One costly hiring mistake that I have observed with leaders is the unconscious avoidance, denial and/or toleration of under-performing employees.

Shocking costs of hiring mistakes

More commonly known as the cost of a mis-hire.

According to Tony Hsieh, CEO, Zappos, hiring mistakes have cost his company as much as $100 million!  That’s alot of dollars immediately subtracted from the bottomline.

For many companies, that one mistake can make the difference between surviving and thriving, between mediocrity and high performance.  Mis-hires and under-performing employees are the #1 profit leak in companies today.

Why Does This Issue Perpetuate Unknowingly in Many Companies?

For one, few companies actually take the time to calculate the hard and soft costs of even a single mis-hire.  Ignorance is not bliss in this case.  The higher the level of the position, the quicker the cost of a mis-hire increases exponentially.

To understand why such a large number, let’s look closely at the long list of direct, indirect and long-term opportunity costs of a mis-hire:

• costs associated with your time, your team’s time and any outside recruiting help in finding, screening and interviewing the pool of possible candidates
• costs associated with reference checking
• hard and soft costs associated with training a new employee
• costs associated with manager’s time to get a new employee up to speed
• costs associated with the lost productivity of a new employee for at least first 3-6 months
• long-term opportunity costs – seldom considered – with a mis-hire

-   substandard service

-   lowered employee morale and the resulting substandard performance in other employees

-   missed deadlines

-   customer dissatisfaction with product quality, customer service and/or lost trust/faith in the company

-   missed sales opportunities

-   and so much more

According to Guy Kawasaki, best selling author and former Chief Evangelist at Apple, there is another hidden high cost of mis-hires. “’A’ players tend to hire ‘A’ players; ‘B’ players tend to hire ‘C’ players and so forth.”   How does that translate to you and your organization?

If you are hiring anything less than “A” performing leaders, your leaders will hire mediocre employees that are not as good as they are, due to their own insecurities.  Perpetuating that under-performing cycle throughout the organization, your “B” and “C” leaders will cost you many times more than the $6 million we quoted above.

Can your bottomline afford that?

Why Is the High Cost of Mis-Hires Rampant?

Below are the 4 most common reason for hiring mistakes I have found in working with companies for over 30 years:

• Hiring decisions are at least 80% made as “gut feeling” or “based on appearances”  — such as, “I liked the person,” “they seemed honest and hard working,” etc.

• Scarcity and/or urgency mindset — a belief that few candidates have the skills you need or you are driven by outside pressures to fill the spot immediately and settle for mediocre candidates.
• As a hiring manager, you are dazzled by first impressions, how good the person looks on paper, credentials, advanced degrees, well-prepared interview responses, etc. In addition, the highly competitive job market has triggered an increase in exaggerated claims, embellished resumes and “half truths” often missed in the hiring process.
• Not understanding the difference between and/or having the needed tools to discern top talent vs. best fit talent.  With all the buzz about hiring top talent, many companies seek the most impressive backgrounds, past successes and prestigious credentials in their pursuit of top talent without any regard to best fit talent.

Past success and experience are often an unreliable predictor of future performance.  Why?  Because different people are motivated by and excel in different work environments, organizational cultures, job opportunities, etc.  Competencies and skills only account for 20% of future performance.  The right attitudes, motivations, values and goals for a given role and company predict 80% of performance.

What are the 5 Best Secrets to Avoiding Costly Hiring Mistakes and Finding Best Fit Employees?

Secret #1:  Shift your mindset from hiring employees to hiring partners.

Your employees are your most important partners and stakeholders.  Hiring employees is like finding the best marriage partner or close circle of friends.

You seek those who have similar values, will make you a better person and provide synergies for both of you to create something bigger than you can individually.  While you may value their past accomplishments and expertise, it’s what’s on the inside and the synergies between you that will make that partnership fly.

Secret #2:  Hire those with the capacity to excel and exceed you.

I emphasize finding those with the best capacity to excel and outperform others, including yourself.  Capacity not only includes current capabilities.

Capacity also includes the right mindset, motivational drivers and thinking necessary to ignite future potential.  It takes extraordinary self-confidence, soul searching and inner security for leaders to recognize when they hire those that exceed them, everyone wins.

Secret #3:  Hire “A+” players based on attitude, motivation and culture fit.

How you assess best talent fit for your company and for each role is the single most important ingredient to successful hiring and maximizing employee performance.

The best tool I have found to help clients assess attitude and motivation fit is an online assessment tool (IWAM), uncovering 48 unique attitude and motivation drivers that best predict future performance.  Although all patterns are important in varying degrees, there are usually 6-8 drivers most critical for company/culture fit and a handful of other drivers important to A performance in a given role/function.  For more info about how IWAM can help you hire best fit talent, go HERE!

