The Cost of Bad Hires

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If there is one constant in HR and Recruiting – it is the fact that no one will ever agree on how much a bad hire costs an organization!  Never!  It doesn’t matter how much time you put into coming up with some algorithm, how much research to back up your numbers – it’s still going to be 90% subjective/soft numbers at best.  This is the main reason executives in our organizations think the majority of HR/Talent Pros in the world don’t get business!   We come to them with stuff like this:

“We need to reduce turnover because of Engineer who leaves us, costs the company $7,345,876.23!”

Then you go through a 73 slide PowerPoint deck showing how you came up with the calculations all the way down the parking meter expense during the interview, and when you’re done – no one believes you’re even close to an actual number.

The gang over at National Business Research Institute put together a pretty good infographic proving my point – take a look:

NBRI - The Cost of a Bad Hire Infographic

97%+ of the ‘lost’ cost is from “Training” and “Productivity Loss” – those are very subjective measures in almost all organizations.  What that says is – ‘Oh, Jimmy isn’t working out – fire him – and because he wasn’t working out we lost ‘X’ percent of productivity over any other possible replacement (which in itself is a whole other leap)’.  And, we lost 100% of training we put into Jimmy because he is now not here.  Which again is subjective, since most training isn’t one-on-one, and resources used to train are almost always not used just on one person, etc.

So, here’s a better way to figure out the cost of a bad hire:

1. Ask your head of finance or accounting what they think it costs? “Ballpark it for me?”  $10K? Sounds great! We’ll use $10K.

2. Use $10K as your cost of bad hires.

Your reality – HR’s Reality – is it really doesn’t matter what the number is – only that the powers that be in your organization all agree on the number. Stop wasting your time trying to come up with a better number – just come up with a number that those signing the check agree is probably legit.

 

The 4 Letter Word We Never Use In HR

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I’m not sure about your HR experience but in my HR experience I’ve used every 4 letter word known to man – except one.  That word is:

Luck.

This came to mind recently when I was speaking to a really close HR friend of mine who happens to work at a really great company.  The kind of company who wins all of those HR and Recruiting awards and accolades for doing ‘great’ HR work.  For being the industry leaders in HR and Talent.  For being the company ‘we’ should all follow and emulate.  My friend is funny, I like hanging out with funny people, and she told me the only reason they’ve won any of those awards is luck!  Not skill, not hard work, not better HR/Recruiting talent – it is luck.  Granted, their team had to do some work after the luck to take advantage of timing – but the Luck is the reason they got to ‘greatness’.

She says that they were your average to below average company – nothing special – when a perfect storm of timing hit them.  They had a product that became popular and they went virtually overnight from being a nobody to a somebody.  “We were the same company, but now everyone wanted to know how and what we were doing in HR and Recruiting!  Internally, we laugh about it – we weren’t doing anything new or different – but being asked to accept awards and come speak.  To hear professionals all of sudden think your something special is a pretty cool feeling!  Everyone should experience it, but it makes me sad because I know HR pros who are hell of lot more talented than I working at crappy companies doing much more than we are in HR to turn their companies around – and they’ll never get awards and no one wants to hear them speak – and quite frankly they do HR better than we do!  We got lucky…”

In HR, and probably most parts of our organization, we never want to give Luck credit for anything.  It diminishes us as professionals, and diminishes the profession.  It can’t be LUCK that is making us ‘better’ it’s our skill!   We didn’t get lucky by hiring that designer who after 5 years just had inspiration and got our company noticed, our selection process picked that person. We didn’t get lucky by winning that harassment lawsuit, it was our training.  Luck is a very bad work to use in the corporate world!  Can you imagine going into your CEO when she asks “So, how did you guys lower our turnover by 25% in the past 12 months?”, and you go “Luck”!  But how many of ‘us’ had these conversations in the past few years when we saw our turnover plummet because of the recession, and our employees having no other job choices – go into our executives and talk about our ‘processes’, our ‘engagement programs’, our ‘programs to reduce turnover’ – when in reality you could have done nothing and turnover was going to plummet.  Luck, was on our side.

