Category Archives: Trench HR

Is employee experience really all about your manager? #Maslow #Drink!

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So, I’m sharing a post I wrote over at EXJournal.org (EX = Employee Experience). It’s site started by some brilliant people from all over the world and they invited me to write to bring down the overall quality of the site! I wrote this post and immediately thought, “Hey, I just leveled-up from my normal poorly written stuff!”.

I thought this because it’s an idea I’m passionate about and truly believe. I think we get lied to a bunch by HR vendors who are just trying to sell their shit. We’ve been lied to for a long time on the concept – “People leave managers, not companies” – that’s actually not true…enjoy the post and check out the new EXJournal site!

“Employees don’t leave companies. Employees leave managers.” 

How often have you heard this over the past decade? A hundred times? A thousand times?

We love saying this in the HR, management consulting, leadership training world. We use it for employee engagement and employee experience, to almost anything where we want to blame bad managers and take the focus off all the other crap we get wrong in our companies.

The fact is, the quote above is mostly bullshit.

Employees actually care about other things more

The truth is, employees actually leave organizations more often over money than anything else. We don’t want to believe it because that means as leaders we have to dig into our budgets, make less profit, and pay our employees true market value if we want them to stay.

Managers might be the issue if you’re getting everything else right. So, if you pay your employees at the market rate. Ifyou offer market-level benefits. If you give them a normal work environment, then yes, maybe employees don’t leave your company, they leave their managers.

But you forgot all that other stuff? Maybe the ‘real’ reason an employee left your company wasn’t the fact their manager wasn’t a rock star. Maybe it was the fact you paid them below market, gave them a crappy benefits package, and made them work in the basement?!

The dirty little truth about Employee Experience is that managers are just one component of the overall experience, and we give them way too much weight when looking at EX in totality. We do this because we feel we don’t have control over all of the other stuff, but it’s easy to push managers around and ‘train’ them up to be better than they actually are.

Rethinking Maslow for EX

There is a new Maslow‘s Hierarchy of Employee Needs when it comes to Employee Experience and it goes like this:

Hierarchy of needsLevel I – Money – cash!

Level II – Benefits – health, fringes, etc.

Level III – Flexibility of Schedule – work/life balance

Level IV – Work Environment – short commute, great design, supportive co-workers

Level V – The Actual Job/Position – am I doing something that utilizes my best skills?

Level VI – Your Manager – do I have a manager who supports my career & life goals?

We all immediately jump to Level VI when it comes to EX because that’s what we’ve been told is the real reason people leave organizations. Which actually might be the case if all of the other five levels above are being met. What I find is that rarely are the first five levels met, and then it becomes really easy to blame managers for why their people leave.

Managers aren’t the difference maker

When I take a look at organizations with super low turnover, what I find are that they do a great job at the first five levels, and they do what everyone else does at level six. The managers at low turnover organizations are virtually the same as all other organizations. There is no ‘real’ difference in skill sets and attitudes; those managers are just managing employees who are pretty satisfied because most of their basic needs are met pretty well.

I think the new quote should be this:

“Good employees leave companies that give them average pay, benefits, and work environment, that don’t utilize the employee’s skill set, and that make them work for a crappy boss.” 

(Tim note – Why the #Drink? It’s a game that my fellow HR/TA speakers and I play. We hate when someone uses the Maslow pyramid in a slide, so we make fun of it by claiming every time a speaker mentions “Maslow” or shows the pyramid the entire audience should have to take a drink – like a drinking game for bad speakers! The more you know…) 

Want to make more money? Be an extrovert!

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New research out of the University of Copenhagen finally puts to rest the age-old argument around what’s better: being an extrovert or being an introvert? I have friends who are on both sides and super successful in their careers, but it’s still one of those things where if you are one or the other, you usually believe what you are is the best.

Well, in terms of lifelong earnings the data is pretty clear you want to be an extrovert! From the study:

One striking result is how much the trait of conscientiousness matters. Men who measure as one standard deviation higher on conscientiousness earn on average an extra $567,000 over their lifetimes, or 16.7 percent of average lifetime earnings. Measuring as extroverted, again by one standard deviation higher than average, is worth almost as much, $490,100. These returns tend to rise the most for the most highly educated of the men.

