The principle of risk management

Let’s say for the purpose of this article that you have a position open and a slate of applicants who possess approximately the same list of qualifications, what do you do?

You start looking at qualities. Certain qualities are important in almost any job but particularly critical when working in a service industry or in a group. If you’ve been reading my blog for very long, you might remember one article where I recounted the story of a highly skilled woodworker who applied for work in my shop but who was also not hired because of a reputation for being impossibly difficult to get along with. I wanted abrasiveness only in sandpaper, not in personnel.

So the catch phrase here is

Hire for attitude, train for skill.

Yes, aptitude is important. Yes, credentials are vital. And yes, education and experience are critical components. Assuming the applicant has the proper educational qualifications required and the necessary certifications if any are required the deciding factor should be in attitude.

I don’t want to discount education, certification, and/or experience because you cannot train someone to do a job if they lack the basic skill sets necessary. Education and experience will validate that. Attitude, however, cannot be easily taught.

Now the reason I even bring this up in a series on motivation is the principle of risk management. Hiring someone is a risk for the company. Going to work for someone or for a company is a risk for the employee. Motivation is so personal, emotional, and psychological. It is a feeling. It simply becomes next to impossible if there is not a good fit.

Risk management demands an assessment ahead of time and on-going assessment over time.

A sense of community, a neighborhood in which employees and associates fit, exists at a very local level, within the confines of a very small area. Loyalty is decided and played out in a relatively small group.

This brings up the problem of employee turnover. This is costly in all businesses, can be nearly fatal in small ones when one upon whom a large portion of the income producing potential of the business rests, leaves the business.

There are 7 costs to be considered:

  1. Reduced productivity – the employee or associate was doing something (if there is no loss when the person leaves, either the person was not contributing or the position was unnecessary). If they were doing something, they are not doing it anymore so output is reduced.
  2. Overwork that now falls to others – this compounds demotivation because they feel resentful at being expected to pick up the work without a commensurate raise in pay.
  3. Knowledge that has walked out the door – experience has value. The person that is now gone had knowledge about the way things work. All the training you invested in them has walked out the door and it must be done again.
  4. Connections that are now broken – this is especially true in sales positions and in positions where the person had developed expedient relationships with vendors, officials, suppliers, contractors, anyone who made the machinery work more smoothly. It gets worse. The left person may well take customers with them. That’s money that has walked away, too.
  5. Severance, benefits, unemployment insurance costs. Administrative costs to modify benefits, COBRA notification, stopping payroll, and all those forms that are usually completed to cover all the potential liabilities.
  6. Training that now must be done again – see #3
  7. Recruiting and hiring costs – including advertising, interviewing, researching, background checks, drug checks, and other incidental costs.

Drake International has created a Cost Calculator you can access here (there is no charge to use it.)

Risk management permeates the very fabric of an organization. High employee turnover signals a problem somewhere. High employee turnover among key personnel is almost always a sign of a problem somewhere in the management or leadership personnel. If an employee leaves because of a personal problem 0 they are moving to another city or state, a health or family issue, or something that can be directly and definitely attributed to a reason OUTSIDE the company, the issue is probable not motivational. If they are leaving because they screwed up on the job, the issue is probably not motivational although it could well be a problem somewhere in the management or leadership of the department or company. If they are leaving because the company is downsizing in general, the problem is not motivational. If they are leaving because of any other reason, the issue is motivational.  Do what you can to make sure an employee’s departure is not your fault. It costs too much.

Hire for attitude, train for skill, never ignore the risk.

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