I like to give Luck credit.  I’ve been very lucky in my career – and I’m always willing to give it credit.  I think luck has more to do with success than people want to give it credit for.  Sure, once luck comes your way, you better have the skill and motivation to take advantage of your situation – but luck is behind so many great pros.  I still believe in hard work and skill will take you far – but hard work, skill and luck – will take you farther!   That word Luck is real tricky.

People As Revenue Drivers

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Is everyone in your company valuable?

Your CEO will say “Yes” publicly, but privately we all know the deal – some employees are more valuable than others.  That’s life, that’s why we all don’t make the same salary.  Some skills are more valuable than others.

Do you measure the value of your employees in terms of revenue?

Most companies don’t.  Why?  It puts too much reality in the face of your employees.  It’s like drunk uncle Charlie at Christmas, no one talks about him, but everyone is keenly aware how many he’s had and when it’s time to start cutting him off.

What would happen in your company if you put together an algorithm to measure value in revenue and compensated your employees based on who are the ‘true’ revenue drivers of your company?

Hard question to answer.  You would probably see a number of things. You’d see none sales executives making a hell of a lot less, that’s for sure!  You would see individuals who had a direct impact to driving revenue be in a much higher influential position within your organization.  You would see HR begin to support areas they are not supporting right now, or not supporting as much as they should!  Like?  Like, sales training and motivation.  Like, a performance management system that didn’t lack accountability and movement out of low performers. Like, compensation models that weren’t designed to keep the masses ‘satisfied’.  Just to name a few.

I’ve seen companies begin to look at these numbers. Simply, they’ll take their total revenue divided by headcount to really just have some numbers to start playing with, when positions are filled in a timely basis.  If we can assume, in a perfect world, that ‘all’ employees have an impact to revenue, that means every single day you have an open position within your organization, at every level, you are losing revenue.  Talent Acquisition/HR is losing the company money because it can’t keep up with turnover or growth.  That’s very simplified, but the reality we face.

Too few Talent and HR Pros don’t view their jobs in that context – ‘loss of revenue’.  They have excuses reasons why they can’t fill those positions – the list is endless.  When I see organizations with hundreds and thousands of open jobs – I start calculating in my mind the millions of dollars their failed HR shops are costing their companies and stakeholders.  It’s a very sobering way to look at the HR function – # of Open Positions * Days = Loss of Revenue.  If you can come up with that number – it makes the business case to upgrade your HR shop extremely easy.  If you can’t come up with that number – I wonder how many positions you are hiring that don’t drive revenue and costing your company in unneeded expense?

I wonder how much revenue you are costing your organization, today?

HR Lady in Topeka: You’re Meaningless

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Take a look at this map depicting how big California’s population is as it relates to the rest of the United States:

Map

Each colored section represents roughly 38 Million people.  Want to know why so much focus in HR (heck, most things in the US) is spent on what California is doing?  It’s because California would be the 33rd largest ‘Country’ in the world if we allowed them to be their own country!  Want to know why your voice at SHRM is never heard?  Take a look at the map.

Every voice is important as long as it comes with 38 Million votes.  Sometimes it’s hard for us to understand why certain things happen in the U.S., especially all my HR brothers and sisters in the Midwest, until you take a look at population concentrations.  Then it becomes painfully clear.  No single state has as much influence on HR policy in this country than California.  Which potentially has big problems down the road – as many California ‘ideals’ about workplace laws and practices, might not match those in the South, Midwest, East and/or Northeast.  It’s one thing I said my entire HR career – I’ll work anywhere for the right job – except California! You want to see bad HR policy run a muck at its finest…

Don’t hate the HR Pros in California – they’re just playing the game – and paying $1 Million dollars for a 1200 sq. foot home. But, hey, it’s sunny!

What can you do about it?  Move.

 

Are You A Big Deal?