For women, the magnitude of these effects is smaller (for one thing, women earned less because of restricted opportunities). Furthermore, extroversion is more strongly correlated with higher earnings than is conscientiousness, unlike for the men.

Yeah, that’s a half of million dollars! That’s life changing money for most people!

Here is something else that came out of the study that I thought was fascinating, people who are ‘agreeable’ by nature, actually make less money!

It may surprise you to learn that more “agreeable” men earn significantly less. Being one standard deviation higher on agreeableness reduces lifetime earnings by about 8 percent, or $267,600. In this context, you can think of agreeableness as meaning a person is less antagonistic and more likely to consider the interests of others. You might have thought agreeableness would be correlated with higher earnings but alas not.

So, here we are as HR pros telling all of our employees who want to be leaders they should be more ‘agreeable’, put the interests of others above your own, etc. What we are really telling them is “hey, here’s how to ensure you’ll make less money in your career!”

I think we see this in our world today. We tend to want to believe we all want ‘servant leaders’ when it comes to someone leading us individually, or leading our companies. But, for the most part, most of our great leaders we can point to, male and female, are still overwhelmingly extroverted and mostly directive in their style of leadership.

One last thing that came out of the study is that being smart and being extroverted is not correlated. Why does this matter? Well, being smart does correlate to higher income as well. So, when we go try and select great employees we tend to just look at intelligence. Which is necessarily bad. If you are going to try to increase your talent, starting with smart people is never a bad idea, but in the long run, it’s more than just IQ:

Another interesting result from the data is that IQ and conscientiousness are not very well correlated. That implies that finding ideal workers isn’t so easy. The quality of openness, however, is moderately positively correlated with IQ, so you might expect that the smarter workers are more willing to experiment and try new things.

So, do you have to be extroverted to make more money? No, but it’s easier and more likely if you are. If you’re introverted, by nature, it wouldn’t hurt to work on your outwardly extroverted self. We all have the ability to be extroverted and introverted in certain situations. The key for earning more income is being extroverted in a professional setting.

Okay, my introverted friends! Tell me why this research is complete B.S.!

How Can You Become a Great HR/Talent Professional?

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I met an aspiring HR college student recently. The question was asked, “Tim, how can I be great at HR?” I told them to buy my book and read my blog and that’s really all there is to it! Just kidding, I said something after that as well! 😉

It’s a great question that ultimately has very little to do with HR or Talent Acquisition. To be great at HR, or anything, rarely do you have to be great at that certain skill set. For some things, it’s important: doctor, lawyer, accountant, etc. But most professions you can learn the skills, so it’s about these other things that I told this young Padawan:

– Go deep on a few things. The world needs experts, not a generalist. Don’t kid yourself to think being a generalist is really what your organization wants. People say this when they are an expert in nothing. Be an expert in something and a generalist in a bunch of stuff.

– Don’t be super concerned with what you’re going deep on, just make sure it interests you. While it might not seem valuable now, at some point it probably will be. I’m not in love with employee benefits, but someone is and when I need help with that I’m searching for that person.

– Consume content inside and outside of your industry. Those with a never-ending appetite to learn are always more successful.

– Connect with people in your field outside of your company. We are in a time in the world where your network can be Pitbull Worldwide! Use that to your advantage. There is someone smarter than you a thousand miles away just waiting to help you.

– Just because someone older and more experienced than you might think something is unimportant, don’t give up on it. We all get used to what we are used to. Older people think Snapchat is stupid and it might be, but it also might unlock something awesome in our employment brand. Experience and age are super valuable until they aren’t.

– Constantly make stuff and test it. Some it will fail, most of it will be average, some of it will be awesome. Give yourself more chances for awesome! Don’t let someone tell you, “we tried that three years ago and it didn’t work”. Cool, let’s do it again, but this time change the name!

