NEW HIRES: HOW TO FIND THEM, HOW TO KEEP THEM

You have just spent several hundred dollars running an ad to attract candidates for a job opening and you have received dozens of resumes to review. From those resumes, you must identify the individuals that have the best qualifications for the job. After selecting those candidates most worthy of an interview, you spend a few hours talking to them to determine whether they are a good fit for the job and your organization. Finally, you decide on one candidate, the hire is made and you hope everything works out so you don’t have to spend a few hundred dollars more in ad costs and the time to screen another round of candidates. But are you really just spending a few hundred dollars on ads plus the time to screen the candidates? What does losing an employee really cost?

Most organizations do not realize how costly turnover really is. The costs associated with poor employee retention go far beyond the costs of recruitment and selection. Costs that are rarely considered when an employee turns over include training costs and lost productivity. And when an organization recognizes that these costs are a part of the turnover equation, they typically fail to realize their full impact. For example, training costs include the cost of orientation in terms of the new person's salary and the cost of the person who conducts the orientation. Also include the cost of orientation materials. Calculate the cost of departmental training as the actual development and delivery cost plus the cost of the salary of the new employee, the cost of the person(s) who conduct the training, the cost of various training materials needed including company or product manuals, computer or other technology equipment used in the delivery of training, and the cost of supervisory time spent in assigning, explaining and reviewing work assignments and output. This represents lost productivity of the supervisor.

Lost productivity includes the cost of mistakes the new employee makes during training, the cost of lost department productivity caused by a departing member of management who is no longer available to guide and direct the remaining staff, the impact cost on the completion or delivery of a critical project where the departing employee is a key participant, and the cost of reduced productivity of a manager or director who looses a key staff member, such as an assistant, who handled a great deal of routine, administrative tasks that the manager will now have to handle.

When all the costs associated with turnover are considered, it is typical for the total to easily reach 150% of the employee’s annual compensation figure. The cost will be significantly higher (200% to 250% of annual compensation) for managerial and sales positions.

To put this into perspective, let's assume the average salary of employees in a given company is $50,000 per year. Taking the cost of turnover at 150% of salary, the cost of turnover is then $75,000 per employee who leaves the company. For the small company of 100 employees who has a 10% annual rate of turnover, the annual cost of turnover is $ 750,000.00!

Wouldn’t you like to add to add $ 750,000.00 to your revenue, most of which could be carried over to the profit line? Reducing turnover can have that kind of impact.

So, how do you reduce turnover? One way is to eliminate much of the subjectivity of the selection process. Once an employer has attracted a pool of qualified candidates for a job opening, choosing the one candidate that best fits the job is often the result of subjective processes. Companies typically spend hours objectively analyzing the benefits of purchasing a new piece of equipment, but they often spend far less time interviewing candidates, the results of which are often based on subjective feelings as to which candidates seem to be the best.

There are many tools employers can use to make the selection process more objective. The most commonly used of these include background verification services, skills testing and job-fit testing.

With today’s media savvy population, employers are encountering job applicants that are resume assisted and interview–wise. They know how to impress interviewers with resumes and backgrounds that may be more contrived than real. Background verification services can help you determine whether a candidate’s employment history jibes with what he or she has claimed. Background verifications, such as credit history, driving record, and criminal history can also provide you a glimpse as to the integrity of the candidate.



Job skills testing is one way to verify whether the candidate possess the skills you need. Job skills testing involves assessments which measure specific, practical skills and knowledge related to a particular task. Tests of this type include mechanical aptitude assessments and skills tests for production, processing, operations and maintenance. Skills testing is not limited to mechanical skills however. There are skill-based assessments for sales and management, as well.

A third tool employers can use to reduce turnover is job-fit testing. Job-fit testing differs from skills testing in that it provides feedback as to the mental skills and personality traits an individual possesses relative to those desired by an organization or required for success in a particular job. Most turnover is not the result of technical incompetence, but the result of a poor “fit.” The employee couldn’t get along with others or couldn’t perform the work due to a personality mis-match with the job. Job-fit testing can help you predict job fit before hiring a candidate, thus eliminating one of the most significant reasons for turnover.

One job fit assessment that employers have used to improve their rate of retention for more than 40 years is the Achiever. The Achiever is unique in that it is the first assessment to be specifically developed for use in a business environment and to combine mental aptitude measurements with the behaviors critical for success in business. The Achiever also incorporates benchmarking capability allowing an employer to compare the aptitudes and traits of applicants to those required for success in the specific job for which the applicant is being considered. This benchmark comparison provides a “picture” of the likelihood the applicant will be successful in the job and gives the employer more assurance that the best applicant is being selected, thereby improving job performance and reducing turnover.

Turnover is a pernicious problem, the costs of which are largely un-recognized by employers. A significant factor in turnover is that most organizations have a more rigorous set of technical specifications for purchasing a new piece of equipment than they do for hiring a new employee, though the turnover cost of the new employee can often be far higher than the cost of the new piece of equipment. Employers have tools available to them to perform an objective analysis on new hires, much as they do on new equipment. And the human capital of an organization has a much greater return on investment than the physical capital.



S. Milt Cotter, Senior Consultant - CRI scotter@criw.com

(800) 328-1940, ext. 199 CRI has more than 40 years experience helping employers get the most from their greatest asset, human capital. Additional information and reference material is available at: www.whytest.biz



NEW HIRES: HOW TO FIND THEM, HOW TO KEEP THEM - To learn more about this author, visit Milton S. Cotter's Website.

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