Right Fit Right On The Money


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Right Fit Right On The Money

  1. 1. Right Fit, Right on the Money
  2. 2. Jill Vershum, M.Ed. Heather Gipson, M.A.
  3. 3. This webinar will introduce strategies to help you bring time and money savings to your organization by making the right hiring decisions. This means finding candidates who are the right fit for job competencies and organization culture, and increasing the odds of your return on investment. We will specifically use case studies to demonstrate organizational impact of selecting the right leaders and front line employees. We will discuss how investing in tools and technology help realize savings, and reinforce that the talent management function is pivotal in resource allocation and right fit. In the end, it doesn’t have to be a gamble.
  4. 4. There is a lot of money floating around when you are selecting executive and senior leaders in the organization and need to get the right fit. •Salary ranges can be hundreds of thousands of dollars, plus bonus and financial incentives •Benefits and insurance coverage (health, dental, vision, life, disability, holidays, vacation) •Pensions, stock options, 401(k), profit sharing •Perks (health or country club memberships, special parking, car services)
  5. 5. •Search firm fees (quarter to one third of salary level) •Employment contracts and severance, often negotiated at time of sign-on •Relocation packages (spouse job search, moving expenses, mortgage differential, house- hunting trips, temporary living expenses) But that is just part of the equation.
  6. 6. There are culture and organization fit issues. When looking at a pool of potential candidates you begin to hone in on the right fit. •Does the person have the right competencies? •Will he or she be a good culture fit?
  7. 7. •How will your candidate fit with board members? •Will there be a good fit with the executive team? •Downstream, will the new leader be able to select and plan the right talent?
  8. 8. So where will you place your money to increase the odds of hiring the right fit? Let’s use two case studies to show you how different organizations placed their bets for the right fit and the right money. We’ll start with the money.
  9. 9. We decided to quantify just some of the costs of executive assessment. In this company, the position was CEO. The base salary level was $550K. For the sake of this case, we quantified some costs that are known: • Search fee assumes 25% salary level, which is conservative—often as much as 33% • Sign-on bonus for this level averages 12% salary level • Outplacement and severance are negotiated into the employment agreement • Outplacement assume 20% base (based on recent research by Manpower) • Severance assumes 8 weeks, although often much more Costs not shown in this example are benefits, relocation package, and other perks The cost of a single executive assessment is $2850. In this case, the company decided to have the final four candidates go through the executive assessment. But that is only part of the picture—the money.
  10. 10. Case Study I: Executive Selection, President/CEO Salary Level $550,000 $405,160 Costs Not Shown: •Relocation Package Search fee •Benefits Package Sign on Bonus Outplacement •Executive Perks Severance $2,850 $11,400 Some costs of executive Cost of single executive Cost for final four selection assessment
  11. 11. Finding the right fit is the challenge. In this case study, our client was the Board President of a national healthcare organization. They were hiring a President/CEO. They had used a search firm and narrowed their selection down. But they had some strong business needs they had to consider to help land the right person.
  12. 12. First, their bylaws required the President be a physician. But they wanted to go beyond having the credentials of a physician. They wanted leadership competencies needed to be a successful CEO. They wanted the selection assessment to have benchmark data against other successful CEOs.
  13. 13. Healthcare reform was looming and they needed a person who would stand out among others and be able to lead in uncertain times. The successful candidate had to be able to diagnose and prescribe in the business arena.
  14. 14. BHI methodology was to interview the Board President and members of the Board search committee to find out what was needed for the right fit and what success would look like.
  15. 15. We used Board interviews to understand the vision, desired culture, position and potential derailers. We mapped the desired traits and success factors to our executive assessment. We assessed their final four candidates using cognitive, personality and work style assessments and an in-depth interview.
  16. 16. We equipped the Board President with valid and reliable assessment results—important to physicians used to making decision on objective data. In fact, it was much like having a stethoscope to see what is beneath the surface.
  17. 17. The results were that the board members were able to make a decision based on more than a physician credential, the high intellect all four final candidates had, and more than political alliances. The decision was based on who could who the leadership competencies and interpersonal acumen to lead during tumultuous times in healthcare.
  18. 18. This client reported to us : “Assessment results provided us with an edge to work through the decision with clarity and confidence.”
  19. 19. Back to the Case example—you might want to decide where you would want to invest to get the right fit— competencies, culture, team, business results.
  20. 20. Case Study I: Executive Selection, President/CEO Salary Level $550,000 $405,160 Costs Not Shown •Relocation Package Search fee •Benefits Package Sign on Bonus Outplacement •Executive Perks Severance $2,850 $11,400 Some costs of executive Cost of single executive Cost for final four selection assessment
  21. 21. As business partners, it is ultimately up to you to piece this together— increasing your odds of getting the right fit for the right investment.
  22. 22. Here is our second case example. Position is VP w/salary level of $200K. Using the same assumptions as before, here a few of the quantifiable costs. •Search fee—assumes 25% •Sign-on bonus—assumes 12% base •Here we have added productivity or ramp up costs because the organization said this would be required (assumes 3 mos @ 50% productivity) •Outplacement (20% base) •Severance (assumes 5 weeks) conservative Not included again—relocation, benefits and perks. Executive selection is $2850. This company had four final candidates also, sourced from the search firm.