In addition, to further assess culture fit, it is important that leaders learn scenario building interviewing skills, or hypothetical “what if” questions for assessing values and traits, without the candidate’s awareness or ability to prepare for such questions.

Secret #4:  Develop a mission statement, results-oriented job description and list of non-negotiable traits before you start the hiring process.

You can’t know how to assess a best fit candidate unless you know why you are hiring someone, how will their contributions impact company goals and be measured and what traits are needed to excel in that specific role. 

Most job descriptions are long laundry list of tasks and responsibilities without justification why the position exists or a scorecard how to evaluate success and performance.  Without this information, the probability of finding those with greatest chance to succeed and raise the game is very low.

Secret #5:  Stop relying on intuition; start relying on unbiased, objective due diligence.

I’ve have heard too many leaders’ hiring regret stories.  Examples of when they were convinced a candidate would work based on feelings and impressions, only to find after a year of frustration, procrastination and endless coaching, that they made a mistake.  A million dollar (or more) mistake, at that.

To avoid this pitfall, develop a rigorous hiring process.  Develop screening criteria and use objective data to eliminate candidates right away.

Examples could include driving history check, credit check, drug tests if necessary, etc.  What you are seeking are personal records that reflect a candidate’s character.  Also check character references, asking truth-telling questions, like … on a scale 1-10, how well did the candidate get along with co-workers?  And, why that #? 

After 1-2 stages of screening, have a team of individuals from a variety of positions interview candidates with list of prepared questions and hands-on problem solving scenarios of common role/company issues.  To ensure a candidate is aligned with company purpose, you should also ask “purpose based” questions such as, “what do you want to be remembered for?  Or “when in your life have you been so passionately focused on an activity that you lost track of time and what were you doing?”

Hiring, by no means, is a science.  Even with the best hiring systems, mistakes will be made.  The key is to hire slowly, fire quickly.  Your credibility and reputation as a leader, inside and outside, depend on it.  Be rigorously honest about your past hiring mistakes, your own hiring blindspots and the changes you will make to start hiring your best employees.

Let’s keep the conversation going.   Visit our blog to share your comments, biggest hiring mistakes, stories of regret, burning questions and valuable resources for finding and hiring best fit employees.  We want to hear from you!

___________________

The post Shocking Costs of Hiring Mistakes appeared first on The Empowered Business.

Photo Credit: David Niblack

This final part of our accountable leader series addresses my top 10 leadership and culture practices for a strong accountability organization.

Keep in mind that the 6 internal drivers, addressed in parts 1 and parts 2, account for as much as 90% of your performance and results, including accountability.  Practices by themselves, can’t drive accountability.  They can only reinforce and support a healthy accountability mindset.

From Accountability to High Performance: Top 10 Leadership and Culture Practices To Make That Giant Leap

To build a high performance organization, a strong accountability mindset and practices must be embedded into your company’s DNA.  The two combined catalyze your organization to move from struggle to thriving, from crises to momentum, from inertia to growth.

Below are my top 10 most important leadership and culture practices necessary to make that leap.

1.  Set goals that truly motivate and excite your employees.The first step to a strong accountability culture is to set goals across the entire organization. However, nice sounding goals on paper does not guarantee achieving them.  Most leaders overlook the missing ingredient that drives achievement — MOTIVATION. Employees must be motivated to “want” to achieve their goals.

Below are a few ways to help your employees set goals that they want to achieve.

• Establish goals that challenge them.  Studies have shown that difficult goals result in higher levels of performance than easy goals.

• Elicit each employee’s personal goals and find a way to help them achieve personal aspirations in conjunction with their workplace goals.

• Help employees identify their jobs’ essence – ie: the higher purpose of why that role exists – to appeal to their fulfillment needs.
  

2.  Define outcome or results-based job descriptions that align with company goals.

‘Old style’ skills and competencies job descriptions are poor predictors (or motivators) of future success.  To truly drive results though your people, every leader and employee should have a results-driven job description that identifies their top 3 -5 outcomes, along with clearly defined success measures to be tracked throughout the year.

I also include a more comprehensive set of important factors, when working with leaders, such as: critical success factors; connection to company goals, resources needed; shared vs. sole responsibility; action plan; and what factors could derail achieving the outcomes.

3.  Hire for attitude and motivation; teach the skills.

A recent study showed that almost 50% of new hires left in the first 18 months.  Of those, 89% left because of ‘attitude fit’ issues, while only 11% left because of lack of skills.

The below table illustrates the tradeoff of hiring for motivations vs. competencies and the level of performance you can expect. Hiring for motivation and attitudes over skills is critical to build strong accountability and high performance.

                                         From Under-Performing to Top Performing:

                                         The Motivation vs. Competency Relationship

4.  Make sure your employees have the necessary skills/competencies, tools and resources to succeed in their role.

While the predominant drive of performance is motivation, having the necessary competencies and tools are essential for an employee to act on his/her motivation.

