How to destroy your business...one "non-hire" at a time!

Thursday, April 11, 2013

Picture this…you are sitting at your desk, about to meet with your CEO, COO, Managing Partner, Division Head (i.e. insert the title of the person who can, with one comment, make your life miserable) to inform you that you have not hit your budget for this quarter. Sound familiar? To make matters worse, the reason you missed your mark is your fault.

If history tells us one thing, it’s that you need to bring numbers to the fight (there are countless battles where one side has shown up light, resulting in a devastating loss). By analogy, the same goes by sporting events, where you need to bring your best (think about a pudgy Mike Tyson showing up out of shape for his fight with Buster Douglas). President Kennedy understood the concept when he engaged “the best and the brightest.” In business, if you do not bring your best and brightest, you will fail. Okay, so what does this have to do with your impending meeting with your boss? Well, you are going to have to bite the bullet and explain that the reason you missed your budget was due to the fact that you failed to recognize that in order to be successful, you needed more firepower. You thought, naively, that you would save money on hiring more employees and all would work out. You were wrong. Remember all the things you told yourself…..I will save salary costs, I will save recruiting costs, I will save training costs, I will save benefits costs, etc. What you forgot, however, is that every day (I will repeat for emphasis, EVERY DAY) you have a vacancy in your group, you miss your numbers. Let’s look at this in detail.

For years, Human Resource professionals have been using different metrics to record and analyze vacancy costs, ranging from the simplistic to the complex. Calculating the COV (Cost of Vacancy) is one of the most important things a company can do, and sadly, one of the most overlooked. Analyzing (and acting upon) vacancy issues is paramount to a company’s success. You (the collective “you”) need to know, in dollar terms, how much each vacancy costs you (per day). The issue, however, is not the analysis itself, but rather the inability to convey the message to the business leads. This article will attempt to “KIS” the subject (Keep it simple!).

Value…..this is one of the most used and abused words in today’s business jargon. While Webster’s defines value as a “fair return or equivalent in goods, services, or money for something exchanged,” most business leaders would tell you that value equals revenue (V=R), and specifically, employees who provide value for an organization are represented by the revenue each one generates. While there are a TON of variables and other vacancy calculations available (feel free to contact me if you want to know more about this), in an effort to KIS, let’s keep the analysis top line. Simply stated….your employees generate the revenue that will keep you in business. Without them, productivity suffers, morale suffers, and ultimately, you will be the last person to turn off the lights.

Getting back to your meeting with your boss….ok, so you read the above and now realize that maybe you were a bit short-sighted in your approach to human capital. You mutter to yourself, “but he told me to cut costs, all I was doing was following instructions. But do the vacancies in my department really translate to loss?” Ask yourself, how do our customers view us? Do they see us as a weak, thin group that is constantly chasing our tails? Are we missing deadlines? Are they confident in our ability to produce quality work?

More questions come to your mind: What about my existing employees? Do they feel as they I am making a commitment to this business? What about their morale? Have I even looked at the effect my vacancies have on existing turnover? What about the quality of work from my current group…has it flat-lined? What are these vacancies costing me in management oversight and training?

Okay, I can go on with 50 different examples about vacancies are killing your business, but you get the picture. We have discussed the analysis, the metrics, the reasons and the effect; now let’s move on to what we can do about it.

You can hear your boss walking down the hall to your office, a copy of last quarter’s P&L in his hand. You start looking around for empty boxes to carry out your desk contents. Then it hits you. You just need to make sure that your boss understands that his edict to cut costs does not justify vacancies. You will tell him that you have analyzed the financial circumstances, and will stop the bleeding immediately. You will explain to him that each day you fail to fill the spot(s) on your team, is another day that you cannot generate revenue, and another day where his business will be flat. These are some of the questions he will ask you (and what your response should be):

1) Okay, Murphy* (*names changed to protect the innocent), why can’t you and your group just work harder?

Answer: But Boss, it’s not about working harder. My team is maxed out as it is. I have people doing jobs that are not in their specialty, which results in less than stellar results. They are also getting burned out. Oh, and before you ask, I tried putting an incentive program together….an incentive program only works if there is a possibility that the incentives can be reached….that is clearly not the case here.

2) Maybe you (Murphy) are not managing your team well enough?

Answer: You hurt my feelings (it was worth a shot!). But seriously, each member of my team is working hard, and I spend a considerable amount of time giving them attention. However, because I have vacancies, I cannot devote my time to management issues (strategy, etc.), as I need to be on the floor helping, cajoling, begging, etc. my team to “do more with less.”

3) What’s the big deal, it’s not like our customers will notice?

Answer: Boss, with all due respect, you’re wrong about that. Dead wrong. Our customers will definitely see that we cannot, as a company, attract and retain talent. In fact, our customers will most certainly notice in that we start losing the employees we have (ever hear of employee dissatisfaction?). Worse yet, our customers will think that we do not care enough about them to do our best, and they will seek out our competitors.

As you see the blood returning to your boss’ face, he looks at you and says, “Okay Murph (always a good sign when he calls you Murph!), I get it now. So what do we do?” You tell him that you will immediately start recruiting for quality hires, and get those vacancies filled ASAP.

Steven Levine, Esq. is the Managing Director for Compliance Legal Search Solutions, a System One Services Division. You can reach him at slevine@compliancestaffing.com, and follow him on twitter at slevineJOBS

ACEDS Nuix Relativity Brainspace