A chunk of your business leaves with the ex-employee. Let me explain.

The ex-employee has knowledge about how things are done, where items are stored, little facts and figures, and other information that perhaps no one else in the company knows. Your business has, in effect, lost some of its memory.

For example, there is a mountain of data on the computers your employees use. You may assume that because vital information is on computers, you can find it when needed. But because of the intricate system of layered folders, maybe only the person who organized the files on a particular computer knows where to find the data you seek… and that person walked out your door six months ago.

A recent study reports eighty percent of a company’s digital data is generally inaccessible because it is stored as personal files on personal computers. That’s like saying a business could lose eighty percent of its memory due to employee turnover. A scary thought.
 

Unwanted turnover is prevented in two ways: first, by not hiring people who are poor risks for long-term employment; second, by providing the people you hire with better leadership and management.

If your turnover is more than only a few employees during their first six months, examine your hiring process and find where improvements are required. Bad hires are preventable. Avoiding this mistake saves considerable time and expense.

Other unwanted turnover suggests your managers’ performance needs evaluation and improvement. A 360° feedback program followed by a program of management skills development may be needed. An analysis of your unwanted turnover during the past year might pinpoint specific problem areas. Did the lion’s share of the turnover take place in a particular department? Were most of the people who left supervised by the same manager?

Get a handle on turnover. You can’t afford to lose your memory

Today’s changing marketplace, typified by reduced member loyalty and similarity of services among competition, creates opportunities for organizations who can build a sustainable and distinctive value for clients. To capitalize on this opportunity credit unions need to become organizationally competent at sales.

Effective credit unions must recruit the right people for sales, train them, and build a sales culture that provides focus and accountability for the selling effort. A successful sales culture must have the ability to sustain momentum for the process. Once a financial institution has made a commitment to becoming a sales-oriented organization, the next step is to put into place the people, the systems, and the resources necessary to support the sales effort over time.

Recruiting & Selection of Sales Performers
Not everyone can be a high performing seller. A person’s personality and experience may not fit the type of selling that he/she is being asked to do. Credit union staff members must possess superior customer service skills and the aptitude for recognizing and maximizing sales opportunities.

Good hiring decisions minimize the company’s investment in training and coaching and produce higher productivity. It takes more than well-written recruitment ads and good networking to find and hire individuals who will become top sales performers. Having the ability to assess applicants’ sales aptitude is the key to putting the right person in the right job.

For managers, this tool will also help you pinpoint those individuals for whom sales training will make a difference in performance and success.

Psychological research of thousands of salespeople has demonstrated that the one factor that consistently correlates with high sales productivity is a person’s personality “fit” with what he/she is actually expected to do in selling. Age, gender, sales or banking experience, and other factors commonly emphasized in financial industry recruiting have little to do with success in selling.

Managers should define and communicate the sales behavior they expect from staff members in sales positions. Next, they should identify peak performers in those sales roles and develop selection criteria based upon the profile of peak performers.

While many credit unions have taken steps to build a more productive sales culture, few have established a preferred way of selling that is consistent in reinforcing their business strategy. Too often, sales is viewed as a short-term initiative. Sales culture development is really about defining, teaching and sustaining desired employee behaviors. Your sales development efforts should result in employees doing and saying the right things that support your business strategy.

The goal is to foster an attitude that members come first and that selling is an important part of the service your institution offers.

Most businesses are very conscientious when considering who they hire. They check the references, experience, education, and other qualifications of their job candidates. They may also conduct drug tests and background checks followed by a round of interviews involving several executives that may bring a hiring decision. Even though this thorough and conscientious effort has been put into the selection process, too many people are hired who turn out to be hiring mistakes.

Noted business guru Peter Drucker says, “Chances are good that up to sixty-six percent of your company’s hiring decisions will prove to be mistakes in the first 12 months.” Given this statistic, it would be easy to surrender to the mystery and unpredictability of people. Don’t do it!

One often overlooked factor is how job candidates fit your corporate culture and match the position for which they have been selected. It is likely that you have almost always picked people who have all of the qualifications for success – somewhere – but maybe not in the job you seek to fill.

Job match can be determined with assessment instruments that measure factors such as thinking style, motivational interests, and job related behavioral traits. These instruments are valuable in establishing benchmarks for positions. The benchmarks are used to determine the job match of job candidates. It is not a perfect system, but it can significantly diminish the sixty-six percent failure rate that Dr. Drucker estimates.

