For most businesses, and people for that matter, they will continue to do the same things each day until there is some reason to change. The basis for psychology is that “people move towards pleasure and away from pain.” This explains why very little changes in an organization until the pain of doing nothing is greater that the pain of doing something. It is with this as the backdrop that we discuss the cost of an open position in an organization verses the cost of changing the way that you recruit, engage and develop talent in your organization.
The cost of an open position is a “hidden cost” for most organizations. In the very short run, an open position costs less money to the direct payroll costs so it can be naively seen as a net positive. It is only when we put a number to the vacant position that we have something to balance that with.
This cost is actually quite easy to come up with. If you look at all of your product and service costing models you will likely have categories of fixed and variable expenses. You will also have the amounts that you charge customers for the services of each employee that they interact with. Your pricing and costing models are the key to coming up with this number.
Say that you are a roofing company and you currently have three open positions for hands on roofing technicians. Each of those technicians you pay $20.00/hour (for easy figuring). Is the cost of an open position then $20.00/hour or roughly $42,000/year? NO. If you look at your pricing model you will note that you CHARGE customers $40.00/hour for each technician’s time. So the cost of this open position is more like $80,000/year. Add to that the fact that in order to get the job done for the customer you need to pay your current employees’ overtime to finish on time. What is the cost of that?
The last hidden cost that you need to consider is the effect on your employee retention that having open positions creates. An open position means that someone else must do the work that is undone because of this open position. People will take on more work or work overtime for a short period of time but eventually if they see no light at the end of the tunnel they will leave and create ANOTHER open position.
So, is it worth your time to change the way that you recruit, engage and develop employees? I’ll just let YOU do the math…
I’m a binary guy. I like 0’s and 1’s. I like on and off. I like yes and no. I LOVE light switches…but dimmer switches confuse me. Getting to a binary question seems like the only way to start a problem-solving process. And so it is with figuring out why people are NOT applying for your open positions.
It might be helpful to define terms here:
UNABLE: lacks the physical or mental capability to take an action. A person may be highly motivated to take the desired action but cannot due to these limitations. Impossible to complete the action.
UNWILLING: May be both physically and mentally capable of performing the desired action but lacks sufficient motivation to do so. Has made a value-based decision to not take the action.
Now let’s ask the question again. If people are not applying for open positions in your organization are they UNWILLING or UNABLE to do so? The ramifications of answering this question will have a profoundly positive impact on your hiring practices. More importantly, do you know which of the two it is?
If people are UNABLE to apply for open positions at your organization, that falls into one of two categories. First: The person is not aware of your organization. They have never heard of it, have never interacted with it and unless something changes will never interact with it. People cannot apply for a position at a company that they don’t know exists. As hard as it is to believe, about 70% of people eligible to apply for your positions fall into this category.
The second possibility is that people are not applying because they have some FALSE preconceived notion about working for you. It may be that they have made or heard negative things about your industry. Maybe their information is inaccurate or completely out of date. It doesn’t matter. Unless you actively change these misconceptions about your organization in the community, people will cling to them and not apply in droves. About 20% of job seekers fall into this category.
If people are UNWILLING that is quite another matter. This would mean that the person knows about your organization, has accurate information about working for you and has made a VALUE-driven decision not to apply for your position. While this happens, through my work with thousands of job seekers, I can tell you that only about 10% of job seekers fall into this category.
How can you find out which is true for your organization? Simple. Just ask your current employees what made them aware of your organization for the first time. Did they drive past you? See a sign? See a job ad? Get referred from a friend?
And about that false preconceived notion about your company or your industry….ask them about that as well. Did they have a wrong idea about your organization before they came to work for you?
Knowing the answers to these questions will help you decide what steps to take to change the number and fit of the people applying for your positions. All of these answers lie with your current employees. It's time to ask them for some guidance.
Whether driving across country or just to the grocery store it is hard to miss the number of organizations that are currently trying to recruit new people into their organization. If it seems like there are more “Now Hiring” signs than you can ever remember seeing…you are correct. U.S. companies are currently engaged in a “War for Talent” unlike they have ever seen before. Unfortunately, this shortage will get worse before it gets better.
Origins of the worker shortage: While this shortage of eligible applicants for perfectly good jobs with good pay and benefits has taken most of the country by surprise, it shouldn’t really have surprised anyone. The demographic shifts in the countries’ population have made this shortage a mathematical certainty for almost 30 years. The math goes like this:
--There are approximately 75 million people in the Baby Boomer generation (born 1945-1964)
--There are about 65 million people in the next generation (Generation X) born 1965-1981
You see? The simple fact is that there are 10 MILLION less people in the generation moving its way through the workforce right now. We don’t have to argue whether the shortage is caused by “millennials who don’t want to work or are living in their parent’s basement”. The simple fact is that with 10,000 Baby Boomers eligible to retire EVERY DAY there are just not enough people in the following generation to fill all those roles.
Something that makes the problem even worse for employers is that the Labor Participation Rate (the percentage of eligible workers choosing to pursue employment) is at a historically low level. For decades about 68% of all people working age decided to work. Since the Great Recession that number has dropped to and stayed at about 63%. Not only are there 10 million less people to fill jobs, but of those about 10% less of them are choosing to work.
When does it get better? For those of you wondering if you can just “wait this out” I have both good news and bad news. The generation after generation X is the Millennial generation. That generation is slightly larger than the Baby Boomer generation. So if you can wait another 8 years without filling all of the roles in your organization you need do nothing. If you cannot wait that long, you need to make significant changes in your plans for recruiting, engaging, retaining and developing employees in your organization. How to do that will follow in future blog posts.
