Tips On Improving Bottom Line, Avoiding HR Issues

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Credit unions can improve their bottom line and avoid most "people problems" by improving their human resources practices, according to an expert on hiring.

Cheryl Mahaffey, president of CM Consults in Playa Del Rey, Calif. and the author of several books, including the "Hire Right Guide" for the Credit Union Executives Society (CUES). Mahaffey led an educational session on the second day of the CUES Marketing, Operations & Technology Conference here.

According to Mahaffey, trouble starts when managers put more time and effort into purchasing hardware than choosing the right employees.

"Computer equipment has an average lifespan of two to three years. A good employee-hopefully-will stay with a credit union for many years," she said. "When people buy equipment, they take their time, compare makes and models, and do research. But when they hire a person, they go on gut instinct."

Avoiding and Fixing People Problems

People problems take many forms, said Mahaffey, including absenteeism, low morale, poor productivity and poor quality work. "At credit unions, the typical people problems are turnover and a skill gap-a gap between what people that are hired can do, and what the employer needs them to do."

People problems, she continued, are the most costly, the hardest to isolate, the most difficult to fix, the most reoccurring and the most time-consuming. Companies have three places to try to address the issue: at the front door (hiring), through training or development after the employee is hired, or at the back door (redeployment or firing).

"The difference between people problems and technology problems is: people problems can't be solved by technology, but they can be solved by teamwork. Technology problems, on the other hand, can be solved by people," said Mahaffey.

Before the Interview

Why are poor hiring decisions made? Mahaffey said one reason is the criteria for the successful performance of a particular job are not identified. Before employers begin to interview for or even advertise an open position, they must identify the knowledge, skill, attitude and personal characteristics needed.

"Keep in mind, you don't necessarily want each person on a work team to have the same characteristics," she advised.

Mahaffey recommended using statistics from the United States Department of Labor, which are available online. The department compiles lists of competencies for various occupations. Employers can use the lists as a framework, or they can make their own lists of characteristics needed for the job they are looking to hire for.

"This will help develop questions that will make for a structured interview," she said. "Employers see a potential employee's resume, education, references, past employment, appearance, dress and interview skills. However, keep in mind that the latter three pull on the employer's gut reactions."

According to an employment study, 63% of all hiring decisions are made in the first 4.3 minutes of an interview- which Mahaffey said can be a mistake.

"If a company hires based on an interview, it probably will be disappointed," she said. "It is better to do a structured interview where the applicant does the talking, so the manager can do the evaluating."

A realistic job preview is a proven way to reduce turnover, Mahaffey continued. She said employers must use a variety of recruitment options to improve their chances of finding the right people. "Above all, assess for job fit," she advised.

Special Rules For IT Departments

In the technology field, a potential employee with a certified skill level means he or she has knowledge that could be outmoded in one year. Mahaffey said it is better to find someone with the capacity for learning quickly. She likened this to an iceberg, where 10% of a person is above the surface-his or her skills and experience-while the other 90% is below the surface, including his or her thinking style, occupational interests, behavioral traits and job fit.

The proper selection process involves the past, present and future, she said. The "past" is a potential employee's skill fit, as evidenced by his or her resume, application and references. The "present" is the company fit, which the manager must deduce in the interview. The "future" or job match, should be tested for to measure the candidate's personality and interest.

After a company has its selection process in place and hires a person, its next step is to build a team by integrating the new employee.

Mahaffey said she is a sailor, and a fan of the America's Cup sail racing competition. She said the victory earlier this year by the Swiss boat Alingi could teach employers of all types a valuable lesson. A racing boat has several jobs, and the Swiss spent a lot of time matching the right person with each position-with the emphasis on the team.

"Different people have different characteristics, they have different managing styles and they like being managed differently, so companies must take care in putting teams together," said Mahaffey.

What's Often Overlooked

An important, though overlooked, element is feedback, she said. Mahaffey recommends 360-degree feedback, in which managers evaluate their employees, and vice versa.

"This helps bosses and subordinates compare their expectations and perceptions," she explained.

While all of this might seem like a lot of extra work, Mahaffey insisted it will pay off in the end.

"Superior HR practices impact the bottom line. The difference between an average worker and one in the 85th percentile is two-to-one - so hiring a good worker instead of an average worker is like getting two people for the price of one," she said.

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