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When things go wrong, businesses fail

Succeed or fail, it comes down to the right people.

I heard an expression once; I don’t know where and I don’t know when.  But it always reminds me of why businesses fail.  It stuck in my head because it makes so much sense. “There is nowt so quare as folk.”  I’d imagine it comes from the North of England.  Maybe I heard it in that TV series, “Last of the Summer Wine.”

People are strange, unpredictable and in a world of technology and machines, people can just be downright unreliable.  But that is the beauty of the Human Being; we are magnificently diverse, irrational and almost unmanageable.

Of course, in the workplace, that can become just a bit scary for the managers.  It is that very diversity of human nature that makes the recruitment and selection of new employees such a critical activity for any organisation.

The truth is that you can’t run an above average business with below average people.  So if you want success, you try to hire the best.  You aim high.  When you don’t aim high; you are aiming for trouble.  Here is what you get if your hiring practices are weak, and your employee turnover is poor.

Productivity

This issue is a big one if you fail to tackle it.  It can be difficult to quantify, but if you ask around you will find plenty of evidence to support our case.  If, and this is a big if, a proper Induction Process is followed, your new hire should not fail.  Your new hire should be almost ready to produce results for your business.

An unsuccessful new hire will continue to draw upon management and colleagues time as they struggle to come to terms with their new role.  This constant distraction reduces their manager’s and workmate’s productive time.

Errors, omissions and poor standards of performance can have a significant impact on productivity.  Reworking, replacing and otherwise making up for bad work is a complete waste of time.  This is compounded when the new hire fails to learn from their mistakes.

Morale & Motivation

If you work alongside a poor performing colleague, you will naturally want to assist them in doing a good job.  This desire to help is particularly common in the case of a new hire, or an existing employee going through a difficult patch or struggling with a new type of assignment.  We all need the help of a supportive team from time to time.  Nobody likes to see a colleague fail if they can help it.

However, when a new hire fails to get up to speed, despite your help.  Or a colleague’s difficulties have become an ongoing issue.  Your performing team members who are carrying the workload without additional reward, recognition or benefit, may stop trying.  Worse still, if management does not take action, they may let their performance drop, either subconsciously or in planned protest.

Where an organisation has a consistently weak hiring record and a high level of staff turnover, poor performance can become the norm, costing a business dearly.

Reputation

If a customer is repeatedly on the receiving end of poor service or product quality, they will complain.  Complaints invariably end up on the shoulders of the under performing team.  The team already know the cause.  They may pick up the slack for a short time, but the problem will eventually resurface if management fails to tackle the underlying causes.

It is a well-established fact that bad news travels faster and further than good news.  When your customer makes a complaint, consider yourself lucky. Usually, they will only complain about your business to their friends and your competition as they move their business.

In some business sectors, these complaints can travel far and wide and may stop higher calibre candidates from applying to work in your organisation, adding to your problems.  Additionally, you may discover to your cost, that your better employees will readily move to a competitor with a stronger reputation.

Financial

If productivity, morale, motivation and reputation don’t particularly bother you, perhaps the financial implications might.  We have yet to see a report or research from any reputable source that suggests that there is any positive correlation between employee churn and profitability.

On the other hand, there is overwhelming evidence that excellence in recruiting correlates strongly with all the indicators of a top organisation, from productivity through creativity and innovation to market leadership and profitability.

However, there is one exception to that rule.  If you are in business selling generic low margin products to a consumer base who buy on price alone, then you can boost your margins with a high staff turnover rate.  However, you still need to hire the right people in the first place.