Part 65: Selecting the Right Candidate – How Small & Mid Sized Companies Grow

For most companies their most important asset is their people. For those companies in the service industry this would appear to be obvious, but even in production or manufacturing companies the same is true as there are fewer staff that are required and therefore fewer possibilities of things going wrong.

There is no such thing as the perfect person for ones organization. A great person for one company may be a very poor choice for another. Someone who can’t make it in one place may be outstanding somewhere else. Having a very good batting average is the best one can hope for. Selecting the right person every time is impossible and there is no magic bullet to predict success. One should rely on battery of tools, including: a multiple phase interviewing process with inputs from several people, using various prescreening and competency tests, checking out references and associates, using the internet and social media, etc. There is an axiom that says “hire slowly and fire quickly” best sums this up. Some highly successful tech firms may interview a candidate a dozen times to get through the candidates interviewing veneer to find what that person is really like and if they will fit into the organization from various perspectives. I have seen hiring managers’ fall in love with a candidate that they “really knew” was a perfect fit, paying little heed to the items noted above only to be disappointed. This goes equally for those who rely on only one or two steps in this process such as tests or reference checks.

A certain amount of turnover is good and healthy for any company to avoid inbreeding and gaining fresh insight as to how to do things better, but too much turnover will result in constant training, loss of continuity, inefficiencies and declining profit. The U.S. turnover rate runs 3-4% nationally, but that is not really a meaningful number. It is a well known fact that GE routinely ranks and terminates the lower 10% of its workforce and provided excellent compensation to its to 20%. Other companies have different parameters, but studies have confirmed that top performers can contribute 10 times more than average ones. Leading hi tech firms have figures orders of magnitude higher then this. A good rule of thumb is to keep the turnover of the top quarter of ones staff to less then 5% and a 10-15% turnover for the rest of ones staff usually being acceptable. There are companies who simply can’t retain good people, because of poor management, company culture, economics, etc. We have also seen turnover of over 100% a yea which can destroys most organizations due a decline in: productivity, morale, efficiency, profits and eventually the ability to operate.

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