Would you pay $2,000 to save $20,000?

It may seem counterintuitive to spend money to save money. But have you ever bought a cheap pair of shoes, only to buy a more expensive pair later on that are more comfortable? In that situation, it would have been cheaper to buy the costlier footwear up front.

We make these kind of mistakes all the time. Going with the less expensive option seems like a good idea at the time, convincing ourselves that the product or service quality will be adequate. Once we experience the lack of quality, we spend even more money on the right solution.

Employers often make this same mistake when hiring. I'm not talking about the cost of salary and wages. Today, however, that's a huge issue — many employees are quitting because their wages have stagnated while the CEO got a multi-million dollar raise.

As COVID-19 restrictions are easing up with increased vaccination rates, service industry employers who pay minimum wage or barely above it are scrambling to get workers back on board.

Wages are a huge issue right now, but what I'm talking about in this article is investing in the right hiring methodology. To put it simply, if you spend a little bit of money to put the right people into the right seats, you can save a lot more money soon after.

Here's how.

The Cheap (But Expensive) Way

You can hastily write up a job description, post the listing on free job boards, and hire the first candidate who has the first inkling of qualifications just to get a warm body in the seat. Your goal in this scenario is to get the hiring process completed as quickly as possible.

Time is money, and the time you save means you spend less money, right?

Wrong.

You still have to review every job application and resume, which takes time.

You're in a hurry because an unfilled position costs you money, you rush to hire quickly, but will likely end up in disappointment for you and the employee.

You find yourself in a situation no better than before: a disengaged employee who likely ends up leaving or getting fired.

Rinse, repeat, spend even more money trying to find the perfect pair of shoes.

Did you know: Gallup found that an actively disengaged employee costs their organization $3,400 for every $10,000 of salary.¹

Instead of focusing on saving money, focus instead on what ultimately makes the best financial and operational sense: putting the right person into the right seat, the first time. Make it your goal to identify and hire only top performers (which may not be attainable 100% of the time, but strive for that goal using the process below and see how close you can get).

How do you hire the best people for each position?

The Top Performer Hiring Formula

Follow these steps:

1. Conduct a Top Performer Profile™ for the role. This process uses a facilitated approach to determine the ideal Core Values Index psychometric profile of the position. This defines your target.
2. Solicit candidates with a job listing that is based on the description text from your TPP.
3. Ask each candidate to complete a Core Values Index psychometric assessment, and use an Applicant Tracking System (ATS) to sort and filter them based on their fit to the role's target score.
4. Review experience and qualifications of candidates with highly matched CVI+TPP scores to weed out those who aren't within the desired range.
5. Interview your top three candidates and then make a hiring decision.

Candidates hired with a highly matched CVI score against a role defined by a Top Performer Profile often outperform their unmatched colleagues with 200% or higher productivity (saving you money) and experience 50% or lower turnover (saving you money).

This process results in employees who are happy and highly engaged in their work. As previously stated, the cost of disengaged employees can be steep.

Spending $3,400 in lost productivity for every $10,000 in salary is like walking in cheap shoes with pain at every step.

The Top Performer Profile hiring process actually saves you time as well as money. Because candidates complete a CVI as part of the job application process, their scores are automatically represented within the integrated Applicant Tracking System (ATS). This makes them easy to manage and sort. After an adequate number of individuals have applied, you only have to review the resumes of the top few candidates, saving even more time.

Essentially, what you've done is chosen a hiring process and tool suite that takes relatively little time and yields a small and manageable group of candidates who are pre-screened to have a highly appropriate psychometric profile for the role.

This saves money and provides high confidence that a well-engaged employee will be placed in the position, further saving even more money down the road with increased productivity and lower turnover.

Figuratively speaking, you've spent $2,000 and saved $20,000 as a result.²

That's smart hiring.

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Notes

[1] https://learning.linkedin.com/blog/engaging-your-workforce/how-to-calculate-the-cost-of-employee-disengagement

[2] Although hiring the right person for the role will likely save you money in the long run, your actual cost-benefit may vary.