Why are some companies mediocre? David Harding says it’s because they hire mediocre people.
So it’s not surprising that Harding exhorts business owners to do a better job of hiring and evaluating employees. By doing so, they can avoid poor staff performance, high turnover and lackluster company achievement.
While he offers his employees at SPG Graphics financial incentives to perform well and stay with the company, Harding says frequent feedback is the key to retaining his 135 employees.
Harding also encourages his managers to be on the lookout for outstanding employee candidates, even if there isn’t a position open. And he has a system for courting those promising candidates who might have an interest in joining SPG Graphics.
Harding spoke with Smart Business about hiring the best, and evaluating and rewarding employees.
Hire carefully.
I think there are innumerable ways you can make sure your selection is the right one. There are a variety of these tests you can give to potential employees. If we have a position become vacant, we don’t stick a finger in the dike and hire the first person that comes and applies for the job.
We believe in multiple interviews. We’re developing a score checklist, so that when somebody comes in, we can actually score how well they did. Let’s say four or five people interview them, each one of those people gives you their impression on the scoring checklist. We add up the scores and find out where this person really falls among all five people.
So they end up with, say, 85 out of 100, and we have certain levels where we’ll hire someone, and certain levels where we won’t. Surprisingly, you do see consistencies in most areas.
Interview continuously.
Another thing our managers hear a lot is, ‘Interview 365 days a year.’ What we mean by that is, even if we’re not looking to fill a position, we should be interviewing and creating a pool of candidates who might become employees of the future.
So we interview whether we’re looking or not, and the people that we are really hot on and want to attract but aren’t ready for us yet, we actually market to them. They receive all the materials that anyone else would receive that we market to. And they even receive our weekly newsletter or whatever we do for our employees. So they know what’s going on in our company, and when we’re ready, we’ll call them up and say, ‘Well, we’ve been keeping you up-to-date on what’s going on at our place, do you want to talk now?’
Hire only the top candidates.
Any time I’ve gone with a mediocre candidate and gone against the data we had gathered — let’s say they’re right on the edge, they could go over onto our side of the fence or not — every time, the mediocre ones have not worked out, even ones that would reach a 6.5 or 7 on the scale.
A lot of times, companies accept that type of individual, and it ends up making them a mediocre company. I call it dumbing down the organization. Let’s say that I’m a manager and I’m worried about my job and I don’t want to hire anyone smarter than me, to make me look good. So now if the guy above me hired me under the same pretense ,and the guy above him hired on under the same pretense and so on and so on, pretty soon I’ve got a pretty dumb organization.
So our people have to understand that we want our employees to be better than them, and that’s OK because it’ll make their job easier.
Encourage little ideas.
We have meetings with every employee group and talk to them about the vision. You preach it as often as you can. Each quarter, we might have a theme on the vision, and we ask the employees to come up with a number of ideas to support what that quarterly theme is.
One of their performance items is how many ideas they come up with. So we expect our employees to come up with one idea a month, three a quarter, and that’s part of their performance review. It’s all automated via e-mail — they submit their idea, and it automatically gets submitted to a committee of three people that work on it.
It also becomes part of the managers’ performance review, how much they’ve done with those ideas. It doesn’t mean that we’re going to implement every one, but did they implement the ones that made sense, and are they proactively making ideas a part of our culture, because a company with a lot of little ideas has a competitive advantage over a company that has one big idea.
You might disagree with that theory, but one big idea is easy to copy. A lot of little ideas that make you better is very hard to copy.
Trash annual reviews.
The yearly performance review should be burned up. We have quarterly reviews, we have an annual review and quarterly reviews. The greatest retention tool is giving employees feedback on a regular basis and having the right employees to begin with.
Our performance reviews are very unique because we have made them all objective. In the case of people that are operating equipment here, we measure their productivity, we measure their efficiency. All of those end up with a grade from zero to 100. In the case of our customer service people, we have certain things that we believe are important, and we have customers grade them on those things to find out if they’re meeting those goals.
For our managers, we do an employee survey every year, and the score that they get is put on their performance review. Now you have a numerical score that can determine their raise.
Share your financials with your employees.
We don’t hesitate to open them up and share them. We have a stock appreciation rights plan — it’s one of the easiest programs to administer.
What we’ve done is take 10 percent of our share of stock and said whatever that stock appreciates — each employee has a certain number of units — whatever that stock appreciates from Date X to Date Y is yours. The first year their stock appreciated about 70 percent.
How to reach: SPG Graphics, http://www.spggraphics.com/