Studies have shown that almost 40% of employees say that working with a great team is their primary reason for staying. So how can you make sure you're leading a collaborative team? Think back to a high pressure situation your team went through - did they stick together, or did they focus on themselves? However your team responded, there are four steps you can take to create team collaboration and accountability:
1. Define Your Purpose
In order to have an accountable team, each team member must know their individual purpose and the goal of the team as a whole. Have you defined your purpose to the team? Take action: ask your team to write down what they think the team is accountable for and see how closely the answers match. Depending on their answers, you may have to take additional steps to get everyone on the same page.
2. Track Team Progress
In order to lead a collaborative team, each team member must have a measurable way to track their progress. This will enable them to see how they're progressing towards their goals, allow them to pivot based on project milestone results and give the team a chance to celebrate their successes throughout the project. Take action: Discuss how you’re tracking progress with your team and find a way to make a visible progress tracker (i.e. whiteboard, poster, etc.) that everyone can see and update.
3. Create a Shared Fate
In order to go from an individual to team mindset, the team must have a shared fate; meaning, whatever happens to the individual happens to everyone. Unless they have a real and meaningful share fate, the team will fracture under pressure – worrying about themselves instead of the group's success. To create this mindset as a leader, you should model the behavior you're hoping to inspire and reward successful collaborative results more than individual performance. Take action: write down a list of behaviors you want to see in your team. Keep track of your own behavior for a week, writing down whether or not you’re emulating those behaviors as well.
4. Work Through Real Issues Together
How important is open and honest communication in the workplace? Research has shown that 99% of employees prefer a workplace where people identify and discuss issues truthfully and effectively. In addition, studies showed that 33% of workers said a lack of open, honest communication has the most negative impact on employee morale.
In order to motivate a team and make it safe for them to process real issues together, there needs to be a strong sense of shared fate and high levels of trust. The first part of this means that the team's level of decision-making authority needs to be clearly defined. The second part requires setting clear performance expectations so that any gaps in performance can be identified. This is crucial because giving honest feedback requires understanding what is expected and identifying what is getting in the way of success. Take action: set-up a time each week for open and honest feedback with your team.
For more on creating accountable teams, check out Revolutionize Teamwork>>
Good leaders ask, “How do I tell better stories?” Great leaders ask, “What stories do I need to tell?”
Will you be a more effective leader if your stories are well-crafted and delivered? Of course. But the truth is, the story you tell is more important than how you deliver it. You're probably not an actor or a public speaker. You're a leader. Your audience doesn't expect perfection. They expect you to be decisive and helpful.
If you tell a story that helps them do their job better, but you forget the opening line, stutter a little, or even butcher the surprise ending, your audience will still learn from it. But if you tell them an irrelevant or unhelpful story even though you deliver it in a way that would make a Shakespearean actor proud, your audience will never forgive you for wasting their time.
So, what stories do you need to tell?
After conducting over 300 one-on-one interviews with CEOs, leaders, and executives in 25 countries around the world about their use of storytelling in business, here’s my list of the most important ten stories any leader needs to be able to tell at a moment’s notice.
1. Where we came from (our founding story) – Nobody ever quit their job and started a company for a boring reason. Find that reason for your company’s founder and tell that story. It will infect everyone with the same sense of purpose and passion.
2. Why we can’t stay here (a case-for-change story) – Human beings are creatures of habit. Change is an unwelcome visitor. This story provides the rationale for why change is needed and a real human reason to care.
3. Where we’re going (a vision story) – A vision is a picture of the future so compelling, people want to go there with you. And the best way to paint that picture is with a story about what that future will look like when you achieve it.
4. How we’re going to get there (a strategy story) – Strategy is how you’ll get from where you are now to where you want to be. In other words, strategy is a journey. And what better way to describe a journey than a story?
5. What we believe (a corporate-values story) – Values are only words on a piece of paper until they’re tested. This is a story of one of those awkward or uncomfortable moments one of your company values was put to the test.
6. Who we serve (a customer story) – There’s no substitute for getting out of the office and meeting your customer face-to-face. And for the majority of your organization that will never do that, this is a story you tell about one of your customer interactions so they’ll know that customer as well as you do.
7. What we do for our customers (a sales story) – A story about what you did for one of your customers that’s so impressive other people will want to buy what you’re selling as well.
8. How we’re different from our competitors (a marketing story) – You probably have a list of reasons why your product or service is better than your competition. Well, guess what? Nobody remembers your list. But they will remember the story you tell them that shows them those differences as they play out in a real situation.
9. Why I lead the way I do (a leadership-philosophy story) – No series of buzzwords on a piece of paper could ever articulate the subtle, human, and complex nature of your personal leadership philosophy. If you want people to understand how to expect you to lead, you need to tell them a story about what shaped the leader you’ve become.
10. Why you should want to work here (a recruiting story) – Every company claims they offer competitive pay and benefits, challenging work, and great advancement opportunities. If you really want to attract the best talent, you need real stories about why it’s so awesome to work there.
If you want to see an example of each of these stories, plus a few tips on how to come up with your own, you'll find them in the new book, The 10 Stories Great Leaders Tell.
Good luck with your stories.
-Guest post from Paul Smith, author of The 10 Stories Great Leaders Tell.