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Monster.com reports:
“The demand for workers in the US eased further in May as the sluggish economy prompted employers across the country to scale back on hiring, according to the Monster Employment Index. However, the eight-point dip in May comes on the heels of three consecutive months of growth, and demand actually picked up for some key occupations such as management and healthcare.
Doctor Donald Sabbarese, Director of Kennesaw State University's
Economic Center points out that "Laying off less productive workers,
what you are left with, more productive workers."
If your company is strong enough to avoid layoffs and hiring
freezes you may still want to proactively build your employment brand
image and counter morale concerns whatever their causes.
Hire more carefully if you can, searching a bit harder for those high
productivity individuals that can continue to build your momentum.
A strong recruiter may well be able to supply you with these quality
candidates, who can be attracted by a more positive brand image.
Talking proactively with your present high productivity employees may
also be a good idea. Perhaps they will admit to concerns about rising
fuel costs or economic instability. You can be the hero once again by
supporting fresh ideas regarding flexible hours and work at home
solutions to counter their rising commute budget.
If you are in the position of having to assist with relocation for new
or high productivity employees, then perhaps its time to work a bit
harder at supporting these folks as well. The housing market is
problematic at best right now, so offering more services or monies up
front to help retain the good people may be necessary.
Remember that there can be a strong bond of loyalty between a company
and an employee that lives “just down the street”.
Helping get your employees closer to the facility, and allowing them the
flexibility to manage their rising commute costs are important tools in
the battle against failing morale, and over the next few years morale
and retention are going to become important issues for most companies.
Next time, we’ll talk about the upcoming labor sourcing issues related
to the Baby Boomer’s retirement plans… Its time to rethink the
importance of RETENTION!
JD Harvill CPC,
jdharvill@dunhillatlanta.com
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Dr. John Sullivan, when heading the Human Resources Management Program at San Francisco State University, used the example, "If an airline bought a new 747, and then let it sit for two months on the runway because they didn't have a pilot, what would the cost be to the airline?"
What if a new business venture, which was targeted to make millions of dollars in profits, cannot begin until the key personnel is recruited,---and the understaffed Human Resources department takes six months to hire the key executives?
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What is lost if a critical Time To Market (TTM) is slightly delayed
by staffing issues and results in a new product having a weak #2
position in the marketplace, rather than a strong #1 position?
If we expect cost reductions and cost avoidance from our purchasing
and our production staffs, what happens when they fail to accomplish the
lower costs because, they are spread too thinly due to having unfilled
positions; yet their competitor continues to reduce its costs?
Many firms calculate the cost-per-hire, but few have taken the time
to calculate the cost of a vacant position. Don Schwerzler, Managing
Director of Family
Business Institute, feels that unfilled positions cost the U.S.
economy billions of dollars.
"Most organizations fail to make a direct connection between the time
it takes to fill a vacancy, and the dollars they end up losing from the
bottom line," he said recently. "As a rule-of-thumb, the average manager
should make for their company at least five times his or her salary --
i.e. a $50,000 supervisor should move $250,000 to the bottom line; a
$100,000 executive should personally be responsible for $500,000
profits."
CASE STUDY 1:
In a real life case study, a client company balked when told that a
retained search should be used to work out conflicting expectations held
by their plant management and their corporate staff, regarding a newly
created Materials Manager position. The retained search was quoted to
be the same rate as the contingency search that was chosen, so expected
cost was not a factor in the decision.
Over the course of a full year numerous candidates
received thorough vetting, including travel, interviewing, psychological
testing and more interviewing. Midway through the one-year process, one hire was made
and he lasted only six weeks.
Implementation of a critical scheduling system was delayed a year and
urgently needed cost reductions, process improvements and the supply
chain staff’s training and developments were missed, and all due to the
inability to agree on a viable candidate.
The position was eventually filled with an $80,000 Materials Manager,
probably no better than dozens who had been considered and rejected
before.
Using Don Schwerzler's formula, an $80,000 position should earn the
company five times their salary, or $400,000 per year. That is $33,333
per month that did NOT go to the bottom line. Given the strategic
nature of Supply Chain function, I'll bet many of you can make the
argument that the cost was actually a great deal more than $400,000.
Possibly with no direct connection to this course of events, the
company has since been sold.
Ending on a happier thought, another case study comes to mind:
CASE STUDY 2:
Management for a Fortune 500 company called from Minneapolis on a Monday asking for
help filling a Warehouse Manager position in St. Louis. The company had
been increasing inventory levels trying to improve flagging service
levels but the extra inventory just made it more difficult to find and
pull the correct product. Service levels continued to
decline, causing a flood of customer complaints.
We had the new Warehouse Manager onboard within fourteen days.
During the post-assignment debrief process the company gave an unsolicited
testimonial recapping how we had saved them money. They had
budgeted $20,000 for relocation and no relocation was required. We
had found a Warehouse Manager for $10,000 less than they were prepared
to pay. They gave us credit for $15,000, identified as lost-opportunity
savings, for finding someone in two weeks while they had expected the
search to take six weeks.
However, the real savings were accomplished over the next year. The new
Warehouse Manager had committed to reach the targeted service level and
also remove $1,000,000 from their inventory. He actually reduced their
inventory by $2,000,000 and improved service 2% above their targeted
level. In addition to saving the $2,000,000 in reduced inventories and the $360,000 annual
carrying cost on that inventory, our client's customers were happy and
buying product once
again.
Jon Harvill CPC,
jharvill@dunhillatlanta.com
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Fax: 770-952-9422 
