Feature Article


 


Better Hiring Practices Increase Life-long Employee Productivity
By Alan Cayton and Greg Borton

People are not fixed assets. Yet, despite the implications, this conclusion still eludes consultants and academics who continue to coin terms like "Human Capital Management" and "Leveraging Human Assets." People, unlike machines, experience a wide variety of change throughout their entire careers, as well as during the specific stages of their employment within a given company. They don't come "fully loaded" with software, they are rarely "turn-key," and they can almost never be "swapped out."

Employees move through the different stages of employment experiencing ebbs and flows in productivity. While these stages vary with each having distinct experiences, there are predictable attributes and demonstrated best practices for improving both the employee's experience and productivity - saving companies millions and improving job and customer satisfaction.

Confronting the Nightmare
Most companies instinctively understand that employees need ramp up time to truly perform at their best, including training, integrating within the corporate culture, and understanding customer issues. The problem arises when that ramp up period turns out to be longer than the actual time the employee remains on the job. What if the best employees don't hit optimum productivity until six months into the job, and leave in seven? Or five?

Several opportunities exist for companies to reduce this productivity drain:

  • First, some firms are more likely than others to have a significant issue in this area. Realizing that you fall into this category is the first step to developing solutions.
  • Second, most companies are unaware of the "Employee Job Life Cycle" or how to manage it.
  • Third, once firms begin managing the Life Cycle, making modest enhancements can dramatically improve financial performance.

Identifying High-Risk Attributes
You're at risk if your industry or function has:

  • High learning curves with limited incentives for employees to stay put.
  • High employee turnover in contact centers, back-office processing, inventory management, and other labor-intensive environments.
  • Functions that also require a certain level of specialized knowledge (e.g., health care, communications, banking, and insurance).

Many companies fall into these categories. As a result, they end up with low productivity patterns characterized by:

  • Low to moderate employee compensation.
  • Limited to no upward mobility for employees (in compensation and advancement).
  • High turnover due to hiring characteristics and competitive job markets.
  • Complex training, with high fail rates, causing significant new employee dropout rates.
  • A wide range of issues requiring months of "on-the-job" experience before typical employees become truly effective.

Measuring the Employee Job Life Cycle

A truly well defined Employee Job Life Cycle identifies the most important employee performance data and measures it for each time period of an employee's typical tenure, from recruitment to termination. For companies with significant new employee learning curves and moderate-to-high job turnover, managing this Life Cycle may be one of the most effective ways of improving productivity, job satisfaction, and customer satisfaction. Yet most companies fail to track the Job Life Cycle, as illustrated below.

By breaking the Employee Job Life Cycle into discrete stages and measuring them, you begin to more accurately diagnose the breadth of any issues and begin to formulate specific, targeted solutions.

The key to effective management of the Employee Job Life Cycle lies in increasing the time of employment for high quality employees, or "deliberate employee job duration." This results in:

  • Decreased Labor and Infrastructure Costs. Increasing average job duration automatically increases productivity, producing 10% - 30% improvements to the cost of labor and supporting infrastructure.
  • Reduced Errors. Increasing average job duration reduces errors, thereby enhancing customer-perceived quality of service, for example.
  • Reduced Stress on Management. Reducing the number of new hires significantly lowers the stress on the management team and organization. A more stable environment universally raises productivity and quality, freeing management to focus on the core business, not employee churn.

Increasing job duration by 10 to 15 weeks can yield cost improvements of 10-30%.

Increasing ROI - Specific Programs to Increase Average Job Duration
In terms of contact centers, for example, the most significant returns are generated by managing the Job Duration Life Cycle rather than by implementing other technology or business processes. Increasing job duration by as little as 10-15 weeks can improve costs by 10-30%. The most effective approach is based on the development of structured business processes and tools to monitor job duration attributes. Data should include:

  • Hiring and termination data across employee populations, identifying job durations by site.
  • Hiring, training, productivity, and cost data for employees in each job group.
  • Work activities, task details, and processes to determine true cost and productivity of each group.
  • Estimates of error rates and re-work
  • "Good" employee job termination reasons by group, identifying why employees terminate early.

Armed with this information on a regular basis, management can adjust to trends in the labor pool. This data also makes it easier to understand the impact of different decisions and the best paths to improvement.

Where to start? Most companies instantly gravitate to new technology or compensation. While it is important to be at least "competitive" in these areas, Recruitment Process Outsourcing (RPO) has proven to be a more effective, less costly, alternative with higher direct impact.

Conclusion - Recruitment Process Outsourcing (RPO)
Changing new agent hiring processes effectively reduces initial employee churn (in the first 8 to16 weeks) which tends to be the most costly variety of churn, especially as new hires incur high expenses with very low contribution. These process amendments have relatively low price tags and produce almost immediate cost savings by reducing hiring expenses while creating long-term replicable processes to increase the ongoing value of your recruitment investment. One strategy in particular, Recruitment Process Outsourcing, has one of the biggest bangs for the buck.

Historically, consultants and managers have structured programs that treat employees in labor-intensive environments like interchangeable cogs in an ever-churning machine. RPO services reduce the churn and improve the quality of work by tailoring recruitment and selection processes that are executed flawlessly, over each and every step. As a result, tailored RPO solutions not only impact job duration, they do so faster and at a lower cost than conventional programs companies might implement on their own.

For large operations with high turnover and a long learning curve, increasing average Deliberate Employee Job duration by 10 to 15 weeks can reduce employee budgets by 10% to 30%. An RPO solution produces these benefits in less time and with less risk than an internal solution. More importantly, an RPO solution allows companies to concentrate on systematically managing their unique Employee Job Life Cycles. This strategic shift also has a cultural and financial impact. When employees see a management team that does not treat them as interchangeable "numbers," the improvements evident with RPO rise to the forefront and resonate throughout the organization, saving companies millions while enhancing customer and job satisfaction. The same solutions can be applied across all business segments - producing significant bottom-line results.

Reprinted from LTI Newsline

About the Authors
Alan Cayton is founder and CEO of StraightSource, one of the country's foremost experts in recruitment process outsourcing (RPO) solutions, and can be reached at Alan.Cayton@straightsource.com.

Greg Borton is CEO and co-founder of Primary Matters, a software development and management consulting company focused exclusively on understanding and improving all aspects of the impact of business initiatives on operations, and can be reached at greg.borton@primarymatters.com.