• March 06, 2018
  • Podcast


Today I will talking about TopGrading a specific approach to hiring the right people for your company and making sure they are doing the right jobs in your organisation.  

I’m pleased to announce Silver Lining has extended till April 6th the Small Business Growth Challenge that was highlighted in last week’s episode 136. You have another chance to win a one-year Business growth plan valued at $2500.00.  Learn how to enter our SMALL BUSINESS GROWTH CHALLENGE register now.

Now onto today episode.

Do you realize how much a bad hire costs you?   Dr. Bradford Smart, author of Topgrading, the estimated cost of a bad hire ranges from 5 to 27 times the amount of the person’s actual salary  think about it.  Say your sales manager is making $100,000.00 base plus bonus of $30K  Your bad decision could cost you on the low end $650K or on the extreme high end $3.5Million   

Your probably saying just what I said how can it cost that much? Well lets just review a few examples how this number adds up quickly.  We also have a handy calculator link on our show notes page for you to figure out exactly how much bad hires cost your business.  http://www.topgrading.com/resources/topgrading-calculators/   But here are some examples for you to think about. 

Total Hiring Costs -Recruitment, search and advertising fees Outside testing, interviewing, record checking and background checks. HR department time and administrative costs, compensation – How much was their salary, bonus's, benefits, training costs then mulipy by # of years they worked for you.  Ohh that’s not all think about their  

Total Severance Costs - hopefully you did not have any lawsuits and lawyer fees!  Don’t forget the opportunity cost,  such as loss of the new business, ideas and energy that a great employee would have brought to the organization or perhaps Loss of production due to lower morale from other employees, maybe they lost you a key customer or even worse this just happened to a friend of mine where the employee stole the entire customer list quit and was hired by their competitor the next day.  OUCH  Think about the impact  that would have on your business all because of a bad hire. 

  1. Job Descriptions are lacking details and metrics for the position. If you are not clear on the purpose of the role, the required competencies, what the person will be accountable for, and how you will measure their success on those accountabilities, you will not be able to effectively evaluate whether you’ve made a good hire.   
  2.  Resumes are not Truthful - All of us were taught at one point or another to use our resumes to sell ourselves and put our best foot forward.  The result is that many resumes contain exaggerations or leave out important information.  
  3. Interviews are Easily Faked – Most candidates been given some pointers on what to expect in an interview: questions about what we would do in a certain situation or how we have demonstrated a particular behavior or skill in the past.  They presesnt themselves positively and answer these types of questions in a way that makes them sound like  superman or wonderwomen. 
  4. Lastly is Ineffective Reference Checking – Are you or your HR manager spending  time and effort trying to track down the candidate’s references only to be denied by HR representatives. Are you only calling the references provided from the candidate which may be their best friend not their direct supervisor?  As employers I know I did skip over even calling the references when they are really excited (or really desperate) to hire Silvie because I thought she was perfect.  3 month down the track realized she was a nightmare!    

TopGrading has been around a very long time in fact GE started using this method of hiring back in the 1980s and 1990s The term was coined by Bradford D. Smart and his son, Geoffrey, in a 1997 article in Directors and Boards magazine.[8] Smart also released a book called Topgradingin 2012 and became a New York Times and Wall Street Journal bestseller.

Did you know that 65000 case studies revealed that every salary level.

  • 1 in 4 people hired turns out to be a A player high performer 
  • 2 turn out to be disappointing 
  • 1 turns out to be a chronic low performer.





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