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.

To see all articles in this series please go to http://optimal-mgt.com/blog.

Most people who do not work out in a new company don’t fail for lack of skills, but the corporate culture they are working in is not a good match. They are a square peg in a round hole.

Finding and retaining people that fit your specific corporate culture is one of the key factors in having a successful company. Corporate culture is not easy to define. It is the atmosphere that works for your company. For example: it might be a small company with an informal working atmosphere, an informal dress code, an open door policy, titles are not that important, a matrix organization with open lines of communications, ad hoc meetings, flexible policies and procedures and people are expected to be self starters with not a whole lot of formal training. Very often the CEO sets the tone and one has to figure out what they have to do to become accepted. This is indicative of many high tech start ups. People coming from a highly structured hierarchical setting such as an old line Fortune 500 Corporation or the military might find adapting to this culture well out of their comfort zone. Likewise, the reverse situation would not work well either where a person who is free to explore to get things done is going beyond the normal protocols of a more formal culture and does not fit in.

The difficulty is in finding out before hand if a person would be a goof fit or not. One can use personality tests, reference checks and in house interviews to try to find this out, but there is no magic bullet. The best approach is to use all three and come up with a consensus, with multiple in depth interviews usually being the most reliable indicator. People are on their best interviewing behavior during the first interview or two. It is only through the attrition process of wearing someone down via well designed multiple interviews that one get past the programmed veneer to get a job and find out what the applicant is really about. Companies like Google sometimes takes this process to an extreme with a dozen or more interviews, but one or two doesn’t do the job.

When one calculates the cost of failure in hiring again and again for the same position, the time spend in doing the job right becomes clear. We welcome your questions as to the challenges you face in order to grow.

To see all articles in this series please go to http://optimal-mgt.com/blog.