Managing for Success!

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Archive for April, 2009

At an operational level, a number of issues contribute to high turnover: the culture and environment, onboarding practices, pay practices, lack of clearly defined performance objectives, weak management and so on. But it all starts with the hiring process.

There are multiple components to successful recruiting, with one of the most critical being the use of testing during the screening process. Why do we need testing? Because candidates learn how to interview! As interviewers, we get caught up in the chemistry of the interview and frequently don’t ask the probing questions or drill down into potential areas of weakness because we’re enjoying the interview. We also have no way of truly knowing the behavioral characteristics of candidates and whether they are the right fit for the job.

One of the most effective tests available today is the DISC analysis, representing the characteristics of Dominance, Influence, Steadiness and Compliance. The online test takes a brief 10 to 12 minutes, has a 92% validity factor and provides an extraordinarily comprehensive array of behavioral characteristics and indicators. The importance? As an interviewer, you’re able to explore areas of concern. More importantly, you are able to determine whether a candidate has those characteristics that best fit the position requirements.

If you’re hiring an internal auditor, you don’t want someone who is low on the C scale (compliance) and doesn’t choose to follow the rules. You want a high C – an individual who is meticulous, detail driven and follows the rules. If you’re hiring a salesperson, you don’t want a low I (Influence) and not very social or a high S (steadiness) who is totally laid back with no sense of urgency!

You can also sharpen your approach by actually running DISC profiles on the most successful performers in a particular position. Look for common characteristics and then use these benchmarks as a guide.

Bear in mind that a behavioral test is only an indicator and a supplement to other comprehensive screening procedures, such as case studies, team interviews, presentations or mini projects. An ideal candidate profile is the essential scorecard — not gut feel, but a systematic process of evaluating all the desired candidate requirements. Ultimately, it may come down to chemistry and judgment, but we all need to do the homework.

DISC also can be used in coaching. In PSG coaching assignments, DISC analysis is one of our essential diagnostic tools, typically used in conjunction with the 360o review. The concept is simple: if one wants to change behaviors, one needs to understand behaviors. We have found DISC to be extremely effective and a powerful starting point in developing sound communication with the coachee.

In addition to the standard DISC analysis, we also offer clients the Sales Skills Index (SSI) that was developed from a series of questions on professional selling skills, including prospecting, qualifying, demonstration, influence and closing.

Here’s some feedback from two PSG clients who have benefited from DISC analysis:
“We use DISC for screening our candidate short list in every search we conduct for clients. We truly get a sense of the real person and the suitability of the match.”
— Dan Denehy, President, Granite Consulting

““We learned our lesson the hard way. We conducted a DISC analysis after we hired a senior manager someone to fill a key position. The DISC analysis that PSG conducted highlighted several s behaviors that clearly indicated that he was a poor fit for the job. He only lasted 6 months and was a set-back to this key area. Since then, we always use DISC before making
— Maritza Milanes, VP HR, SS White Burrs

Chimes is a multiservice agency delivering a wide range of programs, support and services to people with developmental disabilities, including mental retardation and illness. With facilities in six mid-Atlantic states, the organization employs some 3,000 professionals and staff.

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Q: Is it possible that an incentive plan was good during robust economic times, but isn’t good when the economy is in serious recession, like now?

A: Yes. If the plan is inherently well designed, the big change that’s required is to reset performance objectives, particularly quantitative ones. These need to be realistic to avoid setting up employees for failure. Nothing is more demotivating than unattainable targets. The challenge is determining what’s realistic!

The conflict is how to reward and motivate performance vs. the cost of the plan. The next step, after changing the targets to realistic levels, is to lower the incentives, the amount that can be earned for meeting or exceeding performance targets.

We know a number of clients who have simply said “No incentive payouts! We just don’t have the funds!” If you choose to do this, just make sure that your top performers understand the situation, that you are seen to be fair and consistent, and that there is still an opportunity for them to be rewarded as your organization recovers.

Q: What are some other things a business might do when the economy is sour?

A: Here are a few options to consider:

  • You can defer a portion or all of the incentive, contingent on the company’s turnaround.
  • Sales spiffs or special incentives may motivate performance and would be a low incremental cost relative to contribution from the additional sales. This applies equally in the development area for not-for-profits, whose lifeblood is sponsorship funding.
  • If you have a sales operation, let the weaker people go and concentrate your business in the hands of the top performers. You want your top producers to be making money.
  • Make sure that your customer service infrastructure is working, from order taking through shipment, to avoid any excuse for customers to switch suppliers.


Q: Should you cut salaries?

A: You would want to do some other things first.

  • Obvious courses of action are to reduce salaries proportionately or to reduce hours worked for line workers or hourly workers. However, a cardinal error is to make everyone bear the same proportionate burden. This is the time to eliminate weak employees, particularly those who have somehow sailed under the radar screen with insufficient reason to terminate. The fact is that reducing pay for top employees who consistently produce is inequitable. While you may have a sense of moral burden, it may be a question of your company’s survival to let the weak performers go.
  • Once you have eliminated the weak employees and if the financial burdens are still significant, you may be forced to cut salaries and hourly time worked. However, it is important that your company is fully aligned and that all employees are motivated and focused on pulling together for survival. Some of our clients have reported how staff have willingly come together and truly displayed amazing teamwork, despite the hardships.
  • As an aside, you may also use the opportunity to recruit some additional talent now available in the job market.

In summary, drastic times don’t always call for drastic measures in changing the structure of your compensation plan if you make use of some fundamentals of good plan design:

  • Define a new set of objectives with realistic targets.
  • Reduce targeted incentives to lower levels (% of incentive to base salary earned at 100% of performance).
  • Set a relatively low threshold for payout against plan, to commence with low payouts, gradually increasing as performance moves to 100% of overall target.
  • Continue to pay beyond targeted incentive when targets are exceeded.
  • Add spiffs for special sales, products or customers.
  • Ensure there are company goals to create a company drive for survival and success to keep all aligned and motivated. Company performance should index payouts.
  • Reserve a portion of the incentive earned, creating a pool of deferred funds, contingent on the company returning to profitability and normal operations.
  • Be transparent with your operating results.

It’s not easy keeping employees motivated during tough economic times.

In a ground-breaking project recently completed for the King Abdullah University of Science and Technology (KAUST), PSG put together a set of HR recommendations that focused on organizational structure, compensation, job families, medical, insurance and retirement benefits, special expatriate benefits, recruiting strategies, governance and other HR policies and procedures, including code of ethics. We also incorporated the notion of pay-for-performance – unthinkable in the world of academia. PSG was awarded the project over a top international HR consulting firm.

KAUST— check it out at — is a brand-new institution of higher learning that will open in casino poland two years on the shores of the Red Sea in Saudi Arabia. The official groundbreaking was held on October 21. (Refer NY Times Article Saudi King Tries to Grow Modern Ideas in Desert) With a $20-billion endowment, the university will grant Master’s and Ph.D. degrees to students who will work with faculty on cutting-edge scientific and engineering research to benefit and drive the economies of the Middle East and other regions of the world.

In formulating its recommendations to a client some 10,000 miles away, the PSG team benchmarked HR best practices, visiting some of the top U.S. and foreign universities in the Middle East and combined those findings with relevant corporate and nonprofit best practices. The team also took into consideration the fact that Saudi Arabia was not a location that would immediately appeal to the top-notch faculty KAUST wanted to attract.

KAUST is now using our recommendations to set up its HR department and help recruit the people it needs.

To discuss how PSG can help you assess your current HR practices and operations, call us at (203) 987-3338.

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