Once you’ve decided which franchise to buy, what is the most important buying decision you’ll ever make to ensure its success?
Well, no matter what your particular answer, there is a well-defined, proven system that ensures you make the best decision and get the highest possible return on that investment. This system is used by federal, state, and local governments, privately-held and public corporations, charitable organizations and churches, startups, and franchisors everywhere for one reason – and one reason only – because it works.
It’s in use every day, worldwide to purchase everything from paperclips to airplanes. It works for tangibles like furniture and fixtures as well as for services like consulting and catering. And, yet, this proven system is routinely ignored when it comes to making what is truly the most important buying decisions any business ever makes – who gets hired. Let’s face it, competitors can copy your products and services, marketing strategies, and promotions. What they cannot copy is the quality of your employees ─ that is the only sustainable, competitive advantage you’ll ever have.
A couple of reasons for this oversight come to mind. The first is that few business owners and managers realize that the standardized practices they already use for purchasing and procurement also comprise an efficient, effective employee hiring system. Also at play here is a reluctance to systemize hiring in the mistaken belief that it’s not possible to choose human capital the same way we acquire other products and services. This is why most hiring decisions still hinge on the result of gut-instinct interviews − in spite of the fact that interviews are proven to be only eight percent more reliable than flipping a coin.
When the quality and continuity of employees is key to developing the kind of relationships and service that earn customer loyalty and profitability, what does this bode for the future of your business?
If you don’t like your answer to that question, it’s time to take a page out of your Purchasing Procedures Manual and start “buying” employees with the same due diligence applied to every other buying decision.
Spell Out Your Purchasing Specifications
Be it a soft drink dispenser or a new store associate, you can’t get what you need if you don’t know exactly what you need it to do. Your purchasing specs for that new employee should go beyond the basic job description and spell out:
- The mental and physical capacities needed. Do you need a rocket scientist or someone with a GED? Does the applicant need to be able to leap tall buildings in a single bound or just stock the top shelf?
- The innate attitudes that ensure the employee likes the job and your customers like the employee. The Harvard Business School determined that the four major factors critical to success on any job are: information, intelligence, skill, and attitude. Of these factors, they found that the first three account for only seven percent of success, while attitude accounts for the remaining 93 percent. That’s why savvy employers hire for attitude and train for skills.
- The personality traits best suited to the job, your location, and the corporate culture. Is the company rigid or relaxed? Does the job call for a person who is competitive or a team player? The person who does the books should have a natural propensity for attention to detail while your managers should be big picture thinkers.
- The specific skills you need. Does the ideal candidate need to do data entry? Operate a forklift? If yes, design a test to make sure you get what you need. Have the applicant do five minutes worth of data entry or demonstrate forklift skills. (Just remember, hire for attitude and train for skills. It’s well worth it to train a person with a great attitude in data entry rather than hire a skilled person with an “it’s just a job” attitude.)
With the specifications now in hand, the purchasing agent issues a Solicitation of Interest to find out who might provide the required products or services. This is analogous to advertising your job opening and, just like a good purchasing agent, you should use every possible resource. Ask for referrals from employees, customers, and vendors. Advertise on job boards, on your website, and in the local papers and/or Craigslist and Facebook. Call the good people who used to work for you and see if they might want to come back.
Evaluate Bidders’ Qualifications
In the purchasing world, a qualified bidder is: “an entity that has the capability in all respects to perform fully the contract requirements as well as the integrity and reliability which will assure good faith performance.” In the hiring world, this is the heart and soul of an effective employee selection system. It comprises a series of simple, logical steps that reduce employee turnover by ensuring better hiring decisions.
The first step is a telephone pre-screen to determine if applicants meet the most basic hiring criteria (i.e., the ability to work the hours needed, reliable transportation, citizenship or a green card, and willingness to work for the wage offered and to take a drug test). There’s no point in taking the time to see anyone in person who doesn’t pass this screening step.
For those who pass the pre-screen, you then conduct the appropriate tests to determine if applicants meet the rest of the requirements called out in your specs. The first tests are for the required skills and capacities..
For those who pass this screen, standardized attitude and personality tests are also widely available to more narrowly identify those people best suited to the job and/or you can build attitude and personality questions into your interview. For sample questions, see 267 Hire Tough Proven Interview Questions.
Issue Your Request for Proposal (RFP)
At this point, the purchasing agent invites qualified vendors to submit their proposals. Similarly, you have identified a group of people you want to invite in for the big test − the interview.
There are several steps to conducting an effective interview and the first is to tell the applicant up front what is going to happen and what you want them to do. Above all, you want the person to be honest with you and you can accomplish this by saying something like: “I’m going to be honest and open with you about this job and about our company and I hope you will be open and honest with me. It doesn’t matter if you’ve ever been fired or had trouble with a boss or anything else. As long as you tell me, we can take it under consideration. But, if you don’t tell me and we find a problem when we run a background check, I can’t hire you. Do you understand what it is I want?” Now, the applicant is positioned to answer your questions truthfully.
As for the questions, the interviewers who get the best results use structured interview question sets. By asking each applicant the same questions, they’re able to compare apples-to-apples and make the best hiring decisions.
Conduct Your Bid Analysis
Now our purchasing agent will enter all the information from the proposals submitted into some kind of spreadsheet in order to analyze the data and make a decision. This is where you gather up all the information you’ve collected about each applicant you’ve interviewed and do the same.
When making a final decision about who to hire, there are four things to consider in your analysis:
- Test results should count for 30 percent
- The interview should count for 30 percent
- References should count for 30 percent (if you’ve thoroughly checked them)
- Your personal perception should count for 10 percent because no matter how hard you may try to eliminate your biases, you still have them and this is why so many people hire the best applicants instead of the best employees.)
If the applicant scores poorly on any one of the criteria, it’s worth 100 percent and eliminates the applicant. On the other hand, a fantastic rating in any one of these areas can’t, on its own, get someone hired. When you find good-to-great ratings in all four areas, you’ve found the right person for the job.
Make the Award & Letters of Regret
At this point, our purchasing agent will issue a contract to the winning bidder. This document spells out all the terms and conditions as well as the rights and obligations of both parties. The applicant’s signed and dated employment application form should cover all these issues, however, when you “award” the job you’ll want to spell out a few more things to avoid the misunderstandings, disappointments, and assumptions that can lead to that person quitting or to termination for cause.
First, tell the successful candidate why you choose him or her. Explain how the person’s capacities, attitudes, personality traits, and skills are a good match for the job. When you set expectations early in this way, the person will either meet your standards or opt out by declining your offer. (Don’t be upset, you just saved yourself a world of grief.)
Second, make sure the person understands all the terms and conditions of the offer: the position, earnings, start date, and any contingencies (physical exam, drug test, etc.).
Third, make sure the person knows the grounds for termination by reviewing all job-related rules and your company’s performance appraisal form.
Finally, don’t forget to notify the other candidates that you have decided to hire someone else. Thank them for applying and the time they invested and wish them well. After all, you don’t want to create bad feelings in people who could be customers or have friends and relatives who are customers, vendors, or neighbors.
Make no mistake about it, every job applicant knows your job is to “buy” the best applicant you can. Don’t disappoint them. Do what works. Use purchasing policies and procedures to decide who gets hired and watch your organization prosper.