– Take a big chance early in your career. Find a company that you absolutely love and just find a way to work there in any position, then be awesome for a couple of years and see what happens. Working for a brand you love is beyond the best career feeling you’ll have.

– Don’t expect to be “HR famous” overnight, but the work you do right now will make you HR famous ten years from now. Do the work, fall in love with it, the fame will come down the road. “I want to blog and speak just like you, Tim!” Awesome, I started doing this a decade ago. Let’s get started right now!

– Don’t discount social skills in the real world. You can be the smartest most skilled person in the room, but the one with a personality is the one people will pay attention to. This is a skill that can be learned and constantly improved upon if you work at it.

– Spend time with Great HR and Talen pros. No one is really hiding their secret sauce, you just aren’t asking them questions. The key in spending time with others is not asking them to invest more in helping you than you’re willing to invest in making it happen. I get asked weekly for time from people who rarely are willing to help me in return.

Okay, as internships are concluding for the summer let’s help these aspiring professionals out! Give me your best advice in the comments!

Your Weekly Dose of HR Tech: Microsoft’s Workplace Analytics and MyAnalytics are Pretty Awesome!

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Today on The Weekly Dose I review two of Microsoft’s newest entries into the HR tech space Workplace Analytics (WPA) and MyAnalytics. Both MS Workplace Analytics and MyAnalytics are products that can be purchased to use with Microsoft 365.

From a high level what Microsoft does is pull in your data from all the other Microsoft 365 products you use like email, your calendar, activities you do on various other products like Skype, etc. This data is then used to unlock a bunch of stuff around cultural change and transformation.

You can imagine mining this data from your entire employee population would give you insights around how to create more capacity in new ways to work, understand what your best performers are doing to be the best, how certain teams, locations, etc. are collaborating, or not collaborating, etc.

Microsoft Workplace Analytics can then help your organization show where time is being wasted, communication breakdowns, how to increase worker focus time, reduce your amount of meetings, reduce the amount of after-hours work being done, etc.

MyAnalytics can be bought by itself as a stand-alone product for 365 users, but it works great in conjunction with Workplace! It’s the natural offshoot technology for once you have your insights from Workplace you can then help individuals with how can they better manage themselves and their calendars to be more effective and efficient in their work.

What I like about Microsoft Workplace Analytics and MyAnalytics: 

– It’s 100% adoption! Your employees don’t have to do anything to gain the value of using Workplace, they just keep doing what they’re doing and the data insights automatically start coming in. Then it’s ‘just’ simple behavior changes!

– Leaders can easily see ways to increase productivity almost instantly after turning it on. Workplace gives you a dashboard that can be drilled down to the team level to show you where your team’s time is being fragmented and help get them more focus time to work better.

– It’s a dynamic tool that is fairly flexible as a BI tool allowing you to bring in other outside data like Sales metrics or employee engagement data, and give you insights on how to best work on increasing the measures that move your business.

– Workplace shows you organizational and team trends around meetings, emails, internal vs. external hours worked, meeting overviews and effectiveness, coaching opportunities, etc. It’s really unbelievable on how one tool touches every person equally in our organization and can have a real impact on moving the culture of an organization on how the leadership wants to define it.

– MyAnalytics is literally like a Fitbit tracker for your workplace. Complete privacy of the individual data. Organizations have zero access to the individual data. “Nudges” the employee to more efficient/effective behaviors based on data. Constantly gives ideas and tips to help them. Shows awesome things like what percentage of your emails were actually opened, reminds them to block time when their calendar begins to get to full with meetings in the future, etc.

When I first started to see this my first thought was “Oh no! Big brother!” but Microsoft has taken real care to ensure this is a product for a positive cultural change, not a hammer for performance management. It’s a technology to aid organizations at a high level, but also give individuals the empowerment to help control their own work lives as well.

Microsoft Workplace Analytics can work with organizations as small as a couple of hundred and still deliver great returns. MyAnalytics can work in teams as small as 3 or 4 and deliver results. It’s easy to see how you would get giant ROI at the enterprise level, but I love that this can be used for organizations of all sizes.