  23. 23. Case Study II: Executive Selection, Vice President Salary Level $200,000 $158,231 Costs Not Shown Search fee •Relocation package Sign on bonus •Benefits package Ramp up costs •Executive perks Outplacement Severance $11,400 $2,850 Some costs of executive Cost of single executive Cost for final four selection assessment assessments
  24. 24. In Case II, the client was a new President of division of specialty pharmaceutical company. He was hired to grow the company from a $500M to $1B company. Three past Presidents had not been able to do this. He was leading in an economic downturn.
  25. 25. He needed to improve business performance by managing expenses, getting to more efficient operations, and increasing revenues. He knew he needed to shore up his talent and bring in talent where needed.
  26. 26. He wanted to leverage his assets across the organization, create more accountability and interdependencies—which was a major culture change.
  27. 27. The president had a open VP Operations, a pivotal role to meet the formidable business challenges. He was down to the final four candidates also. BHI provided executive selection assessment to the final candidates. Using cognitive, personality and work style assessments, we provided an assessment report for each person and provided feedback on their fit in relation to the others on his team and the business challenges. The results?
  28. 28. Results—first the President avoided a costly hiring mistake as their top choice before the assessment did not have some of the critical competencies needed.
  29. 29. Results—second, the new team worked together on reorganizing to maximize efficiencies, increase interdependencies, and manage expenses over the next few months.
  30. 30. Results—third, the team met its next several quarter financials, after missing 3 out of 4 of the past quarters. This case study speaks for itself on the value of executive assessments for increasing the odds of right fit and right investment.
  31. 31. Let’s shift gears now to a different segment of your workforce. When you look closely at your larger applicant pool, do you notice the subtle differences from one person to the next? Can you identify those that will “absorb” more information and soak it all in during training? How do you go about finding the right fit and impacting retention?
  32. 32. This organization set out to raise retention rates by implementing a competency-based selection system designed by BHI to identify top talent in their manager candidate pool. Upon implementation, management turnover was costing the organization $1.3 million system-wide based on their estimate of roughly $5000 per manager turned over. Over a three year period, the selection system which contained a behavioral interview developed by BHI and one of our assessments led to dramatic turnover reductions.
  33. 33. Manager Turnover 23% (net cost = $1,350,000) 19% Annualized Turnover Rate (net cost = $855,000) 14% (net cost of $630,000) Year 1 Year 2 Year 3
  34. 34. $720,000
  35. 35. Do you hate to see money going down the drain as a result of hiring decisions that aren’t based on what makes for the right fit? So was this next organization….
  36. 36. With overwhelming turnover rates in the hourly employee ranks, this company implemented BHI’s assessment designed to identify key talent for hourly positions. Just one year later, hourly turnover was reduced from 164% down to 107%, saving this organization approximately $60,000 per location…
  37. 37. Hourly Turnover Reduction Turnover Rate 164% 107% At Implementation After 1 Year
  38. 38. …which equates to system-wide savings or 5.6 million dollars in replacement costs . $5,600,000
  39. 39. In order to achieve these results in your organization, your selection system must be based on a solid foundation. Meaning, it must be aligned with the company’s current vision, business strategies and hiring goals or it will likely not produce the level of talent that you need to sustain growth and elevate the brand….Is the talent in your organization deteriorating? Can it deliver to your customers what you expect, thus driving organizational performance?
  40. 40. So how do we know what is the “right fit”? Competencies or key performance areas provide selection tools with a framework for evaluating knowledge, skills and abilities of your applicants, based on what is crucial for the job.
  41. 41. Competency based assessments enable you to zero in on applicants who really have what it takes to excel in the job and grow and advance with the business.
  42. 42. Yet with so many applicants to pick from, do you often wonder which direction you should go? Do you feel as though you need a road map…
  43. 43. to help you identify the best talent to place in front of your customers?
  44. 44. We believe you have better ways to spend your time and money, so BHI’s solutions are designed to find that “right fit” and eliminate costly hiring decisions…
  45. 45. If you’re up to your eyeballs in resumes, applications, background checks, etc….why not simplify and streamline your applicant tracking process? Cut through the clutter…
  46. 46. …and get down to the candidates who demonstrate the necessary abilities and have passed the “right fit” test…
  47. 47. So why not let systems do more of the work for you? With a minimal investment in an applicant tracking system, you just may be able to save your company Millions by not spending time and resources on unqualified candidates and bad hires…not to mention protecting your company from employment discrimination lawsuits.
  48. 48. To win at this game, you’ll have to bring hiring solutions to the table that are aligned with your business strategy (thus competency based) and integrated with other people/HR systems.
  49. 49. Using assessments as one piece of information to make your selection decisions will likely stack the odds in your favor, saving time, money, and improving the quality of selection by getting the right competencies and right fit.
  50. 50. In summary, investing in selection tools and technology increases your odds of finding the right person with the right competencies for a minimal investment. It saves you time. It puts YOU in control.
  51. 51. Placing your bet on Assessment Impact at Executive Level • Investment = 3-7% the cost of making the wrong choice. • Selecting a leader who can meet financial goals when others have failed. Impact at the Management and Hourly Levels • Significant decreases in turnover • Large scale savings in replacement costs: $720K-$5.6M
  52. 52. Right Fit, Right on the Money
  53. 53. Batrus Hollweg International Forum http://twitter.com/BatrusHollweg http://batrushollweg.blogspot.com/