Sunday, August 9, 2009

Hiring in a bad Economy

I just saw the title of a newsletter saying "Now is the Time to Upgrade Your Clunker Talent". Nice take off from the Obama Clunker program, but probably just as ill advised. Let me start my premise with some facts. The Automobile Association stated that on average 220,000 clunkers have been traded in per month over the last few years. The Department of Transportation reported that in July there were 245,384 clunkers traded in, a net increase of 45,384. These cars cost the taxpayers $1B. That's a little over $45,000 per incremental new car sold. Basically 220,000 people got a better deal on a car then they would have gotten anyway. The tax payer paid an incredible price for the incremental improvement.

So what has this to do with upgrading your talent at work? A bad economy and high unemployment is not the right reason to decide to look at your employees. The Obama Administration rushed out a program to make their bosses happy. The concept on the surface looked good, but the true numbers didn't wash out. Don't roll out some employee upgrade program just to make your boss happy. If you have employees that shouldn't be there, then a bad economy and high unemployment isn't the reason to change them. You should change them because they aren't the best employees.

This brings me to my second point. You hired and kept them up to this point. What in the economy makes you a better decision maker? Rushing out to hire someone else just because people are begging for jobs, won't make you a better hiring manager. If anything you are likely to hire someone who normally wouldn't take the job and will leave you after things get better.

Hiring the right people entails matching a lot of attributes including the job, the compensation, cultural fit, skills, aptitude and more. A bad economy might make more people available, but it won't improve your ability to hire and manage. You still have to find the right talent. The people out of work who wouldn't work for you long term, still won't. The job isn't a right fit for them. They will work for you until they can find the right fit.

The last point is this; just like the Clunker Program, everything has a price. Productivity of new employees is always below existing employees. The new employee has to learn your products, your culture, your procedures, and the way you do business in general. This not only takes up the time of your new employee, it takes time away from others on your staff. Replacing a consistent mid level performing employee with a new one will decrease productivity in the short term. There is a cost associated with hiring a new employee that is not just dollars and cents. If the employee isn't going to stay long enough to recoup that cost, like the Clunker Program, it's just bad math.

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