I’m a big advocate that HR should own culture and be the organizational performance driver at a high level. Workplace Analytics and MyAnalytics give those leaders in organizations a tool that delivers real insights into how we can begin changing work for the better! Less wasted time in meetings. Less redundant email. Less of all of those things that keep us from being successful. If you’re a Microsoft 365 shop, this is a demo you need your entire leadership team to take a look at!

The Weekly Dose – is a weekly series here at The Project to educate and inform everyone who stops by on a daily/weekly basis on some great recruiting and sourcing technologies that are on the market.  None of the companies who I highlight are paying me for this promotion.  There are so many really cool things going on in the tech space and I wanted to educate myself and share what I find.  If you want to be on The Weekly Dose – just send me a note – timsackett@comcast.net

Want help with your HR & TA Tech company – send me a message about my HR Tech Advisory Board experience.

SHRM CEO says All Employers Should “Require” HR Certification!

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Did you see this last week by new SHRM CEO Johnny Taylor?

“Require certification,” Taylor said. “SHRM certification is a validation that the professional doing the job has the competency to do it. Treat HR like a profession. Don’t just prefer—require!”  

So, there will be a reaction from the HR community on this for sure! My guess is it will be mostly negative by those who aren’t certified, and mostly positive by the small percentage, overall, of HR professionals who do have a certification.

Here’s my take – I 100% agree with Johnny!

In fact, I love Johnny even more as the selection of SHRM CEO!

We (HR) want to be put on the same level as our peers in accounting, legal, etc. They are required to complete an examination to reach their CPA or pass the bar exam. Why should HR be any different?

I think it would be awesome to begin seeing HR positions at all levels have “HR Certification Required to Apply to this Position!” on job descriptions and job postings. I think it’s a sign that organizations are saying we want to ensure that our HR professionals meet some basic understanding and competency of the profession, at a minimum.

I think the one pushback would be there is a cost of obtaining the certification. That’s a real barrier and being a professional that embraces and espouses to inclusion, we want to eliminate barriers. Thankfully, SHRM also was prepared for this and announced last week:

“We’ve adapted our recertification process to provide additional flexibility to match your learning needs.

Going forward, SHRM will no longer have a maximum limit on self-paced activities, in the ‘Advance Your Education’ category.”

What this means is an HR professional can go out and take all 60 recertification credits for free through various webcasts or other self-paced free HR learning opportunities.

There still the cost to recertifying ($100 for members, $150 for non-members) and a cost to take the initial exam ($300 or $400, respectively). The reality is we all have investments we need to make to maintain and grow ourselves in our profession. This is a rather small amount for such a great profession.

I’ve been a long time vocal critic of SHRM in many ways but I love this push from Johnny to the profession. Sure it’s a bit self-serving since SHRM is the one selling the SHRM-CP and SCP certification (along with HRCI who sells the PHR, SPHR, and GPHR separately), but I don’t care. It’s the right thing to do.

I’ve been an HR professional who has held a certification since 2001. Gaining that certification took work, study, and practice. It wasn’t easy. After completing the examination and passing it was a big deal. 17 years of pursuing continuing education puts me in a really great position as a professional that I know a great deal about HR in a number of facets.

Does this make me a ‘better’ HR professional than someone who does not have a certification? That’s the big question, right? I believe it does, on average. Sure someone can know more than me, who does not have an HR certification, but normally, I would say that is not the case.

So, kudos, to Johnny, who got beat up recently in social media for shaking President Trump’s hand and taking a pic at an event. I believe requiring HR certifications for HR positions is the right stance to take for SHRM and for the profession.

What’s the Best Day of the Week to Take Off?

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Right now you’re probably in the middle of your ‘summer’ work schedule. You know where the office gets out early on Friday or doesn’t even come in on Friday so everyone can have the long weekend and enjoy the great summer weather. In the North and Midwest, where we have short summers, this is fairly common.

I have a confession to make. I’m an awful judge on what I really want for myself.

When I was in college I scheduled myself from 8 am to noon, Monday through Thursday believing how great it would be to get school done early and have the entire rest of the day off to do whatever it is I wanted, and have a long weekend. It was a disaster! Not only did I have my afternoons and long weekend, I also had most mornings off, because I didn’t drag my butt out of bed to go!

