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I was just on the phone with the owner
of a chain of Midwestern convenience stores who actually told me, “It
just doesn’t make any sense for us to even think about using
pre-employment testing. We’ve got to take whatever walks in the door.” When I regained my composure, I did my
best to set him straight, but it got me thinking there are probably plenty
of other business owners and managers out there sitting in the same boat,
thinking and doing the same things. So, this month, I’m here to tell you
if you lower your hiring standards in response to the tight labor market,
you’ll shoot yourself in the foot – and may end up with a limp for
life. When the going gets tough…
Let me take a page from U.S. business history to make my point.
When the Great Depression of the 1930s hit, many emerging, national-brand
manufacturers slashed advertising expenditures. Some even stopped
advertising all together On the face of it, this seemed
sensible enough. If there had been a Consumer Confidence Index back then,
it would have hit rock bottom. Why promote your products and services to
people who don’t know if they’ll be able to put food on the table
tomorrow? There were at least two exceptions
however. Both the Campbell Soup Company and Procter & Gamble continued
their print advertising presence and even entered into early sponsorship
of the first radio programs. This
is when Campbell’s "M'm! M'm! Good!" jingle was born and when
P&G touted Oxydol soap powder on the Ma Perkins serial and gave birth
to the “soap opera.” Today, both are household words.
Campbell’s remains one of the leading advertisers in the U.S and P&G
is the largest and all because they stuck to their game plan in spite of
changing circumstances and were well-positioned to win the lion’s share
of the spoils during the inevitable economic recovery. What does this have to do with whom
you hire? The point is neither firm lowered the bar. While they may have
made some adjustments, they stuck to their basic strategies in spite of
the circumstances. It’s no different now. Just because there aren’t
enough good people, it doesn’t mean you have to hire the next warm body
that walks in the door. This reactionary mindset will undermine any
long-term goals or vision you have for your business, your family, and
your employees. When it came to making jobs tough to
get, Campbell’s was a real pioneer.
In 1897, Arthur Dorrance, the company’s general manager, did not
want to hire his 24-year-old nephew, Dr. John Dorrance. But the
fresh-out-of-school, young chemist was so determined to join Campbell’s
that he agreed to pay for his own laboratory equipment and accepted a
token salary of just $7.50 per week. This turned out to be the best
‘hire tough’ decision Campbell’s ever made. Dr. Dorrance invented
condensed soup that same year and, in 1914, became company president. Back in the late 1800s, William
Procter and James Gamble were immigrants who happened to marry sisters.
They founded their soap and candle-making business at the urging of their
father-in-law. They were epitome of a typical, U.S., family-run, small
business, but you’d have to agree that something more than luck
accounted for their long-term success. Last year, P&G generated $37
billion in revenues and ranked 17th on the Fortune 500 because of the
company’s long-term vision and commitment to certain high standards. And long before we all got sick of
hearing, “our employees are our most important asset,” William Cooper
Procter revised P&Gs articles of incorporation to include the
directive that the “interests of the company and its employees are
inseparable.” This was in 1919! Would you say these strategies served
these companies well? Would you be so bold? The question here is do you
want to lead or follow your competition? You’d better believe the
Sheetz’ and WalMart’s of the world aren’t going to lower their
standards. Customers create revenues,
employees produce profits. Let
me put it this way: Do you purposely buy second-rate or out of date
equipment? Would you design a new location to look no better than the
competition’s? If not, then
why would you think it’s okay if your staff is second-rate? People who will settle for second
best, get second best. What they don’t know, and somehow
can’t believe, is that people who expect the best get what they’re
looking for too. Okay, I know
you’re saying, “But our staff is just as good as anyone else’s.”
Well, that’s okay if you just want to survive. But where’s the joy in
that? Especially when it takes so little for any business to thrive. You
just need to have a vision, some principles or standards you won’t
violate no matter what, and then do a few things a little better than the
competition. One of the best ways to ensure success is to do a better job of hiring than they do. In a Fortune survey of most admired companies, “the single best predictor of overall excellence was a company’s ability to attract, motivate, and retain talented people.” You don’t have to create a complex
spreadsheet to realize that employee turnover erodes profits and morale.
We now also know now that there’s a strong correlation between employee
retention and customer retention. What do you think will happen if you lower your hiring standards? The greatest cause of employee turnover isn’t the tight labor market, corporate downsizing, or career advancement. A recent study by Harvard University found that the vast majority of employee turnover, nearly 80 percent, is due to hiring mistakes. How many more mistakes are you likely to make and what effect will it have on the organization’s future if you lower the bar now? |
