Is your company neglecting the hiring process? It could wind up costing you, in more ways than one.
Written by Bryan Murphy
According to a study from the National Business Research Institute, 66 percent of employers said they experienced negative effects from a bad hire. Poor employees negatively affected employee morale, had a negative impact on client relations, and, one out of 10 times, caused a decrease in sales.
It’s no wonder, then, that 41 percent of companies estimate that a bad hire costs them more than $25,000, while 25 percent report their bad hires cost more than $50,000 apiece. Hiring the right people is not only essential to keeping costs down, it’s also key to building the kind of team, the kind of culture, and the kind of company you desire. If you want a successful company, you have to hire success-minded people.
Of course, that makes it sound easier than it is. Recruiting talented people and then keeping them is a difficult, time-consuming job, and there aren’t many shortcuts available. Over the years, however, I’ve developed a better sense for the universal qualities that make up good hires, the kind of people who serve as the bedrock for a strong corporate culture. When vetting potential candidates, or reevaluating an existing hire, the following four attributes are critical:
1) Love of the job. Your employees have to get energy from what they’re doing if they want to be any good at it. I once mentored a young woman who worked in insurance but really wanted to be a missionary. Her parents thought it would be better for her to have a “real” job, but that job was making her miserable.
The best advice I could give her? To leave her career. So she did. The last time I heard from her, she was in Mongolia, living on a bowl of rice a day, and she was the happiest she’d ever been. Life’s short, and people need to do whatever it is that makes them happy.
2) Self-motivation. As a manager, it’s actually not your job to motivate your employees. Your job is to hire self-motivated people and then do your best not to demotivate them. When you hire self-motivated people, your work becomes simple: give them interesting things to do and let them do them.
3) Character. We all know different types of people: confident, insecure, outgoing, quiet. To me, those character traits are more important than a candidate’s technical skills.
There’s a saying I like: there’s no amount of training that will change a potato into a carrot. You can train anyone to perform a technical skill set, but you can’t train them to be self-assured, honest, hardworking people. People who lack those traits to begin with simply will not elevate and maintain the culture, no matter how many leadership programs they take.
4) Culture is everything. Employees should be paid fairly—that’s important to workplace happiness. But an extravagant salary shouldn’t be used as a hiring or retention incentive. You want employees to be motivated for the right reasons—because they want to fulfill the company’s mission, because they’re doing what they love, because their managers are inspiring—not just for the money. There are sometimes extenuating circumstances in which you go above market to get someone with a specialized skill set; we all understand, but that’s a pretty rare exception.
At a conference a few years ago, I started talking to another senior leader about employee engagement. He told me that, over the years, he’d discovered the factors that drove employees to work hard: “Money, prestige, and power.” When asked what happened to the turnover rate over time, he confessed that it moved up and stayed there. He also admitted that, after an initial very positive impact on business performance, somehow the organization fell back into mediocrity.
I wasn’t shocked because that is the natural outcome of a culture built on power, prestige and money. A culture like that can have a very favorable short-term impact and so may be very tempting (particularly if you are the top dog), yet it cannot be successful in the longer run for a whole host of reasons.
In my own experience, I have found that if you want to build a culture that will endure and a team that will drive performance over both the short and long term, you need four things in addition to a fair paycheck. People want to know they are doing meaningful work to a worthwhile purpose, that they are being heard and making a difference, that they are being valued for who they are, and that there is a sense of fairness within the company. With this orientation, certain behaviors will accelerate within the organization, as outlined in the following chart:
When you focus on providing employees with the things they value and not just large paychecks, you run a better chance of not only finding the talent your company needs, but also creating a positive workplace culture, one made up of committed and values-driven employees.
Certain performance-differentiating behaviors will flow from those values, which will boost business results as well as attract the kind of talent that is looking for the environment you are providing, and so the whole system reinforces itself. It is worth noting that the other model of “power, prestige and money” will equally drive and reinforce certain behaviors, as outlined in the chart below:
Keeping your good hires
The hiring process doesn’t end with new employee orientation. If you’ve made the effort to hire the right people, you must make the effort to keep them around. Focusing on these three key areas can help:
Leadership. Among the things that may impact employees’ engagement, there’s one that’s assured to lose them forever: poor leaders. The trouble is, most lousy bosses generally don’t intend to be lousy bosses. At Farmers Insurance, we’ve developed a leadership program that’s built around this premise. It helps leaders see themselves the way their employees see them and correct for any unfavorable behaviors. Managers can do this even without a leadership program, though. Asking for constant feedback—What am I doing that works? What do I do that annoys you?—is something leaders at all levels can benefit from.
Values. A company’s leadership and its employees have to agree on a set of core values, and then everyone needs to “live them.” Those values need to come through in your business judgments, even when that’s difficult, as in the case of layoffs. Values like respect and integrity need to be upheld, day-to-day, or they risk becoming bland buzzwords written on a corporate wall.
Purpose. Employees want to do meaningful work toward a purpose they can see and believe in. Sometimes, if an employee is moving from Point A to Point B and then back to Point A again, he or she can’t see that. But everyone plays an important role in the organization, and good leadership will make sure every employee feels that way. How? A lot of it comes down to simply listening and letting them know they’re valued.
In an age when every company is taking a close look at its employee engagement scores, we run the risk of merely chasing a number versus simply doing the right thing. When employees are motivated and engaged, a reasonable manager can feel it. It’s apparent in the quality of their work, in the way they walk and talk, and most importantly, in whether they ultimately stay—or not—with the company.
Throughout my career, I’ve met other business leaders who neglect the hiring process. “I just don’t have the time to interview candidates,” they tell me. But that’s silly. Always remember that hiring is the most important thing you do. If you start with good people, give them room, and let them know that they matter, success should come naturally.
Author Biography:
Bryan Murphy (B.S., Duquesne School of Business, Pittsburgh; J.D., Fordham University Law School, New York, AMP 183 Harvard) is President of Business Insurance for Farmers Insurance, a position he has held since December 2013. He was formerly the Chief Claims Officer, a position he held since joining Farmers in 2001 as a Senior Vice President.
Mr. Murphy began his extensive career in insurance at Chubb & Son in New York City in 1978, and later moved to Hartford Financial Services in 1983, where he held a variety of positions, including Senior Vice President of Claims in 1993. In 2000, he joined Zurich Financial Services as Head of its worldwide claims function.
Mr. Murphy is a member of the bar in Illinois, Connecticut, and New York, a member of the Federation of Defense and Corporate Counsel (FDCC), and Chair of Food Share, a non-profit organization that provides food to over 74,000 food-insecure people in Ventura County, California.