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I have a pin in my office I picked up a couple of years ago at the SHRM National Conference from the Baudville booth (no this isn’t a paid post! But I love their company!), it says:

“I’m Kind Of A Big Deal”

I thought it was funny – it’s been stuck to the board behind my desk for over 2 years now.   I like it because it reminds me daily – I’m not a big deal – far from it.  In fact it makes me laugh when someone thinks I’m a big deal because I’m the President of a company, or because I write a blog (you know anyone can do this, right!?) or that at one point in my kid’s life they believed that I use to be Batman, but stopped to be a Dad.   I’m not a big deal.

Here’s the thing about being a Big Deal.  If you truly are a ‘Big Deal’ you don’t act like a ‘Big Deal’ – if you’re a wannabe ‘Big Deal’ then you certainly try and come across like a ‘Big Deal’.  Do you follow me?  Apparently getting an executive HR job in corporate America makes you a wannabe ‘Big Deal’ – or that might just be how certain HR executives like to treat almost anyone they come into contact with.  You might think I would have to worry about writing something like this – but I don’t – wannabe ‘Big Deals’ don’t read HR blogs.  Wannabe Big Deals read their own press clippings – which are usually those articles in the monthly employee newsletter, or local shoppers guide – because they’re a big deal.

I’ve never really understood the ‘Big Deal’ phenomenon.  When I was on the corporate side of the desk I would get bugged by numerous calls from vendors and hiring managers and community groups – all wanting a piece of your time.  I get it, it gets frustrating. Being a Big Deal has those draw backs – people wanting your time.  Being a Big Deal, though, doesn’t give you a license to be an asshole.  Asshole Big Deal is not the kind of Big Deal you want to be.  Treating people like they are a small deal, does not make a Big Deal any bigger, it makes the Big Deal smaller.

I have people reach out to me frequently because of all the writing I do – I respond to each one as if I was responding to a coworker or friend.  If I can’t help, then I will try and find someone who can.  If I can help, I will.  If they want me to sell their product – I will tell them how that works – I’m a really good salesperson if you pay me – I tend to be a really bad sales person if you’re asking me to do your job for free.  At no point do I become a Big Deal – because I’m not.

But I have a blog which allows me to write about ‘Big Deals’ – I guess that’s something.  I might have to reach out and ask Baudville if they’ll send me some of those pins so that when I run into ‘Big Deals’ I can make sure to send them one – just so everyone is clear on what who they are…

 

Profiling Needy

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Last week I wrote a post about how money can buy happiness – and decided to do a ‘Pay-It-Forward’ exercise with my team – this is from that original post:

“Tomorrow morning I’m handing each one of my employees a $100 bill and asking them to go out into the world at some point their day and give it away – randomly – or not randomly – to someone other than themselves.  $100 isn’t a giant amount for my staff – but I’m sure it will have a big meaning to someone else – I think some of the people on my team will feel good about helping someone out – about surprising them and making their day/week/month.   My hope is they’ll come back with a smile and a story.  My hope is they’ll feel a little better about their day.  My hope is they’ll feel happy.  My hope is – money can buy happiness.”

So, this went down – a stack of $100 bills and we all went off to find who we thought needed that $100 the most.  First, I want to share some learning from this activity:

  • I gave very few rules – one was that they had to ‘give’ the money away that day, by midnight – almost everyone wished they had more time.
  • Apparently when you go to give out money – you do a lot of stalking! You want to make sure the receiver deserves it so you follow them around for like 10 minutes which tells you all you need to know about a person!
  • When given the chance to help – it’s hard to find someone to help! In any random day you see all kinds of people to help – someone hands you cash and says ‘Go Help’ and they all disappear…or do they!?  It seems when you actually have the resources to help – you do more ‘Profiling’ and become much more selective about who is actually needy! I say this with all positive intent – my team wanted to help out the ‘most’ deserving person – and you find out it’s hard to tell degrees of deserving apart!
  • In this exercise many on my team set very high expectations for the event of giving – reality is you probably don’t change someone’s life with $100 – but you surprise a lot of people!
  • Some people on the receiving end – are very cynical! (We actually had people say: “So, what do I have to do for this”; “Do I have to fill out a survey”; “What church are you from”, etc.  Just take the damn money! I was trying to be nice!  Others are very gracious.
  • You can find out a ton about what is important to your team, by listening to how and what they wanted to help others!