I have this same ‘traditional’ mindset when it comes to flexibility scheduling at work. In my mind, I believe I would want to either take off Friday (ideally, choice #1) or Monday so that I could always have a long weekend. Without really putting thought into it, I think most people would say the same thing.

As with everything nowadays, some research is helping to shape my mind differently:

The key is giving yourself a beat, a day to make your own pace, and to break the tyranny of the over-scheduled work week. Our human experience of time is ordered by “pacers,” both internal (like being a “morning person” or a “night owl”) and external, like the work week or a deadline, says Dawna Ballard, a communications professor at University of Texas at Austin and a scholar of chronemics, the study of time and communication. “Everyone has a different chronotype. Some people are slower moving, some people are faster moving,” she told me over the phone. “Our work, though, just goes and throws that out the window and says actually, this is how fast you have to work, this is when you have to work…

…One of the hallmarks of modern life is that our internal and external pacers are often at odds with one another—one reason Monday mornings are difficult. “You’re coming off from a weekend, where you do have your own pace,” Ballard says, explaining the Monday blues from a social science perspective. “It’s having to go from your pacer, back to this other pacer, there’s that friction.”

So, what’s the best day to take off in your week?

Wednesday!

Having that break in the middle of your week does a couple of really positive, psychological things. One, you go into your week knowing you only have two days of work, until your next break to do ‘you’ stuff. Then, another couple of days before a two-day break. The second thing is having that mid-week break allows us to do life stuff when it’s less busy with everyone else doing ‘life’ stuff.

You can go work out at the gym and it’s not busy. You can go to a doctor’s appoint or get your hair done in the middle of the day, that’s not a Saturday. You can go to the DMV when it’s quieter than normal. You can take a breath at home, while it’s quiet and recharge your batteries.

When you look at adding a little bit of flexibility to your organizations, it doesn’t always have to be some sort of “we’re letting everyone out early on Friday”. Maybe some of the best ‘flexibility’ would be having a half-day on a Wednesday! Can you imagine instead of a half day on Friday, you got a half day on Wednesday each week? How would your life change?

The next time you use a PTO day to extend a weekend, rethink what you’re doing and try taking a PTO day on a Wednesday. It just might be the break you need to keep you fresh all week!

Taking a Vacation from My Vacation!

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I’ve got three sons, for years we would plan and save to take a big annual vacation with our kids. Places like Disney, and national monuments, and beaches. All the work to get ready for it, all the excitement, all the letdown! I should have saved all of that money for when they were older and then just left them at home to fend for themselves while my wife and I spend three weeks in Hawaii!

Let’s face it, taking a vacation with three kids is not a vacation. There should be a different name for taking a vacation with three kids.  It doesn’t matter where you go with three kids, it’s not relaxing, in fact, it is the opposite of relaxing.  If you go on vacation with kids coming back to work is the real vacation.  We all know it, but no one wants to admit it because you just burned valuable days off and a giant pile of cash.

This concept of vacation is very personal to your employees.  It has a huge impact to help your employees keep a good balance in their lives.  That’s why I was excited to read about some research being done to determine the what is the perfect amount of time on a vacation to get to an ideal state of relaxation.  From the WSJ:

“In a study of 54 people vacationing for an average of 23 days, Dr. de Bloom and co-researchers found that measures of health and wellness improved during vacation compared with baseline, peaking at the eighth day before gradually declining.

“It could be that eight days is the ideal to fully gain the benefits of a holiday,” said Dr. de Bloom. The study was published in 2013 in the Journal of Happiness Studies.

Laura Beatrix Newmark, of New York, has tried getaways of different durations. Her ideal vacation: nine days. “You really feel like you can get into a different zone and then when you come back you feel like you’re in a different mindset,” said the 38-year-old entrepreneur and mother of two young children.”

