The Truth About Avoiding Mis-hires In 3 Little Words

Person-Future Fit

That’s right: person-future fit.  I don’t make this stuff up.  Research validates the practice and the principle.  Don’t believe me?  Read the research.[1]

I base my executive search practice in understanding the past, the present, and the future – strategies, accomplishments, objectives – and what type of person can help the company get there.  It’s very important for me to identify company culture, processes, and communication dynamics to ensure that I can match that company with a professional who has similar interests and objectives.

In this latter regard, you may appreciate some data[2] related to mis-hires:

  • 75% of average hires turn out to be a disappointment,
  • 50% of hires end up being a mis-hire, and
  • The cost of a mis-hire can be:
    • 4 times the annual salary for supervisors,
    • 6 times the annual salary for sales representatives,
    • 8 times the annual salary for mid-level managers, and
    • 15 times the annual salary for vice presidents.

Mis-Hire Costs

This data is reflected in a thorough review of direct and indirect hiring costs such as: interviewing time, administrative costs, cost for outside testing, record checking, physicals, travel costs for candidates, time and expense of all candidates, and relocation costs – if any.

Additional mis-hire costs can include: severance, leave, unemployment pay, legal fees, outplacement fee, administrative costs, lost productivity, and impact on another employee’s production.

Companies that spend the time to conduct an effective search for employees save money by looking for that person-future fit – the first time.

I am often asked by prospective clients how they can justify paying a fee for a professional or executive search.   The easy answer lies in the data above.  If you make a mis-hire on a mid-level manager that is paid $ 100,000 annually, the cumulative cost of that mis-hire could be up to $ 800,000!

What is the fee for the search service – in comparison?  If you don’t believe the estimates, try out the Topgrading Calculator. 

 Workforce Alignment

How does person-future fit work into this equation? Let’s revisit some of the conclusions from the Cornell Working Paper.  A principle focus in the research was workforce alignment which requires:

  • The right types of people, (hiring)
  • In the right places at the right times, (managing)
  • Doing the right things right. (motivating)
  • A company with the right types of people has employees with the knowledge and skills necessary to help that company achieve its goals.

Person-Future Fit

The researchers then identified three different strategies companies use to select employees –

  1. Person job fit – match job applicant’s knowledge and skills to the requirements of specific job openings and focus on an applicant’s ability to perform well right away without extensive training.
  2. Person organization fit – focus on how well the individual fits with the culture or values of the company and hire people with the capacity to work well with other company employees.
  3. Person future fit – focus on the potential long-term contribution of applicants, often to the extent that they are willing to leave positions open until the find the best and brightest new employees.

The researchers found that creating and maintaining that person-future fit provided the best, long-term workforce alignment opportunity. Do you think it’s better to define where we are going and who we need to get us there to create a more aligned and focused workforce?

When I’m engaged in a formal search I do think it is important to understand that person-future fit.  While not the only factor in the search process, it is an important one.  After all, l like to see more than 75% (I usually seek 100%) of hires being a great hire.  Wouldn’t you?

[1] Human Resource Management Practices, Workforce Alignment, and Firm Performance: Christopher Collins, Jeff Ericksen, Matthew Allen, Working Paper 05 – 05

[2] See Dr. Brad Smart’s eBook, Avoid Costly Mis-Hires!

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