The story repeats itself again and again in most small businesses: “Our new employee had the right experience, decent references, and interviewed well. But here we are six months later and he’s not working out. We need to start all over again!”

Better luck next time? Not necessarily – that is, if you continue to select talent the way you always have, hoping that you’ll be luckier next time.

What does the research show about talent “churn”?

Research shows the typical interviewing process is reliable in predicting successful job hires only 14 percent of the time. The 86 percent that don’t work out keeps the vast majority of small business owners going in circles through a self-created revolving door of resumés, applications, hires, and fires.

In turn, company profits literally evaporate due to lapses in staff coverage that result in low productivity, dissatisfied customers, lost business opportunities, continual training expenses, and burnout of their remaining employees who have to pick up the slack.

Negative impact is so serious from continual talent churn, that studies now show it to be a major contributing factor in the demise of most small to medium size businesses. For example, a leading financial institution calculates the minimum hidden cost of replacing a key manager or salesperson at three times the annual salary, and can actually reach as high as ten times depending on such factors as customer fallout.

What’s the real cost of hiring an average versus a top performer?

But there’s another equally important question about hiring costs that most small business owner/managers never even think to ask themselves, namely: What’s the real cost of hiring an average, C-caliber player that gave every impression they were an A-caliber player when they were interviewed? Numerous studies have shown that A-caliber players contribute at least three times more revenue than C-caliber players, and can reach as high as 1000 percent more.

Consider the real world impact of this on a company’s sales:

1. Assume the annual sales volume per average C-caliber salesperson is $100,000.
2. Assume the output of a top A-caliber producer is just the minimum multiple of three times that of the average C-caliber salesperson: 3 X $100,000 = $300,000.
3. The value added by a top performing A-caliber salesperson therefore is $200,000 ($300,000 – $100,000).

How many sales people on your roster right now would qualify as A-caliber players?

How do you know for sure? The results that your top performers produce may only qualify as “average” compared to what your competitor’s top performers produce. What’s the real cost to your company in lost sales for hiring and keeping C-caliber players on your roster?

Considering the negative impact that talent churn and the hiring of “C” caliber players has on your company’s bottom line, what are the options to remedy ineffective hiring practices?

Choose one:
a. Interview more people, faster.
b. Throw all your resources at recruitment.
c. Find and implement a more effective process.

If you chose “c” above, then you are on the right track. Clearly, continuing to hire as you always have, hoping for better luck next time, will not propel your business forward. Since your human resources account for up to 80 percent of your competitive advantage, something has to change. A new approach to identifying and retaining top talent is far overdue.

A new approach

One such approach is on creating a clearer definition of the key jobs your organization has to fill. You will have a much better chance of finding the right fit for a job if you correctly DEFINE THE JOB and then HIRE THE MATCHING TALENT to fill it—a logical approach. The concept is still too new for many businesses to comprehend, as they repeatedly practice talent mismanagement through “fire, ready, aim” instead of “ready, aim, fire!”  Besides, many business owners ask: Is it really possible to measure a JOB and then apply the SAME measurement to TALENT?

Yes, you can do it. You can define jobs and identify matching talent with factual, unbiased measurements to improve the rating on your company’s talent management scorecard. It’s a matter of beginning your next hiring process by assessing the JOB first, and identifying its top 3-5 key accountabilities. The result will be an accurate template for objectively assessing and hiring MATCHING TALENT.

Where most business owners/managers drop the ball

Most business owner/managers have a pretty good understanding of what their ideal candidates must possess in terms of “hard” skills. What few correctly identify, however, are the intangible success factors in the job that accurately differentiate a C-caliber player from an A-caliber player. Instead, they rely on “gut instinct” which has been proven to be notoriously unreliable.

Companies that add this new assessment methodology to their current hiring process put an end to poor hires, and the related drain on their business profits.  Investments made in selecting the right talent for evolving jobs continue to be the most valuable investments in the future success of any business.

And when you consider the return on your investment from hiring an A-caliber player, can you really afford not to do it?  You can greatly increase your “luck” in finding the right person for the job by simply adding a new and measurable “logic” to hiring talent!