The Stories:

We had plenty of hugs, some crying, some cheers and a whole bunch of smiles!   We had people help out animals, babies, old people, young people, poor people, families, teens, schools, bartenders, servers and entrepreneurs.  I had one team member who wanted to share our experience and asked the person he gave his $100 to keep $25 and pass the rest on with the same instructions – 4 total people getting a nice smile in their day.  I had many team members stalk local grocery stores wanting to help others pay for their groceries – to make their week a little easier  – these stories were the funniest hearing how they stalked the aisles and ‘profiled’ the neediness of the individuals.   We heard from teammates who seemed to have a hard time giving the money away at every turn – some people, it would seem, are to proud to accept a simple gift of help (not something you see everyday in today’s world).

One big learning my team took away from this was that quite possibly – it would have been more rewarding if it was their own personal money – and not the companies money (I said I be willing to take it out of their check! 😉 ) But many decided the experience was so rewarding they wanted to do it on their own – and share the experience with their families – the Pay It Forward principle at it’s best.

I think I learned the most – about myself.  In the end I gave my money to a young Latino who had just started up his own business.  It’s tough to start a business in any climate – to be a young minority in Michigan, it might be even harder.  He captured my heart – his will, his enthusiasm, his naive confidence that it could only be successful!  I went looking to help someone who couldn’t help themselves and found myself supporting someone who decided, against all odds, to help himself.  I was drawn to support that.  I’m not sure what that says about me – but the experience made me ‘happy’ and made me feel a connection to my community that I didn’t feel before.  I’ll do this again.  Like my teammates at work – I’ll use my own money – I’ll involve my kids – I’ll try to hear more stories.

The money invested in this was the best investment in my company that I’ve made in a very long time.  Please steal this idea – it doesn’t have to be $100 bills – it can be $5, $10, whatever – you’ll be better for it!

 

 

Your Greed Stops You From Having a 4 Day Work Week

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“ Back in 1930, renowned economist John Maynard Keynes predicted technological advancements would mean we would all eventually work just 15 hours a week. That same year, evolutionary biologist Julian Huxley predicted the two-day work week. Both men warned that someday, we would have so much leisure time, we would be bored out of our minds.”

Can you imagine that? 15 hours per week! Bored out of your mind!

What the hell happened?!

According to a recent article in CNN/Money – we all got really greedy!

“These great thinkers were right about one thing. Technological progress has made workers more productive than ever before.

Yet rather than cutting the work week gradually over time (like the Europeans did), productivity gains have fueled a consumerism boom in the United States. So instead of taking time off, Americans are just buying much more stuff.

Benjamin Hunnicutt, a historian at the University of Iowa, calls the shorter workweek the “forgotten American dream.”

In most cases, fewer hours mean workers might have to take a pay cut, and would not be able to buy as much. But in exchange, they’ll get more free time, save on child care costs and likely be healthier and happier in general.

For example, Dutch workers are on par with American workers in terms of productivity per hour. They pay higher taxes and earn less than Americans. But on average, they work roughly 11 weeks less than their American counterparts each year, have access to government-funded health care, pay little or nothing for a college education, and have far more leisure time than the American.

When UNICEF recently ranked 21 industrialized nations by well-being for children, Netherlands was on top and the United States was near the bottom, in 20th place.Guess who also ranked happier with life overall? The Dutch worker.But Americans still labor on.

“The idea that we can grow our economies forever and ensure everyone a full-time job is a myth,” Hunnicutt said. “We have to deliberately choose to work less and therefore buy less.”

So, are you willing to go with less, so you can work less?  I think most people would say – “No.”  I see it far to often, especially in the boom or bust economy of Michigan’s Auto Industry, when times are great and overtime is being worked by all – you see the new cars, the summer cottages being bought, etc.  People work more, to accumulate more, with the thinking at some point they’ll be able to stop and enjoy it all.  Then one day you look up and realize, you have to keep working to keep all that you’ve accumulated.  Consumerism is a bitch!

