Regardless of your industry, enhancing your intellectual capital can significantly influence your success and directly impact your bottom line. Your ability to attract and retain quality people, especially in a tight and competitive job market, can increase your profit margin.
Recruiting and hiring
While many hiring and retention practices are somewhat general, administering them is often cumbersome. Not only is hiring employees a time-consuming process, but making an incorrect hire can be very costly.
To avoid making a hiring mistake, make sure that the job description is on target with the duties and responsibilities expected of the employee and that the skill set is clearly defined. Do your due diligence, such as calling references, administering drug tests and performing background checks.
You might be surprised by what you learn -- it is estimated that approximately 5 percent of professional hires have criminal records. So do not forget to complete a criminal background check on prospective hires.
Just because the candidate looks good on paper does not mean that the individual is capable of doing the job, nor does it indicate that he or she will fit into the organization's culture. In addition to the skill set, consider the candidate's personality. Remember, teaching skills is easier than changing attitudes.
According to Jim Collins, author of "Built to Last," potential hires are traditionally assessed on experience, skill and appearance. But that's a miniscule part of the big picture. The paradox is that 50 percent to 70 percent of most job qualifications may be more inherent in personality than in skill.
Administer behavioral or personality assessments. These can be right on target when it comes to highlighting red flag issues. When interviewing, ask out-of-the-box questions, such as, "What is the riskiest decision you've made in business?" The responses may provide insight to the individual's character.
Motivating and retaining
While competitive compensation and benefits are keys to gaining employees, studies have indicated that people perform better when equipped with the appropriate tools to help them do their jobs well. Technology, training and support are fundamental resources with which employees perform better.
Understand that fewer than 20 percent of your employees will achieve or exceed performance levels, so identify and nurture these champions.
And with all employees:
* Manage expectations and make lines of authority clear.
* Conduct annual performance appraisals to ensure that expectations are clear, and solicit candid input.
* Offer incentives for efficiency. It gives employees the opportunity to be recognized for their optimization of efficiencies and best practices.
* Understand what motivates your employees. Some are motivated by money; for others, time off to spend with their families may be a greater incentive.
Firing and turnover
Hiring and retaining quality staff has serious implications to the success of your business. The U.S. Department of Commerce estimates that 30 percent of business failures are due to poor hiring practices. Yet, despite your best efforts, good employees are sometimes lost to other professional or personal opportunities.
Turnover is one of the most significant hidden costs of a business. It is estimated that the average cost-per-hire can be anywhere from 25 percent to 150 percent of a position's base salary, depending upon the level within the organization. For example, a $50,000 position may cost you $75,000 to fill.
If your turnover exceeds 10 percent, investigate the cause. Annual losses generated by poor hires, absenteeism, drug abuse and theft amount to $75 billion per year, according to the U.S. Department of Commerce. It is also important, for all issues pertaining to employees, to not only include management but also rely on legal support.
Regardless of whether employees are dismissed or leave on their own, exit interviews can yield valuable information pertaining to the organization's managerial, operational and cultural functions.
However, not all turnover is bad. Sometimes "rightsizing" your organization is needed to keep ideas fresh, morale upbeat and your mission clear. At the end of the day, you want happy employees who will contribute to your success.