Be an Investor When Recruiting and Hiring
Who you hire is one of the most important decisions and investments you can make in your business. However, recruiting and hiring today is more important than finding a person with the right skills and qualifications. Do the candidates fit our culture and strategic vision? Do they share our values and have the right behaviors to make them successful and provide your company a long-term return? Will they still be around in 5 years? Warren Buffett is considered to be one of the most successful investors of all time and is currently the third wealthiest person in the world. Regardless of one’s opinion of the “Oracle of Omaha,” it is hard to argue with his amazing track record of success. As the Chairman and CEO of Berkshire Hathaway, Buffett has inspired millions, while making billions through a philosophy of investing that can also be applied to successful hiring practices in your business. Aside from utilizing financial ratios and other analytical tools to find undervalued companies he can invest in, there are other key considerations that Buffett and many other successful investors look for before making a decision. Never compromising on business quality, taking the long view, and listening to those you know and trust, to name a few hallmarks of Buffett’s investment strategy. Could thinking as an investor also be applied to hiring? After all, when recruiting and hiring a person to join your company, you are making a major investment. That same hire can often be critical for the future success of the company. Time, training, compensation, benefits and other “rewards” for the people you employ are your investments in growing your business and making a return. In today’s low-unemployment, low-retention “candidate’s market,” approaching recruiting and hiring as an investor may make the difference and lead to better decision-making in this critical area. Never Compromise on Quality “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren Buffett Berkshire Hathaway was originally a textile manufacturer when Buffett first took control in 1962. He later stated that entering the textile business was one of his worst trades ever but kept the name. That experience taught Buffett that “you get what you pay for.” He was no longer interested in buying something at a bargain in the hope of getting a nice short-term return, especially when the long-term prospects for the business look terrible. He chose a path of “value investing,” in which he looks for prices that are low compared to their actual or future worth and often overlooked by other investors. Never compromising on quality can also be applied to hiring. For example, Candidate A is a high-quality candidate that matches all of the skills, qualifications, experience, behaviors and cultural alignment needed for great success in the position. “A” checks off all of the boxes, has been thoroughly screened and you can see a bright long-term future. Candidate B also has many of the same skills and qualifications. “B’s” behaviors and culture fit were not as strong and the references not as glowing, nor was there a projected long-term future with the company. Here’s the kicker— “B” wants 20% less in salary than “A.” How many would automatically gravitate to Candidate B because they felt they were saving the company money or had to stick to a budget? Quality investments yield high returns and increase in value over time, similar to Candidate A in our example. How does this apply to value investing? Candidate B will inevitably cost the company more over time and return less due to low engagement, poor cultural fit and eventual turnover – in other words a lot more than the 20% saved in Candidate A’s compensation. As Buffett has stated, “Price is what you pay. Value is what you get.” Taking the Long View Once asked how long he would hold a high-quality investment he made at what was considered a reasonable price, Buffett answered, “Our favorite holding period is forever.” Embracing a “buy and hold” investment philosophy, many of his investments have been held for decades. Buffett and investors care more about the future price than the value it was on the day it was purchased. As a business leader, you should care more about what a new hire can bring you a few years into the future instead of having them be able to “hit the ground running” and automatically start making returns on day one. Look for those candidates who are quick learners and can innovatively solve problems. They are the ones that have the experience and behaviors that will help them integrate quickly into your company and excel in the future. Smart investors also continue to invest – just as companies need to keep investing in their people. While you may not have the budget to increase their compensation, look for other ways to invest in your new hires and current top talent and leadership. In a recent Udemy “Workplace Boredom Report,” 46% of employees are looking to leave their companies because of a lack of opportunity to learn new skills, and 80% agree that being given more opportunities to learn new skills would make them more interested and engaged in their work. Do you offer continuing education, seminars, training programs and other developmental programs that will keep your employees learning new skills? There is a measurable ROI to upskilling your employees, and often it is in the form of productivity gains, increased engagement, more profitability and reduced turnover. Listen to Those You Know and Trust “Management changes, like marital changes, are painful, time-consuming, and chancy.” – Warren Buffett Warren Buffett has always noted the importance of only investing in competent and trustworthy management teams. He knows that when he selects partners or managers, their actions and decisions will be felt for many years. As a business leader, you too must be cognizant of selecting competent and trustworthy people to join your organization. They could have a
