How to Make More Effective Hires

Beverly FlaxingtonBeverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.

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Getting hiring right is crucial to both the candidate and your firm’s success – but how can you get it right?

“Hiring the right people from the start, most experts agree, is the single best way to reduce employee turnover. Interview and vet candidates carefully, not just to ensure they have the right skills but also that they fit well with the company culture, managers and co-workers.” So says a recent article in the Wall Street Journal entitled “How to Reduce Employee Turnover.” But for most companies, in my experience, the hiring process is engaged with as much enthusiasm as firing someone.

The Department of Labor Statistics shows that approximately 50% of all employees leave a job within the first six months of being hired. Couple this data with statistics from Dr. Bradford Smart’s book, Topgrading, which shows that the loss of a staff member within 24 months of them being hired can cost a firm up to 18-times that person’s salary, and you quickly calculate that poor hiring decisions are very costly.

Many of the questions I get and much of what advisors ask is related to hiring and matching the right person to the right role.

Let’s look at a few of the important components for increasing long-term successful hires:

  1. Identify success for the role. First and foremost, write a detailed position description that answers several questions: What’s the role’s accountability within the firm? What does the person in the role need to do to succeed? The job description should address the following key areas:
  • Who the employee reports to and who other key stakeholders are
  • The role’s major areas of accountability
  • Measures of performance for this person/role
  • Unique working conditions or related requirements
  • Critical success factors for the role (actions and behavioral)
  • Competencies, which include domain, technical and “soft” skills
  1. Align compensation with business objectives. In too many cases, the compensation plan has been developed around the candidate and their needs or around what the firm values at that given point in time. Review what the firm needs to accomplish from a business perspective, and then choose compensation that motivates the person in the right direction. Thus, if client retention has been a problem, the compensation plan should include something specific to this issue.
  1. Define the interview process. This is the ‘who,’ ‘what,’ ‘when,’ ‘why’ and ‘how’ of interviewing. Who should be involved in the process? What percentage weighting does their input receive? When does everyone get together to talk about the candidate and why would they recommend for or against hiring? Have a plan in advance so you aren’t scrambling to collect feedback and making a decision based on “like” or “dislike.”