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Kevin Wilson, CEO, Sterling Management

Personnel costs are the major costs for any business, as most CEOs realize. Most believe these costs are from the actual salaries and payrolls.

While this is true, in most cases, what is not realized are the costs of inefficient, unproductive and even destructive personnel. These costs remain hidden as they are out of view, not seen on the P & Ls.

The inefficient, unproductive people cost a business about 5 to 10 times their salary. Yes, you heard that right. If an employer is paying $50,000 per year for one employee and they are inefficient, unproductive and possibly destructive, you could be losing $250,000 to $500,000 in lost revenue and/or lost sales.

I do not throw these figures out loosely. This is from hard-won experience. These figures are from calculable statistics, before and after case histories of hundreds upon hundreds of businesses.

How does this happen?

You already know one can make enough mistakes on paperwork or the assembly line that costs thousands. How about losing customers because of ignorance or manners or just intentionally telling them to go away?

What about chatting on the phone, personal calls, texting when there is work to be done?

What about bothering others that are trying to work or asking silly questions that have already been answered by you others or that are in the manual they were supposed to have already read?

One of these types of employees can tie up at least 3 other productive personnel in constant re-dos. There goes three other salaries right there!

And that does not even account for the illicit drug use in the workplace.

What are the solutions?

There are many, but the main solution is having the right personnel there in the first place. And that takes going through enough applications and resumes to find the right person with the right attitude and enough intelligence and willingness to get the job done.

How many applications? Try 100. May take 200-300.

Most HRs are not willing to even approach that much effort. Ok, then settle for less which we found in every case means settle for the unproductive, inefficient, mistake-ridden person.

Next step: Test them with IQ, Aptitude tests to ensure they can follow directions and have at least enough intelligence to do the job. And throw in a personality test that detects attitude problems.

Hire them temporarily with what we call a “working interview” and see if they can get things done without causing too much disruption to the company. Give them a week to do this.

In my booklet, “Personnel: Your Most Valuable Asset or Greatest Burden” for business owners, available on Amazon you’ll get an even better grasp of this subject.

Good luck! You’ll definitely need it with such a subject as personnel.


About the Author

Kevin Wilson is the CEO of Sterling Management.  Founded in 1983, Sterling has been the dominant player in the practice management consulting field for over three decades. By survey, active Sterling clients see a 10 to 20 percent increase in production in the first four to six months and a 30 to 40 percent increase in the first year. Sterling CEO Kevin Wilson is not only a highly trained administrator and consultant; he has published the widely read human resources book, Personnel: Your Most Valuable Resource or Greatest Burden. All told, Sterling has delivered over 500,000 hours of business consulting and achieved more than 135,000 training completions among 175,000 business professionals from 1,700 cities in every state in the nation. The company has won more than 75 local, national and international awards including twice appearing on the Inc.500 list of America’s fastest-growing, privately-held companies. For more information, visit www.Sterling.us.

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