How to reduce turnover and build a great bench using effective recruiting techniques
By Robert J. LaBombard, CEO, GradStaff, Inc. The author has over 25 years of experience in the chemical, environmental and staffing industries. GradStaff, which provides outsourced college recruiting services, serves clients in a variety of industries, with heavy emphasis on financial services.
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How to reduce turnover and build a great bench for the future using effective recruiting
Banking is a great fit for thousands of new college grads every year.
Credit analysis, loan operations/servicing, loan origination, branch manager trainee programs, customer service, and personal banking all offer great entry points for the right candidates.
Yet, in talking with bank executives, we know there is a pretty significant level of angst related to hiring college grads to fill entry-level positions. That’s not surprising. Entry-level hiring is tricky—from how to recruit college grads to the cost of training to finding the right fit. The downside of a poorly designed program is turnover, and turnover is expensive.
How expensive? If you add together recruiting and training costs from the original hire, new recruiting and training costs to find a replacement, lost productivity from the position being unfilled, administrative and other costs, it is commonly believed that the total cost to replace an employee is equal to two to three times their annual salary.
Now, consider the following example. Say you hire ten trainees per year at an average salary of $40,000. Assuming a replacement cost of two times the annual salary, if you experience 30% turnover in the first year, your total cost to replace exiting employees will be $240,000. At 50%, the replacement cost rises to $400,000.
Larger regional and national banks hire hundreds of new college grads every year. Using the metrics discussed above, turnover is costing many institutions millions of dollars. Some executives will say that they factor attrition into their recruiting programs. While some attrition is obviously inevitable, if turnover in the first year exceeds 10%-15%, this strategy is akin to adding oil to your car’s engine every week in lieu of fixing the leak. In short, you’re wasting resources.
Based on the cost of turnover, many small and mid-size banks have opted not to hire at the entry-level. They prefer to have larger banks train for them and then hire away trained people after working elsewhere for two to four years. While managers should be opportunistic in hiring experienced people, over-reliance on this approach can be costly. This will become apparent when banking professionals are in short supply as “baby-boomers” transition into retirement over the next few years.
The answer, of course, is to reduce turnover and increase retention; in essence, to develop a way to reduce the risk of entry-level hiring.
It can be done.
The following discussion focuses on the recruiting of new college grads to fill entry-level positions. While not specifically included in this article, the principles discussed here can easily be applied to entry-level positions (tellers, call center representatives, etc) that do not require a college degree.
No experience? Look for skills
We’ve talked to hundreds of hiring managers who have told us that the hardest position for them to fill is an entry-level position. The reason is that the candidates typically have little professional work experience and usually no direct experience pertaining to the job to be filled. When hiring managers can’t probe for experience, in most cases, they are lost. Some will look to grade point average or majors, but even those parameters, while important, are not great predictors of future success.
When asked what attributes or traits set their star performers apart, hiring managers seldom talk about experience—regardless of the position. Most commonly, they tick off a list of higher-level skills that are much more important than work experience in determining long-term success. Here are the skills cited most often:
• Communications skills;
• Organizational skills;
• Interpersonal skills;
• Attention to detail;
• Problem-solving skills;
• Initiative/motivation; and
• Work ethic.
The goal then is to develop a profile of the ideal candidate for the position you are trying to fill and then a process to identify candidates that match the profile. In addition to attributes, it is important that your profile also assess how candidates should mesh with your unique culture and environment.
Look for a few key attributes
The profile of the type of candidate you are looking for is not a job description. In most cases, a job description does a good job of defining duties and responsibilities, but is not as effective in defining the requirements for success in the position.
The profile can be developed by thinking about the new grads you have hired in the past for your entry-level positions. What attributes made the great performers stand out? For the candidates that were not a good fit for the position or culture, what attributes or traits were the cause? Finally, what attributes and attitudes does your culture value?
A common mistake is to develop a profile that identifies too many desired attributes. The more you look for, the less likely you will find the perfect candidate. Be realistic. Typically, each position will require three-to-four essential personal attributes.
Finally, it is important to factor company culture, work environment, supervisor management style and other factors into the profile of the ideal candidate.
