The ability to assess and select top people is critical to a company’s success. If you want to build a company where people love to work you have to know how to hire and keep great people. Unfortunately, a poor hire can cost a company a great deal of money and cause undue distress and wasted time for everyone involved.
Great companies and managers start with optimistic,
change-resilient, and committed people whose values fit the workplace culture.
Sound
familiar?
Believe it
or not, hiring the right people can be enjoyable and fun. Managers can easily learn an innovative performance-based
method of interviewing people based on a candidate’s past
performance. Research in the area of
emotional intelligence supports the idea that the ability to communicate
effectively with others is a critical workplace core competency. The selection
and assessment process is a great place to practice these skills.
“Having the most talented people in each of our businesses is the most important thing. If we don’t, we lose.” ─ Jack Welch while CEO of GE
How do great leaders of successful companies spend half of their time? They spend it on people: recruiting new talent, picking the right people for positions, grooming young stars, developing global managers, dealing with under-performers, and reviewing the entire talent pool.
Everyone agrees that talent is an important competitive advantage, but surprisingly, three out of four companies do not make their talent management programs a high priority. Hiring practices often are random and decisions often are based on intuition. In many cases, hiring decisions have success rates similar to flipping a coin!
Executive turnover is at an all-time high. Fifty-eight percent of large and medium-size companies changed CEOs between 1998 and 2001, according to an international study of 481 corporations conducted by Drake Beam Morin, a management consulting firm. The median tenure of CEOs is now 2.75 years, down about a year from 1999. Only 12 percent of CEOs have held their position for 10 years or longer.
Low performing companies have nearly twice as much turnover among top performing employees as high-performing companies, according to the consulting firm, Watson Wyatt Worldwide. These low-performing companies will soon be in great jeopardy because a large personnel shortage is looming. The U.S. Bureau of Labor Statistics projects 151 million jobs in the U.S. by 2006, but only 141 million people will be employed.
Yet despite all the rhetoric about the war for talent, most companies don’t have effective hiring practices. A McKinsey & Company survey of talent management practices from 1997 to 2001 surveyed 7,000 managers and only 26 percent strongly agreed that talent was a top priority at their companies.
In this comprehensive survey, (The War for Talent, 2001), what distinguished the high-performing companies from the average-performing firms was the fundamental belief in the importance of talent and the actions they took to strengthen their talent pools. But without this talent mindset, recruitment is an activity with less than favorable outcomes, attrition rates are high, and performance suffers. Companies that scored in the top quintile of the talent management index earned, on average, 22 percentage points higher return to shareholders than their industry peers.
Even in a slower economy, the war for top managerial talent is persisting. The way that companies have managed talent in the past will not be sufficient in the future. Talent is a critical driver of corporate performance. A company’s ability to attract, develop and retain talent will continue to be a major competitive advantage in the coming years.
Three factors contribute to the growing need for improving an organization’s talent reserves:
1. The irreversible shift from the Industrial Age to the Information Age
2. The intensifying demand for high-caliber managerial talent
3. The growing propensity for people to switch from one company to another
How well is your organization hiring?
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