Recruitment Strategies: The Secret to Faster, Cheaper, and More Effective Hiring
In this article, we’re going to define who’s “right” for your business and look at a document I call the Great Performance Profile that will help you decide if a jobseeker or employee is a good fit. But first I want to make sure that you don’t fall into the trap of chasing unicorns.
Many consultants advise recruiting “the top 10% of talent”, "A-players" or people “better than you”. They’ll use evocative phrases such as the “war for talent” and “finding unicorns”. I disagree. Not necessarily because this isn’t competitive – it can be – but because it’s often easier and more cost-effective to play a different game.
Don’t Recruit ONLY the Top 10% / A-Players
Many hiring managers want only the top 10% because they think they’ll be more productive. At the same time, the vast majority don’t believe that their company can recruit highly talented people (McKinsey & Company, 2017)! That’s because implementing the “top 10%” strategy is very difficult.
A stringent selection process means that only the top candidates can be considered. There are many ideas about where the mythical 10% is to be found: perhaps among graduates from top-tier universities or those who’ve dropped into or out of Silicon Valley.
Under this view of recruitment:
- Recruitment is more expensive and time-consuming because you’re chasing such a small number of candidates even though applicants outside the top 10% could be perfectly suited to the job.
- You spend a fortune positioning and branding as an “employer of choice” to compete against other employers.
- Positions remain unfilled for longer, so the organisation misses out on the value those roles should be adding.
- When employees join, their expectations may have been hyped up and they’re more likely to become disillusioned and leave.
- You pay a fortune for staff who may not always deliver better results because what made them successful elsewhere doesn’t necessarily translate into success in your organisation.
- You’re constantly worried – for good reason – that someone is going to poach your staff.
Companies with a top-10% culture often sack the bottom 10%, regardless of whether these employees were doing a good job. This “rank-and-fire” model was first introduced in the 1980s by Jack Welch at General Electric and had unforeseen consequences, including:
- Dismissal of staff who met Minimum Acceptable Standards.
- Harder recruitment as the firm gained a bad reputation for staff turnover.
- Employees not wanting to be promoted in case they were relegated to the bottom 10% of their new grade.
- Managers recruiting poor quality employees to make up the bottom 10% and “save” incumbents who they have a strong relationship with, which reduced productivity.
- Disengaged and unmotivated staff as a result of unnecessary internal competition.
Such an approach rarely takes into account of whether employees are meeting Minimum Acceptable Standards and tends to give businesses a reputation for high staff turnover.
Recruit Everyone Capable of Meeting Minimum Acceptable Standards
My preferred approach is to:
- Recruit the top 10% when you can without going to unnecessary effort to attract them.
- Recruit Great Performers: candidates that meet the Minimum Acceptable Standards required for success.
- Simplify business processes so that it’s easier for people to achieve the Minimum Acceptable Standards, and where appropriate give staff the technology needed to become more effective.
- Offer training to develop existing talent and give employees opportunities to develop specific skills for your business.
The benefits of my approach are:
- A bigger talent pool to choose from because you can find Great Performers among the 90% that other employers aren’t so obsessed with.
- Less time and money needed to create a perception that your business is great to work for (there’s rarely a need for small- and medium-sized enterprises (SMEs) to go to such trouble when employees might move jobs for a small wage increase, and some people want to work for smaller family-style businesses rather than fast-growing or large ones).
- Faster, cheaper recruitment that allows you to start adding value ahead of branding-obsessed competitors.
- Lower payroll costs.
- Faster growth and higher net profit because you aren’t waiting to find new staff.
Don’t misunderstand me. I’m not advocating hiring Poor Performers. I’m simply urging you not to restrict yourself to some arbitrary 10% figure, especially as you may already be recruiting from a small talent pool, which is likely to be even smaller for niche and skilled roles tied to specific locations.
Great Performers Meet Minimum Acceptable Standards
To further understand who the “right” staff may be, we’ll develop some categories of employees. I appreciate you may not like to judge and categorise other people. But in business it’s kinder all round to make clear-headed, considered decisions. I use the following categories that apply to all roles, whether generalist or specialist, whatever the department and to any level of seniority:
- Great Performers regularly meet or exceed expectations and are a good cultural fit.
- Good Performers sometimes meet expectations and are a good cultural fit. A subset of this category are Peak Performers, who have peaks of success followed by troughs of failure.
- Poor Performers regularly fall below expectations or are a poor cultural fit, and don’t improve even with training and coaching.
I cover each category in more detail below.
These employees are consistently capable and resourceful, work hard, love a challenge, like to grow and seek continuous feedback in order to improve.
<span class="grey-callout"><span class="text-color-purple">Tip:</span> Don’t make the mistake of thinking Great Performers are the “top 10%”. Instead, simply think of them as all those who can meet or exceed expectations. </span>
Because they show the potential to consistently meet expectations, I recommend trying to develop Good Performers into Great Performers over a period of a year. After this, you may run into diminishing returns, and so I recommend two approaches:
- Moving them to a different role that they would be better suited to, therefore retaining your knowledge and training investment.
- Making your processes more efficient so you can leverage their contribution.
It’s perfectly acceptable to keep Good Performers. Employees who meet expectations, are conscientious, don’t require lots of managing and make a positive contribution to the culture are a real asset to an organisation.
Unfortunately, ineffective performance management in some organisations turn Great or Good Performers into Poor Performers. This can happen when staff aren’t given clear expectations for performance and management avoids giving candid and constructive feedback out of fear of confrontation. Sometimes, a business has moved through its life cycle and requires more specialists and professional management. The generalists who were once Great Performers now find themselves floundering in specialist roles.
Don’t tolerate Poor Performers
Your organisation can hit the rocks when you tolerate even one Poor Performer:
- You incur an opportunity cost from someone not carrying their role properly. For entry-level and front-line positions the cost might seem low, but because there are often lots of such employees working closely with your customers, the cumulative cost can be massive. And Poor Performers in management and leadership roles can cause irreparable damage to a business.
- You have to manage Poor Performers, fixing the relationships they’ve broken and dealing with the inevitable disruption!
- You have less time to nurture Great Performers, a further lost opportunity.
- Your Great Performers may leave if they get fed up of being held back by Poor Performers. Often you’ll never realise until it’s too late.
- Fewer Great Performers want to join your organisation if it’s seen as tolerating mediocrity.
- Your organisation develops a reputation for having a high staff turnover, making it even harder to recruit Great Performers.
- You have to do their job. This saps your energy and productivity, and puts pressure on you and your family.
- You still need to pay a Poor Performer!
I have an article that covers How to Dismiss Poor Performers.
<div class="grey-callout"><p><span class="text-color-purple">Exercise:</span> Write down the name of everyone you’ve hired over the past year (preferably longer) and determine the percentage of Great Performers, Good Performers and Poor Performers. </p><p>Now you have a baseline to track success.</p><p>If 50% of employees can be considered Great or Good, when you want to fill 10 roles you’ll actually need to hire 20 because you’ll dismiss 10. For an annual salary of £20,000, if you need to fill 10 roles, then a 50% success rate means you’ll lose £200,000.</p><p>That may sound poor, but in some organisations I’ve seen 50% is a realistic figure.</p><p>This doesn’t mean that if you’re doing better than 50% then you’re doing well. Ideally, you should be aiming for 90%+ of hires being Good Performers or Great Performers. I use 90% rather than 100% because, as it deals in people, recruitment will never be an exact science.</p></div>
<span class="navy-callout">You can access a calculator at www.starget.co.uk/book that can assist you in determining the amount of money you are losing due to poor recruitment.</span>