Employee Selection and Talent Management
Running head: EMPLOYEE SELECTION AND TALENT MANAGEMENT
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Introduction Employee selection is very important to the success of an organization. I’m sure there isn’t one person in the world today that has not been affected by a poor hiring decision in some way. From the less than helpful conversation with your phone provider’s customer service department, to the mountain of work you have to cover to make up for the work your coworker isn’t sure how to complete. There are many examples we can think of when it comes to poor hiring decisions that affect not only us on a personal level, but the company as a whole. Today I will discuss the importance of employee selection in the overall talent management process. More specifically uncovering the importance of employee selection as it relates to ROI, the effect of high turnover, and organizational culture.
LaToya Edwards
SELECTION AND TALENT MANAGEMENT
2
Return on Investment According to Neil in a quote taken from smallbusiness.chron, “The human resources, or HR, selection process is important because of the production and performance value companies get by making good hires and the high cost of replacing employees following bad hires” (2015). As we all know, companies are looking to maximize their efforts in all decisions, especially decisions that cost the department. Making good hiring decisions maximizes a company’s return on investment. Hiring an employee is an investment into the company’s present and future goals. As we’ve been learning in our readings, we know there is a lot of planning and work that goes into the onboarding process of a new hire. With all this work and planning, comes added cost to the company. It is extremely important to make wise hiring decisions so money and time is not wasted on a bad hire. Some items you should notice if you are indeed experiencing a return on investment listed by Matthew S. O’ Connell are, “Increased productivity and quality, reduced turnover and absenteeism, reduced risk of legal challenges, reduced risk of aberrant behaviors, and improved resource utilization.” The article goes on to say, “Research has shown that one standard deviation in job performance is worth at least 40% of an individual’s total compensation. For sales and executive positions, that number is much higher. Thus on a job that pays $50,000 per year, a person performing at the 75th percentile is worth at least $20,000 more to the organization on a yearly basis than someone performing at the 50th percentile” (2007). Based on this research, it clearly exhibits the exorbitant costs related to a poor hiring decision. The company in the case of the 50th percentile worker will of course not get the return they were looking for. All hiring energy should be placed on the upper percentile workers who may learn faster, work better with the team, adapt faster, or work with customers better than the average worker.
SELECTION AND TALENT MANAGEMENT
3
The effects of high turnover Employee selection is also very important to turnover rates within a company. O’Connell goes on to say in his article, “There is no doubt that turnover occurs for many reasons. Improving the selection process will not completely eliminate turnover. However, a significant portion of early tenure turnover can be attributed to poor job fit, which can be affected by an improved selection process” (2007). I use the example quite frequently of the customer service department at my job. The level of dissatisfaction is so high, that employees quit almost before their 90 days are up. The department has to remain fully staffed at all times or they will experience a spike in hold times for the customer, and overworked call center agents. Recruiters then look for any warm body to fill these vacant positions. Training is cut short and qualifications don’t matter as long as there is someone in the seat to take phone calls on Monday morning. This leads to frustrated employees, frustrated customers, and frustrated employees in departments that have to clean up the mess of customer service. Most of these employees eventually get fired or quit, and the high turnover cycle continues. There is also no return on investment in this scenario since the employees are wasting training and recruiting dollars, not productive, forcing more knowledgeable departments to take on additional work. The company reputation is also now in shambles with a ton of bad publicity and poor reviews. Gwen Moran also lists some of the hidden costs of employee turnover as slippage, ripple effect, and customer loss. She describes slippage as work that is not getting done as a result of an empty seat, employees picking up the slack and not meeting their own goals as a ripple effect, and customer loss due to them not wanting to deal with employees constantly in the training level instead of expert (2011).
