Million-Dollar Hire: Build Your Bottom Line, One Employee at a Time
April 2011, Jossey-Bass
Even in a down economy, U.S. business and government make millions of hiring decisions every year. Every decision carries risk. Every hire is an investment. Ideally, every one pays a return. In today's demanding environment, companies no longer have room to get it wrong. Million-Dollar Hire shows how leading companies have re-invented themselves, beat their competition, and added millions to their bottom lines with re-engineered recruiting and hiring practices. Using practical, real world illustrations, it shows that there are tools to treat every hiring decision with the same focus a business applies in acquiring other high-value assets.
- Shows how new technologies and social networking tools are being used to spider the Internet and find the best candidates before the competition
- Explains how different approaches to candidate screening translate to different levels of financial return to a business
- Reveals how to estimate the financial payoff for every hire and how to avoid legal challenges
- This is an invaluable tool for CEOs, CFOs, COOs and HR professionals who want to revamp what is often one of the least sophisticated parts of a business-the ways it finds talent.
1 Three Things We Know About People.
2 Four Things We Know About Process.
3 Some Basic Thinking Models.
4 Measuring Payoff in Hard Numbers.
5 Measuring Payoff in Soft Numbers.
6 Technologies Come to Recruiting and Hiring.
7 Setting Strategy and Choosing Tactics.
8 Candidate Sourcing and Prescreening.
9 Assessing the Whole Candidate.
10 Making the Million-Dollar Decision.
11 Navigating the Legal Pitfalls.
12 Holding and Growing the Investment.
13 It's Your Money.
About the Author.
David P. Jones, PhD, is the president of Growth Ventures Inc., a human capital advisory firm. He has worked as an organizational psychologist for over thirty years, and launched HRStrategies, an international human resources consulting and outsourcing firm recognized as one of the fastest-growing consulting companies in the United States prior to its acquisition by Aon Corporation.
NEW YORK (April 5, 2011) – A key lesson from the Great Recession is that there should be no tolerance for bad hiring: It’s far too expensive.
Employers are realizing that – when taking into account recruiting costs, salary, bonuses, training, pay increases and tenure expectations – any high, five-figure new hire represents a million-dollar investment in the long term, according to Dr. David P. Jones, author of Million-Dollar Hire: Build Your Bottom Line, One Employee at a Time (Jossey-Bass, April 2010 www.million-dollarhire.com), which was released today.
“Traditionally, there has been a big difference between the detail that went into purchasing, say, a six-figure piece of accounting software and how companies hired a six-figure employee. The purchasing decision involved detailed cost/benefit assessment, while hiring just involved reviewing some résumés, holding a few interviews and some reference checking,” says Jones, president of human capital advisory firm Growth Ventures Inc.
“But in the down economy, executives are insisting on re-inventing how their companies go about hiring – because they can’t afford bad hires and, importantly, because metrics are now linking hiring models with economic payoff and risk management. Those responsible for hiring now need to view hires as balance sheet assets – or liabilities,” he says.
In Million-Dollar Hire, Jones shows why and how the hiring function can – and should – marshal science, technology and other tools to up the ante on the success of the hiring process. “Executives are also chasing a return on their hiring investments by holding recruiting and hiring operations to the same kinds of financial return targets they lay on manufacturing, sales, customer service and other financially-driven operations,” Jones says. This is a reasonable expectation, as new data show that the best hires – the top 15% – exceed their salary in terms of productivity and other payoff outcomes by 40%; accordingly, sub-par hires translate to a 40% loss.
“Since hiring the best can be seen as producing a 40% return on salary investments – every year – what executive wouldn’t want that? Where else can a company get this kind of return?” Jones adds. (There are significant implications for the economy overall: Based on Bureau of Labor Statistics data, about $2.3 trillion in “people” investments are made during the course of the year. In December 2010 alone, there were 3.4 million private-sector hires, amounting to $194 billion in people investments.)
Million-Dollar Hire delineates how the best organizations are remaking hiring into a more effective, economically-focused function…
- New research and tools are driving bottom-line payoff through higher productivity and lower likelihood of turnover or performance problems for new hires. “What’s interesting is the array of screening tools that have resulted, covering everything from skills tests to personality profiling techniques that actually predict turnover, bad behavior in the workplace, accidents and the like,” Jones says.
- Hiring is finally coming under the same quality control lens that has watched over manufacturing and other operations. “We’re beginning to see Six Sigma quality improvement concepts be applied to recruiting and hiring results,” says Jones.
- Technology solutions can now source, attract and engage candidates who fit the employer’s profile. “Technology solutions in the recruiting and hiring arena are exploding,” says Jones. “Every social networking site is in the recruiting business. Internet-based screening, onboarding and retention tools are multiplying every day. Many are focused on finding and evaluating the best candidates.”
- Techniques are emerging to “onboard” new hires in ways that build a bond, and reduce the likelihood a new hire will derail. “New hire onboarding was once a paperwork process,” says Jones. “Today, it focuses on engaging the new hire, and avoiding quick turnover when the uncertainty that comes with a new job blossom.”
- Economic models link different recruiting and hiring approaches to different economic payoff and risk reduction results. Economic models available today are showing that good hires produce dramatically better results. Says Jones, “Seeing the numbers is literally sending executives off to their HR departments with a set of payoff objectives in hand.”
- New approaches to reduce the risk of legal challenge to hiring decisions. “Unfortunately, legal oversight, challenges and rules and regulations also are expanding. Today, employers are putting procedures in place that keep all the new techniques from creating risk,” adds Jones.
“The premise is simple: nothing can build a company, turn it around or sink it as quickly as its recruiting and hiring decisions. No decisions an executive and his or her team make can pay off—or cost—as much as their hiring decisions. Today, the HR department is becoming an executive’s best friend,” adds Jones.