Eight days. Seems about right. You take off on a Friday after work, maybe sneak out a little early. You then have Saturday, Monday, Tuesday, Wednesday, Thursday, Friday, Saturday and Sunday. Eight days.  The problem is that first day never seems like a vacation as you get settled in and try to unwind and that last Saturday you need to start packing and getting stuff together because you leave on Sunday. That final Sunday might as well be a work day because you definitely aren’t on vacation any longer!

One other thing the study found that could really help your employees if getting people to think and visualize their vacation in the days leading up to their time off. We’ve all heard that: “Oh, Tim, he’s already on vacation!” But, I’m sure it helps people start to unplug from the job and get ready for the full-time role of just enjoying some downtime.

Those who are working like mad right up until the time they leave, have a really hard time shutting it off!  A great engagement idea would be getting employees little care packages of things that will help them on their vacation: some extra sunscreen, bug repellent, a Starbucks card, etc. Help them start to get their mind on having a relaxing time.

If they’re parents, select a safe word they can text you to call them and tell them they are urgently needed back at work!

Career Confessions from Gen Z: The 4 Essentials Every Office Should Have!

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Ever since I was little, I’ve been pretty particular about the spaces that I live in. For my 12th birthday, my parents took me to Ikea and Target and let me “re-do my room” with a New York theme. I can also vividly remember the time when my Mom and I went to tour a college in Upstate New York and we almost left the hotel because we were worried about bed bugs. This particularness caused a lot of stress before going off to college about having to share a room with another teenage boy (a personal nightmare for me).

As I am entering the workforce, I know that this will carry over into the office that I work in. On average, a person will spend about ⅓ of their life at work. That’s longer than most of us will spend at any house we will ever live in! Since I’ve started interning, I’ve noticed some things that have made a big impact on my happiness and productivity at work:

1. Drink Machines: I am drinking water CONSTANTLY and I know that almost everyone sitting around me has a water bottle or cup at their desk. Having a water machine, like a Brita filter attachment or a Bevi machine, is more important to me than having elaborate coffee makers or nice vending machines. (editor’s note – the apple doesn’t fall far from the tree – I’m a life-long advocate for a Diet Mt. Dew soda fountain in the office!) 

2. No Cubicles: I didn’t anticipate this making such a difference, but I now do not want to work in a cubicle. At Quicken Loans (where I’m interning!), we have little half walls that make rows and columns, but they are short enough to see and talk to the people around you. This creates a much more open environment so I can ask questions without getting up or I can eavesdrop on other people’s conversations!

3. Bathrooms: Read my last post for more of my feelings about bathrooms at work but basically, just make them nice.

4. Updated Decor: I get that office decor is difficult. You’re never going to please everyone’s tastes, it’s expensive etc. BUT you could at least put in a little bit of effort to put some decor on your walls that is from this century. A good rule of thumb: if your decor is older than some of your employees, you probably should get rid of it! There’s nothing sadder to me than being surrounded by gray all the time. Liven it up a little!

Now, I could go on for a while about what else I look for in an office, but these are just the basics. Just put a little effort to meet your employee’s requests, and you’ll probably be on the right track!

Another Editor’s Note (because apparently, I don’t have my own platform to say anything I want): I’ve been telling HR leaders this for a couple of years now. With Gen Z – Design matters! It matters in your employment brand, it matters in your personal workspaces, it matters for younger generations. Perception of working in a great place is influenced by design. Don’t discount it! 

 

This post was written by Cameron Sackett (not Tim) – you can probably tell because it lacks grammatical errors!

HR and TA Pros – have a question you would like to ask directly to a Gen Z? Ask us in the comments and I’ll respond in an upcoming blog post right here on the project. Have some feedback for me? Again, please share in the comments and/or connect with me on LinkedIn.

HR Mind Games: Does a Cognitive Assessment Tell Me a Candidate is Stupid?

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HR Mind Games Hangout – Episode #2 – Does This Cognitive Assessment Tell Me a Candidate Is Stupid?

HR Mind Games is a quick hitting, 20-30 minute hangout hosted by Kris Dunn, founder of FOT and the HR Capitalist and sponsored by Caliper, the leading provider of Assessments for Selection, Talent Management, and Leadership Development.