SELECTION AND TALENT MANAGEMENT
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Organizational Culture My last point will show the importance employee selection as it relates to organizational culture. In our textbook Osland states, “When the company’s espoused values are inconsistent with the practices that employees encounter on a day-to-day basis, problems with motivation, communication, and retention will follow.” He goes on to say, “Deciding the types of attitudes and values that employees should have in order to achieve a person/organization fit is entirely dependent on culture.” Adewale and Anthonia point out in their article, “The importance of recruiting for culture fit cannot be overemphasized because of its impact on making good recruitment decisions is supported by the impact of poor culture fit decisions. It helps to reduce absenteeism and turnover. Also, assessing for fit helps the organizations increase employee satisfaction and morale, which leads to better productivity and performance” (2013). Hiring someone that isn’t a good fit for the organizational culture will leave the department dissatisfied, as well as the employee. Expectations need to be made perfectly clear during the selection process to avoid premature exits from employees. An example I like to use, which is similar to the textbook’s example is the employee looking for a relaxed environment but is hired into formal, straight laced company. If the HR team was on top of their planning and research, they would have been able to weed out this applicant. Not only did this person apply, but they accepted the job and are now miserable in this position and will more than likely quit soon. This will cost the company money, time, training costs, recruiting costs, and add to the turnover rate. Making sure an employee is a good fit based on company culture, in my opinion is almost as important as fitting for skills. Predicting the future morale of the potential new hire, I believe is very important.
SELECTION AND TALENT MANAGEMENT Conclusion In conclusion, proper planning can help any human resource professional avoid costly mistakes. Paying attention to every detail in the employee selection and talent management process will help positively influence a company’s return on investment, reduce high turnover rates, and find proper candidates to fit the company culture. When making hiring decisions, we want to earn and not cost the company money. We should also work to support the company in meeting all strategic goals. While learning from the textbook and doing independent research, I realize meeting all these goals are not always possible 100% of the time, but planning and research will get us closer to the mark of perfection.
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SELECTION AND TALENT MANAGEMENT
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References Kokemuller. N. (2015). Why Is the Human Resource Selection Process Important? Retrieved from http://smallbusiness.chron.com/human-resource-selection-processimportant-14399.html O’Connell. M. S. (2007). Employee Selection: The Five Sides of ROI retrieved from http://www.hreonline.com/pdfs/11012008Extra_SelectROICalculator.pdf Moran. G. (2011). The Hidden Costs of Employee Turnover. Retrieved from https://www.entrepreneur.com/article/220254 Osland, J., & Turner, M. E. (2011). The organizational behavior reader. Boston: Pearson. Adewale. O. Anthonia. A. (2013). “Impact of Organizational Culture on Human Resource Practices: A Study of Selected Nigerian Private Universities.” Journal of Competitiveness, vol. 5, pp. 115-133, December 2013, www.cjournal.cz. Accessed on 4 November 2016.
1
Introduction Employee selection is very important to the success of an organization. I’m sure there isn’t one person in the world today that has not been affected by a poor hiring decision in some way. From the less than helpful conversation with your phone provider’s customer service department, to the mountain of work you have to cover to make up for the work your coworker isn’t sure how to complete. There are many examples we can think of when it comes to poor hiring decisions that affect not only us on a personal level, but the company as a whole. Today I will discuss the importance of employee selection in the overall talent management process. More specifically uncovering the importance of employee selection as it relates to ROI, the effect of high turnover, and organizational culture.
LaToya Edwards
SELECTION AND TALENT MANAGEMENT
2
Return on Investment According to Neil in a quote taken from smallbusiness.chron, “The human resources, or HR, selection process is important because of the production and performance value companies get by making good hires and the high cost of replacing employees following bad hires” (2015). As we all know, companies are looking to maximize their efforts in all decisions, especially decisions that cost the department. Making good hiring decisions maximizes a company’s return on investment. Hiring an employee is an investment into the company’s present and future goals. As we’ve been learning in our readings, we know there is a lot of planning and work that goes into the onboarding process of a new hire. With all this work and planning, comes added cost to the company. It is extremely important to make wise hiring decisions so money and time is not wasted on a bad hire. Some items you should notice if you are indeed experiencing a return on investment listed by Matthew S. O’ Connell are, “Increased productivity and quality, reduced turnover and absenteeism, reduced risk of legal challenges, reduced risk of aberrant behaviors, and improved resource utilization.” The article goes on to say, “Research has shown that one standard deviation in job performance is worth at least 40% of an individual’s total compensation. For sales and executive positions, that number is much higher. Thus on a job that pays $50,000 per year, a person performing at the 75th percentile is worth at least $20,000 more to the organization on a yearly basis than someone performing at the 50th percentile” (2007). Based on this research, it clearly exhibits the exorbitant costs related to a poor hiring decision. The company in the case of the 50th percentile worker will of course not get the return they were looking for. All hiring energy should be placed on the upper percentile workers who may learn faster, work better with the team, adapt faster, or work with customers better than the average worker.
