engagement, these should not be aimed at getting the right behavior from the wrong people. Instead, they should focus on getting the right people in their company and keeping them there. It is not how you compensate your executives; it is which executives you have to compensate.
One should place greater emphasis on characteristic attributes than on educational background, work experience, practical skills, or specialized knowledge to determine the “right person.” You can teach skills and knowledge; however, characteristics such as values, commitment, and work ethic are more ingrained. It is a skill versus will decision.
There are three practical disciplines outlined below to aid you in your people’s decisions.
1. When in doubt, don’t hire – keep looking
Many companies expedite the hiring process in an endeavor to manage short-term operational needs. While this approach may help your company run in the short-term, it endangers the long-term efficiency and profitability. Lack of alignment between organizational and employee goals, lack of clarity on roles and responsibilities, and poor on-boarding experiences, among other reasons, ultimately leads to a high turnover rate. In a study of over 1,000 employees conducted by BambooHR, 31% reported having quit a job within the first six months.
Successful companies do not compromise until they find the exact right people for the right role; they find ways to get through tough situations until they find the right people. Placing a tremendous emphasis on having the right people who are motivated, hardworking, and disciplined in the right roles across all levels in your company has enormous benefits.
No company can grow revenues consistently faster than its ability to get enough of the right people to implement that growth.
David Packard, co-founder of Hewlett-Packard Company.
2. When you know you need to make a people change, act
The moment you feel the need to manage someone tightly, you have made a hiring mistake. We have been in situations where we try to postpone the inevitable by giving chances, building systems to compensate for their shortcomings, and so on. The time and energy spent on compensating for one wrong person siphons energy away from developing and working with all the right people. The stumble continues until they choose to leave, or you finally act.
Leaders of successful companies did not hire many people and retain those who met performance expectations; they took the time to select the right candidate at the first instance and then did everything they could to keep them on board for a long time. A report by Recruitment & Employment Confederation (REC) has found that a poor hire at a mid-managerial level can cost a business more than three times the employee’s annual salary.
However, before you drop the axe or make a judgement, we recommend investing substantial effort in determining if you have a person simply in the wrong job role or if he/she needs to leave the company altogether.
Two key questions can help in this regard:
a. If it were a hiring decision, would you hire the person again?
b. If they decided to leave, would you be disappointed or secretly relieved?
3. Put your best people on your biggest opportunities, not your biggest problems
Once you have hired and retained the best people in your company, involve them in your biggest opportunities rather than solving your biggest problems. While the concept of problem and opportunity is subjective, project management defines problems as issues that prevent a company from achieving its goals and objectives. In contrast, opportunities are initiatives that assist the company in reaching its goals and objectives if acted upon appropriately.
Problem-solving is a short-term, tactical, and reactive approach that focuses on what has happened in the past as opposed to the long-term, strategic, and proactive opportunity-seeking approach that looks into the future. When confronted with a problem, we tend to focus on the features of the problem rather than the entire situation and the opportunity if offers. You can achieve greater success when the focus shifts from problem-solving to opportunity-seeking.
We have all come across the famous quote by Steve Jobs; “It doesn't make sense to hire smart people and then tell them what to do, we hire smart people so they can tell us what to do.” Getting the right people and managing to keep them on board is one of the fundamental principles that can help your company consistently outperform the competition and eventually achieve greatness.