In each episode of Mind Games, we’ll cover how general assessment geekiness/expertise helps HR and Recruiting Pros make better hires as well as maximize performance once that talent is in the door!

Episode #2 – Does This Cognitive Assessment Tell Me a Candidate Is Stupid?

CLICK HERE TO SIGN UP FOR THIS EPISODE OF HR MIND GAMES!!!!

In our second episode of HR Mind Games, we’re going to focus on the use of cognitive tests as part of the assessment platforms. Does a low cog score mean someone is stupid? Can low cog person be a high performer? How do you coach a low cog scoring person to be successful in your organization that demands speed?

If you’ve ever run into a cognitive test as part of an employment assessment and said, “****”, this one is for you. Join us on 7/31 and we’ll break down the wide world of cognitive tests in candidate/employee assessments.

Future episodes: Narcissistic Managers, How to Use Assessments for Good, Not Evil….

CLICK HERE TO SIGN UP FOR THIS EPISODE OF HR MIND GAMES!!!!

 

Why do we hang on to bad hires for so long?

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I’ve been very public about my philosophy on hiring. I do not hire to fire. In no way do I hire someone thinking “I can’t wait until the day I fire them!”, I don’t think any of us really think that!

I hire someone believing that with the right training, development, and support, they will be wildly successful! I own at least half of that equation, the person I hire owns the other half. Many times it works, sometimes it doesn’t.

The problem with my philosophy is “Sunk Cost”.

Sunk cost is an accounting philosophy that means a cost that has already been incurred and cannot be recovered. So, you’ve already sourced, recruited, and trained an employee. You’ve gone beyond training working to develop them. All those costs are now spent.

BUT – because you’ve ‘invested’ those costs into an employee, you are less likely to let them go believing you are more likely to get a return on those costs. In reality, there is absolutely zero evidence that shows you’ll get any return for future investment into that employee, but we really struggle to give up on them based on what we’ve already spent.

This is super common in the management of people resources!

Well, I’ve already dropped $50K into Tim, I guess another $10K isn’t that bad. When in reality that $10K is actually way better spent on another employee, and you fire Timmy!

I’ve known about Sunk Cost for a long time, but now there is actually scientific evidence to back up the fact we should be firing failing employees sooner:

“Sunk costs are irrecoverable investments that should not influence decisions, because decisions should be made on the basis of expected future consequences. Both human and nonhuman animals can show sensitivity to sunk costs, but reports from across species are inconsistent. In a temporal context, a sensitivity to sunk costs arises when an individual resists ending an activity, even if it seems unproductive, because of the time already invested. In two parallel foraging tasks that we designed, we found that mice, rats, and humans show similar sensitivities to sunk costs in their decision-making. Unexpectedly, sensitivity to time invested accrued only after an initial decision had been made. These findings suggest that sensitivity to temporal sunk costs lies in a vulnerability distinct from deliberation processes and that this distinction is present across species.”

This scientific study showed both humans and rats basically do the exact same thing. If we feel we have already invested a ton of resources to a task, we are more likely to continue pursuing this task even when all the evidence to that point has only shown failure!

This is Poor Performing Employee Management 101!

-You hire an employee.

-The employee gets trained and should have the skills to perform the job.

-The employee doesn’t perform the job, so you give more resources to help get them up to speed.

-The employee still doesn’t perform.

-The manager decides not to terminate the employee, but to continue to give more resources and chances.

Why do we do this?

You hired 3 employees before the failing employee and all three completed training and did the job successfully. We know the process works. So why do we not fire the employee?

Sensitivity to Sunk Cost. We are as dumb as rats when it comes to investing our own resources into failing employees. We act the exact same way!

It has nothing to do with the employee and our desire to give everyone a fair shot (I don’t hire to fire). It has everything to do with our own internal drive of not wanting to lose, what we fell we’ve already invested, even when all the data tells us future investment is akin to burning a pile of cash.

So, don’t hire to fire, but also don’t be as a dumb as a rat and not fire someone who shows you they can’t and won’t do the job you hired them to do!