Focusing on Youth in Hiring is Hurting Your Organizational Health
In the Fall of 1984, Ronald Reagan, at the time the oldest U.S. President in history, was in a fight for re-election. In his first debate with youthful challenger Walter Mondale, he appeared tired and lacking energy. Many began to question his stamina for the job. In the second debate, he was asked a question about his age and being able to function in tough circumstances and in a crisis. Without hesitation, Reagan said the lines that we wish would be used more by older candidates seeking a job today: “Not at all… and I want you to know that also I will not make age an issue of this campaign. I am not going to exploit, for political purposes, my opponent’s youth and inexperience.” He never looked back and won re-election in a landslide. Underlying the humor of Reagan’s response (even Mondale laughed at the time) is the truth in his words. Do we, and organizations in general, consciously and/or subconsciously choose “youth and inexperience” over “experience and wisdom” to our detriment and even to the detriment of the younger employees we onboard? Are we missing training, coaching, mentoring, and even reverse mentoring opportunities that would ultimately lower turnover and benefit the entire organization? Is it time to rethink age in hiring, especially in the current “candidate’s market,” and get away from the misconceptions and perceived costs of hiring older workers and focus on the benefits? In Search of Experience and Wisdom “Age is an issue of mind over matter. If you don’t mind, it doesn’t matter.” – Mark Twain Most can agree that experience and wisdom are good things, but there are clearly also times when age and health can lead to poor performance. On the flip side, performance in younger employees could be just as impacted by a lack of training (investment in your personnel), mentoring, and coaching, which could lead to increased turnover and impact the future of your entire organization. We recently placed a 61-year-old candidate into a client who simply couldn’t ignore the fact that she would make the entire department better. Instead of age being a negative, this particular person’s depth of work and life experience, high energy, and continual learning mindset, as well as the fact that she had been a coach and mentor to several in the same field for decades, became a major positive. She didn’t need training— she was going to become the trainer. The client saw that this was a resource that many of his Millennials could tap into, and concerns over age and longevity in the position were overcome. Too often as business leaders, we look for “shiny and new” over “tried and true.” On the flip side, the disdain that many in the Baby Boomers and Gen Xers have for Millennials (and vice versa) is not a new phenomenon. Saying that Millennials are more prone to leaving jobs and switching companies than previous generations is misleading. They leave jobs because they are young and new to the workforce, and there was probably little in the way of training investment, coaching, and mentoring to keep them there and get them through the rough patches. According to Pew Research and a study they did comparing Millennials to Gen Xers, the percentage of 18-to-35-year-old employees who stayed with their employers for 13 months or more was 63.4% for Millennials in 2016 and 59.9% for Gen Xers in 2000. In addition, the percentage of these same groups who had been with their employers for 5 years or more was 22% for Millennials in 2016 and 21.8% for Gen Xers in 2000. It is easy to form generalizations about generations and blame the Millennials for leaving because they do not “have a strong work ethic.” It is also envy, and we have all been there. Ask an all-star major league baseball player from the 70s or 80s if he wouldn’t want the salary of even the most mediocre ballplayer today? What about Millennials just entering the workforce out of college? According to Mike Brown and the “The Class of 2018 Career Report” conducted by LendEDU, 41.3% had already found a job, and of those, only 37% envision staying at that same job for over 3 years. 28% of those who had found a job envisioned staying at their job for up to 3 years, while 25% thought they would last 6 months to a year, and 10% said they would leave as soon as something better came along (click here for the full study at LendEDU). The research indicates that younger workers are leaving your company, not because they are “Millennials.” They are leaving because they don’t see the career path and opportunity they’re looking for, and they may indeed have higher expectations, or they simply need guidance. They may have been thrown into a position without proper onboarding or training and are learning simply by making mistakes, which can be soul-crushing. In a recent Udemy “Workplace Boredom Report,” 46% of employees are looking to leave their companies because of a lack of opportunity to learn new skills. This is when a more experienced and wise counterpart can provide the training, skills, career/life guidance, coaching, and patience that can help them learn the position, see their fit within the company, adapt to the culture, and see a future. Do you have a mentoring program? There is a wealth of company, industry, and subject knowledge in older workers that Millennials can tap into and that employers should value. Programs that enable knowledge transfer and connect younger and older workers have been found to have a high return on investment because of the impact they have on increasing retention rates, promotions, and overall employee satisfaction. There is also a benefit in reverse mentoring in which older executives are paired and mentored in turn by younger employees on technology, social media, and trends. After all, what organization couldn’t benefit from a free exchange of ideas, wisdom, and engagement between employees in different generations?