I wonder what life would be like if I had less.  A number of years ago my family relocated and we were between houses and staying in corporate apartment – all we had was our cars and some clothes.  My wife and I look back at how easy of a life that was!  No yard to mow, no house to constantly take care of, no keeping up with the Jones.  We took the kids to parks, we did more as a family, we were never happier, and we had less.  There’s something to say for less…

 

 

Fast: As Defined By Various Hiring Managers

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I’ve been in Recruiting now for 20 years!  Can you believe it?!  That I started recruiting at 10 years old…

The other day I was thinking about how the word ‘Fast’ takes on many different definitions when you talk to various hiring managers, or in my case, various hiring managers at various companies.  When most people think of the word ‘Fast’ in the world, I assume they are thinking about timing – quick timing, short timing, etc.  In the recruiting world when a hiring manager tells you – “We need to fill this position ‘Fast’!”  99.9% of recruiters will feel that means if I find the a good candidate – that manager will move right away to interview, offer and fill the position.  Not so ‘fast’ my friends!

When I hear ‘fast’ come out of a hiring managers mouth I get excited! Finally! A hiring manager who wants to move – a go-getter – a doer – I’m closing this puppy by the end of the week!  In my mind I start to calculate how ‘fast’ we can actually fill this position.  It’s Monday – I can find a candidate by Tuesday, Interview on Wednesday, offer on Thursday – it’s not out of the realm of possibility that the candidate can start on Monday! That’s like hitting for the cycle in Recruiting!  A one week recruiting process – now that’s ‘fast’!

Here’s how Webster defines ‘Fast’:

1 –

a : firmly fixed <roots fast in the ground>

b : tightly shut <the drawers were fast>

c : adhering firmly

d : not easily freed : stuck <a ball fast in the mouth of the cannon>

e : stable <movable items were made fast to the deck>

2 –
a: firmly loyal <became fast friends>

 

It’s not until you get down to the third definition in Webster’s that you being hearing words like: quick and rapid!  Now, as a Recruiter, ‘Fast’, in terms of a hiring manager makes complete sense!  Firmly fixed! Tight! Adhering Firm!  Not easily freed… 20 Years is how long I’ve been recruiting and thinking that ‘fast’ actually meant ‘quick’ and ‘rapid’ when filling positions.  Now, I just feel stupid!  This whole time I thought hiring managers wanted me to fill their positions quickly.  So many days being frustrated when the hiring managers were slow to move on candidates, when I thought they were going to move ‘fast’ – now – only to find out they were moving ‘fast’ – hiring manager ‘fast’…

 

I’m sure HR never would define ‘fast’ like a hiring manager…

 

 

16 Stupid Moves That Get You Fired

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TheLaw.TV had an article recently of the 8 Stupid Moves that Get You Fired.  Two things about this came to mind: 1. What the hell is TheLaw.TV (is it a TV show on the internet?; if so why the article? Why .TV?  NBS, ABC, CBS, FOX, etc. don’t end in .TV); and 2. I’m pretty sure there’s  more than 8 Stupid Moves to get fired!

Here are the 8 Stupid Moves from TheLaw.TV:

1. Being late too often.

2. Stealing from the company. (I’m sure they don’t mean like office supplies – they mean like Stealing-Stealing…)

3. Too man sick days.  (Yep – you get sick days – but companies don’t like when you use them, we just tell you, you should use them – it’s Jedi-mind-tricks, but HRish)

4. Falsifying time card. (My personal favorite is having a ‘friend’ clock out for you later in the day, when you left early. I get to fire both of you!)

5.  That’s not on my Job Description. (I don’t think this one was real but someone at TheLaw.TV needed some more – I know this is fake because the only thing SHRM has truly taught HR Pros in the last 50 years is that one line on the bottom of every Job Description – I don’t even need to write – You know it! “Other duties…”

6. Drinking on the Job. (before noon.)

7.  Sexual Misconduct. 37.8% of people met their spouse at work according to an eHarmony totally legit survey.  In that same survey, but unpublished, were how many people found their ‘next’ spouse at work- at a slightly higher rate of 92.8%)

8.  Surfing Porn. (Nothing says ‘Fire Me’ like boobs at work. On a totally different but same note – I’ve never had to fire a woman for surfing porn at work – that might be a separate post if I could find a HR Pro willing to share a female porn firing story!)

