Start by Making Objective Hiring Decisions
In 2012, the Harvard Business Review informed us all that an estimated 80% of employee turnover is due to bad hiring decisions. And yet, just two years later, a 2014 survey by Fortune Knowledge Group found that 62% of executives still say it is often necessary to rely on gut feelings when making business decisions. Hopefully 2016 will demonstrate that hard lessons have been learned and improved statistics will reflect our efforts. One of the ways to stem this tide is to change the way you make hiring decisions. Instead of hiring the likeable candidates who interview well (likely prompting that gut stamp of approval), you can make your hiring decisions more objectively. Performance issues aside, the most common factors suspected in failed hires tend to be poor skills match and unclear performance objectives. It is possible and prudent to strengthen your hiring processes with the addition of objectivity.Track Productivity Across Your Organization
Business is like baseball. You measure everything. Listen to the data. Everything your organization does should result in improved productivity. Thankfully employee productivity can be measured easily at a high-level, across-the-board view, not just on an individual basis. These big picture trends can also provide indications of the quality of hiring decisions.Track Output / Total Input = Productivity
This formula can be used to calculate the organization’s productivity by work hour. An organization that brings in $10M annually and employs 50 full-time (40hrs/wk) employees generates $96 per hour of work.$10,000,000 / 104,000 hours per year = $96 per hour
The formula can also be used to calculate the average productivity contribution of each employee. In that same organization, we would see that each employee produces $200,000 in revenue each year. (This breaks down to $3,846 per employee per week, assuming a 52-week work calendar.)$10,000,000 / 50 employees = $200,000 per year
Obviously this is not actually the case. Your administrative assistant is not directly contributing to the company’s bottom line at that rate, and your salespeople are probably going above and beyond that number. Businesses are systems, which makes it difficult to pinpoint issues like who contributed which dollar of revenue when. However, tracking these two numbers over time (making allowances for seasonal fluctuations) can clearly identify when the organization is making progress and when it is not.