Employee Retention Issues? How to Keep Your BEST (Part 2)
Part 2 of 2-Part Series on the Important and Timely Issue of Employee Retention In Part 1 of Employee Retention Issues you took that long hard look in the mirror and realized you have a serious employee retention problem, and more than likely it is your fault as a leader. Just as you realize this, your bad employee retention dream becomes a nightmare. Your best salesperson resigns out of the blue. In a blink of the eye what you finally identified as a top strategic concern is now a raging fire you need to put out, even though you have a busy schedule and other initiatives underway. Now you not only have to find a replacement for this talented employee, which is incredibly difficult when skilled professionals of this caliber are currently in high demand, but you also have to temper the impact their departure will have on the rest of your team— who may be already exploring other career options. Whenever someone walks out the door, people notice, especially when they are good. Morale takes a hit, and it will push those not already looking for a way out to begin doing so. This is exactly why employee retention and job satisfaction should be placed at the top of your priorities list, and why finding unbiased professional advisory to do this so is critical. Why do I need an unbiased and independent advisor? Have you ever walked into the same room many times without seeing that someone left trash on the floor? Have you failed to notice that your significant other or a daily coworker got a haircut? These oversights are natural for us all. We get too close to our daily environment to see it objectively or with clear eyes. You may have extremely bright HR leaders on your team, but they may also be too close to the situation to provide the objectivity and tough honesty necessary to define retention strategies. Remember, you have already identified leadership as the culprit. Now asking that current leadership to figure out the answers treads on egos, fear of telling you your wrong, or concern of losing face with other employees. What retention strategies do I look for with an advisor? Before identifying a strategy with an advisor, you will be asked to begin looking at things from the employee’s point of view. It is imperative that you get out of your own way! All professionals are different with unique sets of behaviors, desires and goals. Yes, employees want to know they are being properly compensated at or above market rates. More importantly, employees want to feel they are appreciated and treated fairly. They want to be challenged and excited by their job. They then want the autonomy to do it. Provide full transparency to your advisor(s) in every area of the employer-employee relationship within your company. Only in approaching the situation in such an open and honest manner will you be able to embrace the key strategies that will improve your organization’s employee retention and boost employee morale. How? The BEST Employee Retention Process An effective employee retention program addresses all of these concerns and beyond. In fact, your efforts should start with the HIRING PROCESS… HIRE: Your recruiting and interviewing process sets the tone for an employee’s tenure at the company. Provide full transparency to candidates about the pros AND cons of your company, culture, products and their role. Clearly identify the role expectations with specific metrics they will be held accountable for. Doing so dramatically lessens the potential of a new employee feeling disenchanted that they were sold a “bill of goods” when being caught by surprise by something that should have been shared up front. TRAIN: Onboarding — Every new hire should be set up for success from the first day of work through 90 days and beyond. Develop an onboarding process where new employees learn about the job, the culture, how to contribute and thrive. Create an environment that fosters ongoing discussions, goals, and opportunities to address questions and issues. Having something as simple as their business cards and workstation ready is a small way to show your commitment to their success. Mentorship — Pairing a new employee with a mentor will increase their ability to learn the ropes from a veteran with a wealth of resources and experience. Reverse mentoring is equally as beneficial in this process as the new hire offers a fresh viewpoint to an experienced staff. Training and Development — Ask each of your direct reports about their short- and long-term goals to determine how you can help achieve them and invest in appropriate professional growth opportunities for employees. MOTIVATE: Communication and Feedback — Keeping open lines of communication is essential for employee retention. Your direct reports should feel that they can come to you with ANYTHING, and likewise, they expect you to be honest with them about improvements they need to make in their own performance. YOU need to connect with your people and not vice versa proactively! Work-life Balance — What message is your company culture sending? Burnout is very real. A healthy work-life balance is essential, and people need to know that management not only understands the importance butalso supports it. Dealing with Change —If your company is going through a merger, layoffs, or other big changes, keep your entire team informed as much as you can to avoid feeding the rumor mill. Getting out in front of it and accentuating the positive will keep morale and motivation strong. Promote Teamwork —Foster a culture of collaboration that accommodates individuals’ working styles and lets their talents shine. Clarify team objectives, business goals, roles, and inspire everyone to contribute ideas and solutions. REWARD: Employee Compensation — It is essential in this competitive labor market for companies to offer attractive compensation packages. That includes salaries, of course, but also bonuses, paid time-off, health benefits, retirement plans and all the other perks that can distinguish one workplace from another. Recognition and Rewards Systems: Make it a