First, screen by phone
Resumes of new college grads are very difficult to distinguish. So how do you decide which ones to pursue? Go back to your candidate profile. If multi-tasking skills are critical, look for candidates that seem to have balanced a lot of activities in college. If you’re looking for good communications skills, look for classes, projects, volunteer work, or internships where these skills were important.
Keep in mind, too, that resumes can be deceptive. Before you schedule anyone for an in-person interview, conduct a phone screen with the candidate. This will allow you to ensure that minimum requirements are met (such as salary expectations, commute, etc.) as well as to confirm that your impression of the candidate gleaned from the resume seems to be accurate. Specifically, you should quickly assess communications skills, flexibility, motivation, and enthusiasm.
A lower GPA can be better
A word of caution about majors and grade point averages. These items should be considered, but they are not always great predictors of future success. Many companies have a minimum GPA required to be considered for professional employment. Most common are 3.0-3.25 GPA minimums. Some firms have a minimum as high as 3.5.
The caution is based on the fact that GPA standards between schools and majors vary considerably. Further, there can be huge differences between candidates in terms of their involvement in extra-curricular activities, leadership positions, and jobs. A well-rounded candidate with a lower GPA in many cases is a better candidate that one with a high GPA who was not engaged in college life. Finally, a lot of candidates really struggle in the first year in college as they adjust to college life and search for their major. If you take out their GPA from their first year, a lot of candidates would have had an overall GPA as much as 0.25 to 0.50 points higher. Minimum standards run the risk of needlessly eliminating many good candidates.
Four steps to better interviews
Avoid the temptation of interviewing too many candidates. We’ve seen many hiring managers want to interview a dozen or more candidates to “ensure” they hire the best one. This is a huge waste of time and a sign the hiring manager does not truly know what he or she wants. If you develop accurate candidate profiles and screen well, you should only need to interview two to three candidates per position.
There are several important points to keep in mind as you conduct interviews to work toward candidate selection.
1. Your interviewing technique should help you determine if the candidate possesses the attributes required for success in the position. We recommend performing a behavioral-based interview, which is an interviewing technique based on behavioral science.
In this approach, open-ended questions are used to allow candidates to demonstrate proficiency in different skill areas using real-life examples. By assessing initial answers and in asking follow-on questions to go deeper into a topic, a candidate’s relative strengths and weakness should become apparent.
For example, an initial question might be “Tell me about a time when you had a difficult problem to solve.” A follow-on question might be, “What resources did you use to get the information required to make your decision?” or “Why did you choose option A over option B?”
In preparing for the interview, you should think about open-ended questions that can be used to uncover strengths/weaknesses in all the attribute areas important to the entry-level position to be filled.
2. An interview should also include a career exploration. In this step, you learn more about the candidate’s career expectations, interests, and goals. You may also assess salary expectations, attitudes on work/life balance, etc.
3. You should give the candidates the opportunity to express why they think this industry, your company, and this position is a fit for them. Ask them to comment on why they would be successful in the position. In short, give the candidates the opportunity to sell themselves. Also, give them the opportunity to ask questions. This is very important. It shows how much research they have done and if they truly want the job.
4. If you like the candidate, be sure to use the opportunity to sell your company and the position. Keep in mind, regardless of the job market, there’s always competition for great candidates.
When the interviews are over, make the match. Select the candidate that is the best fit and most like your star performers.
If possible, use a probationary period
In buying a new or used car, the best way to see if you like the vehicle is to test-drive it. In the same way, when hiring for entry-level positions, the best way to see if a candidate will succeed in a position is to see the person perform on the job for a period of time.
Interviewing a candidate two, three, five, even ten times, will very seldom identify anything you didn’t know from the first interview. As a result, we recommend hiring for entry-level positions using a probationary period, typically 90-120 days. This can also be accomplished by using an outside service via a temporary-to-hire, temp-to-perm, contract-to-hire or similar approach. Seeing the candidate perform in the position prior to finalizing the employment arrangement is a critical strategy in determining the long-term fit of your candidate and reduces the risk in making your final decision. BJ
View October 09 digital edition
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