New Hire Failure Is Rarely Caused by Lack of Technical Skills

“Mark Murphy, founder and CEO of Leadership IQ, a consulting company that does research and leadership training for organizations like IBM, Microsoft, General Electric, and Johns Hopkins University agrees [that talent may get you noticed].  For his book “Hiring for Attitude,” Murphy spent three years studying twenty thousand new hires.  He found that 46% of them failed within eighteen months.  ‘The shocker,’ he reports, is that ‘only 11 percent of those failed for lack of technical skills.’  The rest didn’t make it because of their attitude: poor motivation, negativity, and emotional issues made them lackluster team players, ineffective leaders, inconsistent problem solvers, and worst of all, a drain on their workplace’s collective energy.  Most probably had the smarts for the job – what they lacked was the optimism, grit, and determination to succeed.”

This excerpt from From Grit to Great by Linda Kaplan Thaler and Robin Koval really caught my attention.  This study was based on a study of 20,000 new hires.  This is a decent sample size and based on the companies who are this researcher’s clients, many of these 20,000 were likely working for big companies.

If 46% of these new hires failed at big companies, the statistics at small companies would probably be even scarier.  Smaller companies have less on-boarding, little training, and are probably not as picky when hiring.  If half of all of our new hires fail, the impact to small companies is even greater.

Why is New Hire Success Even More Important to Small Businesses?

Why?  Because they make up a much larger percentage of our entire workforce.  If we have 20 people in our company, then each one makes a significant impact.  We need to make sure that we improve the success rate of our new hires.

This study highlights attitude as the main contributor to success, and the authors of From Grit to Great, summarize by concluding that many of those who failed lacked in optimism, grit and determination to succeed.

If big-company Human Resource departments are not able to identify these attitude and character issues, then how can a small business owner improve the odds?

I think we have to broaden the ideal candidate profile before we begin recruiting a position.  We need to understand in advance of the recruiting process the position requirements, in addition to technical skills, to be successful in our company.

What Should Employers Consider in Addition to Technical Skills?

Here are some to consider:

1. Does the candidate match your core values?  All business owners have core values for their business.  It is worth taking the time to write them down and consider them when you are making a new hire.  If an employee does not embrace your core values, regardless how talented or experienced, there will be problems at some point in the employee relations.  It may impact their attitude when they realize they do not agree with the foundational values of the company.  But, on your end, it may be that you don’t trust their judgement or do not agree with their decision-making because of these differences in belief.  This is a very important hiring condition.
2. Has the candidate demonstrated determination and perseverance in their life?  When hiring young people, these characteristics may not show up in past work experience, however, they may be evaluated in other areas of their life such as grades, sports, a volunteer activity or a leadership role in school or church.  The best way to surface some of these characteristics is to ask open-ended questions about times in their life, personal or professional, where they demonstrated perseverance or determination.  Ask for specific examples.  Look for them to share their story.  For students, grades could be one form of determination unless the candidate is just off-the-charts intelligent.
3. Can the candidate’s references specifically support that the candidate had a good attitude, initiative, had good problem-solving and other soft skills that you require in your job?  Many times small businesses skip the step of checking references.  This is an essential step for every hire.  Even if someone you know sent them to you, unless they worked for that person and they can vouch for all aspects of their work performance, you still should check other references.  And preferably, someone who can provide insight into their behaviors and attitude at work.
4. Does the candidate have the experience to match the skills they are marketing?  In reviewing a resume and in conducting an interview, it is important to ask the candidate how well they did the job, not just what they were responsible for.  How do you measure how well they did?  You are looking for awards, quantitative indicators, promotions, etc. to support the quality of the job they did in the position.  For example, all Controllers are responsible for A/P, A/R and closing the books.  What you want to know is what their DSO (days sales outstanding) was for A/R and how many days it takes them to close the books.
5. Has the candidate jumped around from job to job?  This is still a valid concern.  I know that the media touts that the millennial generation will have 2-3 times the number of jobs in their 20’s than past generations, however, this is still an indicator of attitude, stick-to-itiveness, and loyalty.  There may be a valid explanation as an exception to this rule, but it would be unique. If they have never held a job for more than 2 years, don’t expect them to stay with you more than that long.

If you take the time to determine the answers you are looking for in advance, the better you will fare in hiring people who are a good match for your organization, as well as being qualified for the technical parts of the job.

Business Owners Need Patience to Wait for The Best Match

Then, as small business owners, we have to be diligent in waiting for the best match for our criteria.  Since we tend to wait as long as possible to add positions to our infrastructure, we are usually in a hurry.  Holding out for the candidate who demonstrates technical expertise, experience, work ethic, and cultural fit will hold significant power in changing the statistics I opened with from Murphy’s study.

The reminder I always give myself when hiring is that this is going to be 25% of my team, or now, 1/6 of my team.  This is a high percentage that I can’t afford to be sub par.

I still believe that people are our greatest asset.  We have to take as much time evaluating and determining the best candidates to hire as we would spend evaluating and researching the best piece of equipment or the best office space.  It is even more important and will either cost more over time, or potentially help the company make more over time.