SELECTION AND TALENT MANAGEMENT
3
The effects of high turnover Employee selection is also very important to turnover rates within a company. O’Connell goes on to say in his article, “There is no doubt that turnover occurs for many reasons. Improving the selection process will not completely eliminate turnover. However, a significant portion of early tenure turnover can be attributed to poor job fit, which can be affected by an improved selection process” (2007). I use the example quite frequently of the customer service department at my job. The level of dissatisfaction is so high, that employees quit almost before their 90 days are up. The department has to remain fully staffed at all times or they will experience a spike in hold times for the customer, and overworked call center agents. Recruiters then look for any warm body to fill these vacant positions. Training is cut short and qualifications don’t matter as long as there is someone in the seat to take phone calls on Monday morning. This leads to frustrated employees, frustrated customers, and frustrated employees in departments that have to clean up the mess of customer service. Most of these employees eventually get fired or quit, and the high turnover cycle continues. There is also no return on investment in this scenario since the employees are wasting training and recruiting dollars, not productive, forcing more knowledgeable departments to take on additional work. The company reputation is also now in shambles with a ton of bad publicity and poor reviews. Gwen Moran also lists some of the hidden costs of employee turnover as slippage, ripple effect, and customer loss. She describes slippage as work that is not getting done as a result of an empty seat, employees picking up the slack and not meeting their own goals as a ripple effect, and customer loss due to them not wanting to deal with employees constantly in the training level instead of expert (2011).
SELECTION AND TALENT MANAGEMENT
4
Organizational Culture My last point will show the importance employee selection as it relates to organizational culture. In our textbook Osland states, “When the company’s espoused values are inconsistent with the practices that employees encounter on a day-to-day basis, problems with motivation, communication, and retention will follow.” He goes on to say, “Deciding the types of attitudes and values that employees should have in order to achieve a person/organization fit is entirely dependent on culture.” Adewale and Anthonia point out in their article, “The importance of recruiting for culture fit cannot be overemphasized because of its impact on making good recruitment decisions is supported by the impact of poor culture fit decisions. It helps to reduce absenteeism and turnover. Also, assessing for fit helps the organizations increase employee satisfaction and morale, which leads to better productivity and performance” (2013). Hiring someone that isn’t a good fit for the organizational culture will leave the department dissatisfied, as well as the employee. Expectations need to be made perfectly clear during the selection process to avoid premature exits from employees. An example I like to use, which is similar to the textbook’s example is the employee looking for a relaxed environment but is hired into formal, straight laced company. If the HR team was on top of their planning and research, they would have been able to weed out this applicant. Not only did this person apply, but they accepted the job and are now miserable in this position and will more than likely quit soon. This will cost the company money, time, training costs, recruiting costs, and add to the turnover rate. Making sure an employee is a good fit based on company culture, in my opinion is almost as important as fitting for skills. Predicting the future morale of the potential new hire, I believe is very important.
SELECTION AND TALENT MANAGEMENT Conclusion In conclusion, proper planning can help any human resource professional avoid costly mistakes. Paying attention to every detail in the employee selection and talent management process will help positively influence a company’s return on investment, reduce high turnover rates, and find proper candidates to fit the company culture. When making hiring decisions, we want to earn and not cost the company money. We should also work to support the company in meeting all strategic goals. While learning from the textbook and doing independent research, I realize meeting all these goals are not always possible 100% of the time, but planning and research will get us closer to the mark of perfection.
5
SELECTION AND TALENT MANAGEMENT
6
References Kokemuller. N. (2015). Why Is the Human Resource Selection Process Important? Retrieved from http://smallbusiness.chron.com/human-resource-selection-processimportant-14399.html O’Connell. M. S. (2007). Employee Selection: The Five Sides of ROI retrieved from http://www.hreonline.com/pdfs/11012008Extra_SelectROICalculator.pdf Moran. G. (2011). The Hidden Costs of Employee Turnover. Retrieved from https://www.entrepreneur.com/article/220254 Osland, J., & Turner, M. E. (2011). The organizational behavior reader. Boston: Pearson. Adewale. O. Anthonia. A. (2013). “Impact of Organizational Culture on Human Resource Practices: A Study of Selected Nigerian Private Universities.” Journal of Competitiveness, vol. 5, pp. 115-133, December 2013, www.cjournal.cz. Accessed on 4 November 2016.