In conclusion, your hiring process is probably terrific, but it may be missing the job match factor. If you are not consistently getting the results you expect from your new hires, you may want to start using job match in your system.

Too often, executives look the other way and accept employee turnover as a nuisance, but necessary fact of business life. The cost of employee turnover does not show up on a P&L statement making it easy to overlook when analyzing expenses. However, if your business has a revolving door in the HR department, you could increase profits by thirty percent just by better implementing hiring practices and by reassigning employees to jobs for which they are better suited.

Stop hiring the wrong people
One place to plug the leak is to stop hiring the wrong people. Some HR professionals expect to hire two to four people in order to find one who stays six months or more. Anticipating new employee failure, companies have adopted 90-day probationary periods. In short, they have surrendered rather than taking a proactive stance toward turnover.

Turnover – four-step process
As an example of how turnover affects a business, let’s consider a company of 1,000 employees with fifteen percent turnover. In a year’s time, 150 employees will leave and be replaced by new employees. While new employees are usually highly motivated, it takes a while for them to become fully productive because they lack the training and experience that comes with time. Eventually, they will join the fifty-five percent of a company’s employees who are motivated, competent, and productive. That means that in a company of 1,000 employees, only 550 of them are truly productive.

About thirty percent of the company’s employees are in yet another category, one that is an anchor on productivity. These are people who are probably competent, but lack the motivation to become fully productive. Some employees tend to drift back and forth between this group and the group that really is productive. People may be in this category for a number of reasons: they may be distracted by personal or family problems, they might be potentially good employees who have been assigned to the wrong tasks, they might have grievances or be disgruntled about a work issue, etc. Whatever the cause, one of three things will eventually happen.

• Some will continue to perform marginally and manage to hang onto their jobs
• Others’ performance will improve, moving them back into the productive group
• Still others will turnover and either quit or be terminated.

In this example, annual turnover is 150 people, necessitating the hiring of 150 new employees.

Don’t surrender to turnover. While some is unavoidable, chances are excellent you can cut turnover in half, or more, by using assessments to put good people in the right jobs. You can plug the profit leak by better hiring and by dealing proactively with the people who are marginal performers.

By using tools such as Profiles’ Step One Survey II™ and Profile XT™, employers avoid the mistake of hiring people who will not meet the needs of their organizations. The Step One Survey II™ is the premier hiring instrument for weeding out job candidates who are dishonest, illegal substance users, unreliable, and/or lazy. Profile XT™ is a battery of assessments used to evaluate “The Total Person” and accurately predict success in the company’s specific jobs and positions. Data from Profile XT™ is useful beyond the hiring process and is also valuable for training, managing, career path planning, and other management interests.

Most companies have effective hiring systems resulting in hiring people who have worthy attributes, skills, and training. However, the system breaks down when the qualified person is put into a position that does not quite fit who they are. Instead of job match, this results in job mismatch, which causes the job and individual to suffer, limiting the company’s productivity. Use of Profile XT™ with customized job benchmarks assures greater compatibility between employees and the work they perform.

The importance of job match cannot be overemphasized. Of all the predictors of job success, none is more important. Yet it is the one ingredient missing from most placement processes.

Invigorating marginal employees
In the “marginal employees” group there are two sub-groups – those who can be resuscitated and those who cannot. The Profiles Performance Indicator™ is an ideal management tool to assess these employees and discover those whose potential for effective productivity is the greatest. The information provided by the Profiles Performance Indicator™ is used by managers to communicate with and motivate more effectively the people under their supervision. It suggests areas in which individuals can use their strengths and positively affect areas in need of improvement. There is even a Motivational Energy measurement that helps the job matching process.

Some managers may find themselves in the group of marginal employees. Profiles has help for them, too. The CheckPoint Management & Development System™ provides managers with detailed 360° job performance feedback reports. A follow-up program, SkillBuilder™, offers a series of ideas for improved performance and action steps for increasing managerial skills and effectiveness. When used in concert with an overall management development program, the CheckPoint™ also yields an Organizational Management Analysis™ report to increase a company’s focus on the activities and projects most important to future growth, productivity, and profitability.

Leaders who recognize the status quo as a threat to their organizations are using Profiles’ assessments to decrease turnover and increase their productivity by reducing the number of employees who are marginally productive. The results speak for themselves where it counts most, on the bottom line.