Solid list – but remember the title was ‘Stupid’ – I think they missed a few – here’s the missed ones:

9. Cooking fish in the break room microwave.  (That’s like terrorist bad! You know who you are!)

10. Smoking Pot in Your Car at Lunch When I can see you from my office window. (“Hi (me waving) – I can see you!”)

11.  Wearing white socks with black or brown dress shoes.  (I haven’t fired anyone for this, but I’ve come close.)

12.  Fighting with the boss over some stupid idea you won’t let go of. (But really, we should change up everything we do and become a charity because 50 years of running a profitable company is enough)

13. Taking credit for crap you didn’t do, but people who report to you did. (I would actually go with hanging over firing on this one.)

14.  Asking for a salary increase after you just got a your butt handed to you in your performance review. (Gutsy, but stupid.)

15.  Listening to really weird Pandora mixes at the office in attempt to look cool. (I have to admit I did this back in the day – last year – but it was rap because I wanted to look black, not cool.)

16. Being ‘way’ into anything in an over-the-top way. (Think transmeta-physical yogo ultra-marathoner – I only eat dirt and I’m obsessed with Pokemon. Come on – you’re fired.)

Ok – give me your Stupid Move that will definitely get someone fired!  Hit me in the comments.

Would You Tell On Your Boss?

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Classic HR Line by –  HR Pro:

“You know who tells on their boss?”

Employee:

“Who?”

HR Pro:

“Soon to be fired employees.”

If you don’t think this to be true, you either haven’t been in HR long enough or you haven’t been in a position to have to nark on your boss!   Why does this happen?  I’ll let this recent article from Business Week about the Tiffany’s VP caught stealing over $1M in jewelry explain:

“Chris E. McGoey, a Los Angeles-based security advisor, believes that other employees at Tiffany’s may have had suspicions long before the investigation, but were afraid to speak up. “I guarantee you that a company like Tiffany’s has checks and balances,” he says. “But it didn’t apply to [Lederhaas-Okun.] People reported to her, and they had to relinquish their inventory to her, based on her say-so.” Even if they had concerns about why the jewelry she was checking out wasn’t being returned, he says, they might’ve been reluctant to raise any red flags. “Nobody wants to rat out their boss,” he says.”

But why doesn’t anyone want to ‘rat’ out their boss!?

It’s simple – ratting out your boss puts you in a lose-lose situation.  While the ‘corporation’ will be thankful you did this, the leadership team will be wary of you from now on out.  Not that they are doing something wrong, but you get labeled as the type of person who would be willing to tell if something did happen.  People automatically go to unethical/unsavory types of behaviors – which is the wrong thing to do.  When someone is willing to tell on someone else – leadership will then believe they are the type of personality that can’t stop from telling even simple misgivings.  Senior VP forgets to approve an Ad plan, misses deadline – causes everyone to scramble around and costs the company a few thousand dollars to get it right.  This Sr. VP would not want this to go public, it’s embarrassing, but forgivable corporate mistake.  This Sr. VP would look at our ‘rat’ as someone who would probably ‘tell’ on her, thus she would probably not want this person on her team.

Sorry folks, that’s reality in corporate America!  This is common amongst whistle-blower employees – company commends them publicly, and privately tries to find ways to get rid of them.  I’ll admit this happens more at a professional white-collar level than blue-collar.  “Professional’ employees might feel more to lose, thus less willing to come forward if something is going on.  Also, if it’s found out that something wasn’t going on – kiss your career goodbye!  Lose-lose.

So, how do you get your employees to rat on a their boss?  Don’t make them rat.  Several times in my career I’ve had employees come to me, reluctantly, when something was going on.  I gave them options on how to share the information, and still save their reputation as a ‘corporate’ person.  I usually ended up finding a way that made it plausible that either myself or another executive found the same information, thus taking this person out of the cross-hairs.  Not perfect, but it allows your employees to not have to carry the burden of being a whistle-blower.