If a role is “too big” for an employee – ie: they lack the skills to succeed, then it is essential to teach, coach and train your employee so they can achieve their goals.

In your employee’s outcome based job description, identify the skills to succeed, where the gaps are and a development plan to eliminate those gaps.

5.   Set clear expectations that your employees understand and agree to.

While leaders often understand the need for clear expectations, many overrate their ability to deliver on the level of clarity needed.  Because of differences in perceptions, language and the meaning given to it, too often a leader’s intended communication is not received or interpreted by their employees in the same way. This is the #1 reason for unmet expectations.

To avoid such a breakdown, at a minimum,

• Communicate expectations in concrete terms – ie: answer all calls within 3 rings.

• Ask employees to repeat back what expectations they heard.

6.  Elicit employee’s emotional buy-in for trust and commitment.

For many leaders, developing a strong accountability organization can be harder than it seems.  The common blind spot is not getting your employees’ emotional buy-in about the importance of accountability.

Buy-in involves capturing the hearts and minds of your employees to take ownership of their roles AND to take ownership of company results.

According to a study done by Partners in Leadership, executives reported that …

…only 10% of their employees fell into the “Buy-in” category, while 84% were seen as either “Comply and concede” or “Exempt and excuse” in terms of owning organizational results.

When employees buy-in, they act as though your company is their company.  They go beyond the expectations of their role and do whatever it takes for the company to succeed.

How many of your employees would fall into the “Buy-in” category and take ownership of your company’s results?

7.  Reward your employees — on their terms — to increase motivation, drive and commitment.

There are 2 kinds of motivation – intrinsic and extrinsic.  Most companies attempt to motivate employees extrinsically – ie: compensation, bonuses and benefits.

Yet Herzberg – top motivation theory expert – found that extrinsic motivators fall into the category of “hygiene” factors and can only eliminate employee dissatisfaction.  They don’t increase motivation.

On the other hand, intrinsic motivators – such as, achievement, meaningful work and recognition – cost little and have the greatest impact on employee commitment.

As a leader, do you know what the intrinsic motivators for each of your employees are?  How much time do you focus on increasing those motivators?

8.   Be firm and let go of consistent under-performers. 

Consistent under-performers lower the entire organization’s performance. They become a de-motivating factor to other employees.  They consume more of a leader’s/manager’s time when it can be better spent on your high potentials and future leaders.

The first step to improving this situation is to realize that you, as a leader, are part of the problem by avoiding the truth. Do what you can for a defined period of time to coach your under-performers to achieve success.

If improvement is not achieved, the second step is to help the employee to transition to a better suited role or another employer.

9.  Create a daily environment and culture of self-responsibility, self leadership and self-learning.

Self-responsibility is the ultimate trait of a high performing organization.  You can’t have a strong accountability culture without every leader and employee taking responsibility for themselves, behaviors and outcomes.

Self-responsible people are the do-ers of the world, not the “done to.” They refuse to see themselves as victims. They believe that they are in charge of their own destiny.  They are the creators of opportunity, rather than believing they are entitled to it.

While it is beyond the scope of this article to go into “how,” to create a culture of self-responsibility, the 4 mindset and behavioral traits essential for self-responsibility are:

• Commitment – a willingness to do whatever it takes to succeed.

• Ownership — taking ownership for all your results.

• Resilience – ability to bounce back and rise above adversity, crises and failures

• Continuous learning – learning from past experiences and mistakes, always seeking to grow and evolve.

10.  Expand your internal locus of control to drive bigger and better outcomes.

A person has either an internal or external locus of control, depending on to whom or what they assign responsibility for what happens.

External locus equates to a “victim” mindset.  Such people believe that everything happens to them.  They are masters of blame, helplessness and low self esteem.  Nothing is their fault.

Internal locus equates to “the accountable person.”  Such people believe they can control or influence the outcomes in their lives.  Even when events are beyond their control, they know they have options how to respond to such events.  They have self-confidence and a learning mindset.

To increase your internal locus, recognize the fact you always have choice.  Brainstorm other options, take small actions and, most importantly, pay attention to and change your negative self talk.

Summary: 

The goal of this 3 part series is to increase your awareness about the one thing.  In this crazy busy world of business, I know the one thing that makes the biggest difference in you and your organization is the level of your game.

Becoming an accountable leader is the catalyst for transforming your untapped potential into hard-core business results. You can only change the level of your game if you are rigorously honest with yourself about the strength (or lack) of accountability, within your organization.

Use the principles and practices in this series to get started. For more personal feedback about building a strong accountability culture, request our complimentary Leadership Strategy Session to define next steps, given your goals and challenges.  However you proceed, take the next step now!

The post The Accountable Leader: Developing the Right Practices That Ignite Performance (Part 3) appeared first on The Empowered Business.