By Jeff Sheets
As I travel across the country and talk to dealers, hiring and retaining employees are always hot topics. When it comes to both topics, people think there is some hidden secret or “magic bullet” that they are missing. Really, just like most problems in business, it boils down to hard work and making sure you’re prepared to hire or retain good employees before the need arises.
When it comes to hiring good employees, there are some important building blocks such as job descriptions, recruiting, and proper interviewing. With regard to retaining employees, it really comes down to valuing them not just as workers, but also as individuals. In this article, I want to help you do a better job of hiring and retaining good employees.
Do you realize how expensive it is to hire and train a new employee? The following figures from Forbes magazine should startle any owner/manager:
* For entry-level employees, it costs 30-50 percent of their annual salary to replace them.
* For mid-level employees, it costs upwards of 150 percent of their annual salary to replace them.
* For high-level or highly specialized employees, you’re looking at 400 percent of their annual salary to replace them.
You should always be looking for the next person to join your team. The places to find potential employees include employee referrals; your centers of influence (church, clubs, etc.); and personal friends and acquaintances. College coaches are a great example of what needs to be done in the business world. They have to be recruiting all the time to field their teams, and you should look at it the same way. College coaches don’t treat recruiting as just an activity. They are selling the kids on why they should play for them. That is the kind of attitude you need to adopt when searching for and interviewing candidates.
However, you need to establish the following things to lay the foundation for the hiring process:
#1 Current job descriptions: The key word is “current.” The same job performed five years ago is most likely drastically different today. You need to keep job descriptions updated so that when you need them, they are ready. If you aren’t prepared to present candidates with their primary responsibilities, then how can you persuade them to join the team? People want to know their duties, so that they can feel comfortable that the job is a good fit. A job description should list the qualifications you are looking for in an employee such as college education, good math skills, etc. The job description should also include daily, weekly and monthly responsibilities; some jobs might entail annual responsibilities too, so don’t forget to include those if applicable.
#2 Well-written job ads based on job descriptions: If you need to place an ad, it should be produced based on the job description itself. Avoid using words that are trite and don’t really describe what the job or company is about. For example, I would avoid using the following words: dynamic, hands on, motivated, fast paced, exciting, team player, self-starter. Advertise well, and be upbeat about the position.
#3 Personality profiles: I know that I’ve mentioned personality profiles in previous articles, and they are a tool that should be used in the hiring process. Even though you may have great employees now, you need to realize that ultimately they might leave or you may need to add similar people if you expand your business. If you have fantastic people who do their job well, find out what makes them good! That is why I suggest you have personality profiles done on all current employees. I like the Strengthfinders profile by Gallup (www.gallupstrengthscenter.com). It is easy and drills down as far as you want to go. You can get an abbreviated version of top-five strengths for $10 or the deeper 34 strengths for $89. Either is great, but the more information, the better for hiring purposes. Once your current employees complete a personality profile, use it as a barometer for what you are looking for the next time you hire for that position. For candidates under serious consideration to be hired, this would provide you another means to make sure they are a good fit for the job and for the company.
Once you have these items, you can move on to the interview, which is really a chance for you to sell your company to candidates and see if they are mutually interested in the job and business. You need to have basic questions answered. For a customer service/counter person, you might ask the following questions:
* Have you worked with a Windows-based system?
* Can you handle customers at a counter?
* Have you had to answer the phone and deal with a difficult customer before? How did you handle it?
You should always be looking for more information beyond the job description. For example, I like to ask candidates the following questions: How important is this job to them? What is their motivation for applying for and wanting a job?
Recently, I was in a dealership, helping the owners wade through applications and interview candidates for a part-time pickup and delivery driver. Initially, the owners thought of hiring either a young person with a strong back or a retired person who had time. Ultimately, neither was hired. I helped them hire a gentleman who was a full-time third-shift worker and had a great family-related reason for needing additional income. The other candidates were ho-hum about the job, whereas the person who was ultimately hired was excited to land the job because he was motivated by external reasons. In fact, he has worked out so well that he decided he wanted to work full-time at the dealership because it was so enjoyable and he realized the owners cared about him much more than the corporation did. Now that’s a good hire! There are some advantages to hiring a part-time worker and then moving that person to a full-time position if he or she is a good fit. However, if you need a full-time employee immediately, you should not be afraid to hire someone to work full time right away if you’ve gone through the hiring process correctly.
Now that you have hired a candidate, what about the retention of that person as an employee? Based on the preceding example on the cost of replacing an employee, when do you up the ante to meet or exceed an offer made by another business? Let’s say a good employee comes to you and says that he or she has been offered a job with a 10-percent pay raise. Is it worthwhile to exceed that offer to keep that employee? In the entry-level position, let’s suppose the employee makes $25,000 a year. That means to meet the other offer, you would have to bump up the employee’s salary by $2,500. Based on the Forbes analysis, the cost to replace this person might be $7,500 to $12,500. Sometimes, you need to weigh the cost of allowing a good employee to leave when increased compensation could have kept that person. The cost of replacing mid-level (managers) and high-level (general managers) employees is extremely expensive. Obviously, it has to make sense for the company financially to make the offer, but realize a lot of time and money will go into replacing good employees.
With regard to compensation, it is part of attracting the right people. Sometimes, it is not all about the salary; offering medical insurance or other incentives can help too. I believe that in every job there is a way to build incentives into an employee’s compensation. If an employee produces above a certain level, then additional compensation is provided. You have to set standards and make sure the task is valuable to the organization. Your employees have to work hard to achieve their goals, but when they do, know that you are sharing a part of the new revenue they have produced. What is also good about that is it proves the position has the capability to generate more income through incentives, and you can advertise these incentives as additional income potential.
Creating a good working atmosphere and making sure that employees have the chance to engage in meaningful dialogue with you as the owner are important too. I favor taking employees with you to conferences and allowing them to attend training sessions to get better at their jobs. At the end of the day, you want to make your employees feel that they made the right choice by coming to work for you.
Here is a quote from Jim Collins, author of Good to Great, to mull over: “If I were running a company today, I would have one priority above all others: to acquire as many of the best people as I could [because] the single biggest constraint on the success of my organization is the ability to get and to hang on to enough of the right people.”
Whatever you can do to make the right decisions and keep good employees is worth it. Without them, we (owners) go only as far we can take the company, and that usually is not very far.
Jeff Sheets is the founder and owner of OPE Consulting Services. For the past eight years, Sheets has worked extensively with hundreds of outdoor power equipment dealers to address all of their needs from marketing and inventory management to designing layouts of new facilities and helping rescue businesses that are in trouble, and more. He has a vast amount of experience of bringing “best practices” to OPE dealerships. For more information, he may be contacted at email@example.com or (816) 260-5430. You can also follow him on Twitter @opeconsult and connect with him on LinkedIn.