New Employee Success Rate at Risk?

Reprinted with permission of Training + Development 
Magazine, August 2007 Edition

Nearly one-third of CEOs say that as many as half of their new employees haven't been meeting expectations, according to Management Action Programs(MAP), a business-consulting firm based in Sherman Oaks, California.

"CEOs don't have faith in their own companies' hiring processes, which isn't surprising given their companies' relatively poor track record in consistently hiring successful employees," says Allan Hauptfeld, principal of Vantage Research & Consulting, which conducted the "2007 MAP Quarterly CEO Survey."

Additional statistics point toward a breakdown in hiring systems as the culprit behind the problem. Thirty-six percent of CEOs rated their companies' hiring systems below average.

"Just finding a potential employee with the 'complete package'-appropriate skills and training combined with the right attitude and work ethic is very challenging for these CEOs," Hauptfeld says, "Then, if they do find that candidate, offering an attractive compensation package becomes the next major hiring hurdle."

Lee Froschheiser, President and CEO of MAP, says the problem is serious. The cost of losing a new hire can cost two to three times an individual's annual salary, and the expense is sometimes much higher than that. "It's extremely expensive and frustrating for many CEOs, but these same business leaders do not have solid onboarding systems to support the hiring of talented employees," he says.

"As this survey validates, onboarding the right people is hard work and a major challenge," Froschheiser continues. "Despite all of the books out there on the topic, these employers aren't exercising the fundamentals of a good hiring process-and are suffering because of it."

The survey reported that CEOs also worry about how current events could affect their companies. However, it's internal issues that cause them the most anxiety.

"Given their hiring and employee challenges, it's no wonder that issues such as growth, employee retention, and marketing outrank all external issues, such as fuel prices and real estate fluctuations, in importance to future business performance," Hauptfeld explains.

The survey also indicated that CEOs rely mainly on referrals to find new employees. Other methods, listed in order of popularity include print advertising, online advertising, external search firms, and company website ads.