Making Every Hire Count: Maximizing Your Human Capital Investment
With today's leaner staff and budgets, every new hire counts drastically. Badly conducted hires will yield you staff who amount to little more than a cost of doing business. But although the money you spend on payroll could well be your largest cash commitment, a staff of properly hired and maintained employees can increase your profits far beyond their cost. Your staff is therefore an investment—easily the most important investment your business ever makes.
Calculate ROI on hiring
Most businesses in the printing industry have two major common expenses: equipment and personnel. Best practices suggest that when evaluating your capital equipment investments before purchase, you first calculate your exact return on investment (ROI). Often, as a sales tool, manufacturers will even help you determine your ROI on their own brand of equipment.
Similarly, with this article we want to suggest that you consider your staff as human capital. So, as with equipment, can you measure your ROI equally effectively on your personnel investments? The answer is a qualified yes--even though personnel expenses can be less predictable. Variables such as salary demands, employee benefits, education, training, and job-market conditions can throw off projected employee budgets considerably. Also, since many returns on personnel investment do not result in a tangible product, their measurement requires more subtle calculations — but nevertheless they can still be measured to a useful degree.
As with equipment, when you prepare to invest in human capital, you first need to evaluate the potential fit between your new hire and your company’s needs. Simply put, you can do this by determining what your company does best, then hire for matching skills in job candidates. Similarly, you can identify areas where your business may have serious shortcomings and seek new hires who can fill in these vital gaps. Additionally, your customers have certain requirements your company must meet in order for them to give you their business; so you need to analyze and hire for the staff skills that will give your customers what they want.
Ideally, you could integrate all the above concerns by charting a comprehensive workflow strategy that maximizes your business’s efficiency and productivity while enticing customers to come back for more. Keep in mind your equipment - tools that will only perform if operated effectively and according to an efficient production plan. Next, define what levels of staffing your company requires to execute the strategy at the senior, intermediate, and entry levels. Use industry guidelines to determine an appropriate ratio of your gross billings against staffing count. Then hire accordingly. Above all, remember that the productivity of your labor force leverages all your other assets. It is pivotal in executing a business strategy and improving profitability.
Increase hiring return
Other factors to ensure a good return on your human-capital investment are:
- Create a description for each job function and identify the skill sets it involves, considering not just educational and technical but also “soft” skill requirements. (More about soft skills later.)
- Use industry salary guidelines or similar ones established by your company.
- Hire at the appropriate level. Someone who has the skills and seniority to command a higher salary than an intermediate or junior may be more efficient and accurate. At the same time, don’t overhire. Keep in mind that each role needs to challenge the incumbent appropriately.
- Hire for fit. Your ultimate goal when adding new employees is their seamless integration into the balance of your staff. If you make personnel decisions that build a cohesive team, your return on human capital investment will skyrocket.
- Invest enough time to hire effectively. To streamline your hiring process optimally, take advantage of the services of an industry-specific staffing firm like PrintLink. Our managers know the industry and how to define and meet your strategic hiring objectives. Additionally, we only send you resumés from qualified professionals who fit your job requirements--saving you valuable time.
Evaluating potential employees means assessing their ability to perform their job, including whether they possess the necessary technical or "hard" skills, appropriate certifications, and work experience. But don’t forget about the so-called "soft" skills — skills that are not so obvious from a candidate's resumé.
Often soft skills are loosely defined as interpersonal skills. (Remember the phrase from your report-card days: "Works and plays well with others"?) And in practice, these skills often translate into such practical and varied benefits as courtesy, teamwork, effective communication, and conflict resolution. But they can also include learning ability, adaptability, work ethic, self-confidence, capacity to handle pressure, or any number of task-specific abilities. Also among the most beneficial soft skills that excellent employees can contribute to your business are energy, initiative, and the drive to search for solutions and strategies to help the company grow ever more profitable. And at their higher levels soft skills can also encompass leadership ability to encourage other staff, gain their confidence and cooperation, spark their creativity, and inspire them to contribute more to the business.
Research has proven the value of soft skills. For example, after American Express provided some of its financial advisory staff with soft-skills training, the portion of the staff who received the training saw an immediate increase in sales — 12 per cent more than the control group, to be precise.
So how do you measure a candidate's soft skills for yourself? References are an excellent tool. While most candidates aren’t likely to offer you reference contacts who would speak negatively of them, you can still gain valuable insight by asking the right questions. Firstly, inquire about candidates' ability to work in functions similar to those you will require of them. Secondly, try to assess the quality of candidates' working relationships with co-workers and subordinates. Thirdly, remember to ask questions about candidates' behavior that are geared specifically toward eliciting both the qualitative and quantitative information you are seeking. For instance, "Can you tell me some ways that Mary was able to motivate other staff members?" will probably gain you more insight than, "Did Mary get along well with others?"
Boost return after hiring
Once you've hired wisely, six further essential steps you need to take to maximize your staff ROI include:
- Clarify expectations - Most importantly, make sure each member of your staff — new or old — is trained in your procedures and understands both your and your customers' expectations.
- Provide training - As you continually review employee performance, try to determine and fill gaps in training. These missing elements may be depriving staff of the tools they need for optimal performance while also hindering you from getting the best return on your salary investment. Don’t worry thatif you train someone, that person will leave your company and reward his or her new firm (a.k.a. your competitors) with your training investment. In fact, more often than not, employees will appreciate their employer's commitment to building their skills and reward it with increased loyalty and superior job performance. And even if your employees do depart for other opportunities, you still want each of them to perform as effectively as they can for the duration of their tenure with your company.
- Develop incentive or reward programs for employees - These can be easily established by defining a benchmark, then developing a scale of rewards for exceeding the benchmark. As long as the benchmark you establish contributes an appropriate measure to your profits, you are assured that your reward program will bring you a far greater return than its cost.
- Listen to what employees say about your business - After all, they're the ones who have the inside perspective on your day-to-day operations. Be open to making changes in procedure and policy, and accept constructive criticism from your staff gracefully when needed.
- Treat staff well - Acknowledge them as people — not merely cogs in the manufacturing process. Help them work through any of their personal issues, either on the job or at home, and you’ll have a friend for life — or at least a long time. Again, your return in the form of staff's dedication, loyalty and commitment to excellence will likely far exceed your investment in them.
- Never underestimate loyalty - The cost of employee turnover goes well beyond dollars and cents. It's important for you to realize that other employees can suffer setbacks professionally and emotionally when a co-worker departs. When you are forced to replace a departing staff member, your business incurs additional costs for lost productivity, increased overtime, and decreased staff morale.