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Cutting costs might be important but it's not the path to prosperity.

Death by a Thousand Cuts is catching up with business executives and owners, says Jan van der Hoop of HiringSmart.

“Since the business climate began to soften 3 years ago, owners and managers have been focused on doing more with less.  They have now reached a breaking point,” he says.  “They have been cutting back for too long… now there is nothing left to cut.”

In a competitive market that is challenging every assumption and forcing business to actively reinvent itself from the bottom up, most executives find that their business model is going through more contortions than you could have dreamed, even six months ago. The only thing they know for sure is their cost structure; the revenue model is completely up in the air. Traditional sources are drying up faster than new ones can be found and tapped, and the only thing they’ve had to cut costs to survive.

Now they’re at the point where the law of diminishing returns has kicked in. There’s not much left to cut, if they want to stay in business. The only option is to grow their balance sheet. Not by acquiring assets or committing to new expenses, but to grow the contribution and the ROI they are receiving from their existing capital base – primarily their human capital.

Jan van der Hoop says that creative approaches to staffing will lead to better business results by helping mangers understand what characteristics separate top performers from poor performers and the factors that drive performance and productivity.

A recent study of 20,000 newly hired employees showed 46% of those new hires failed within 18 months. This happens not because the new employees lack technical skills, but because they are a poor fit for the job or the team, are not motivated, or demonstrate other problems "that never get assessed in the interview. To catch these mismatches, screening interviewers need expert coaching to help them look beyond technical skills and ask the right follow-up questions. This question received the highest “certain” response of all of the questions in our survey.   According to a Purdue University newsletter, falsified information consists mostly of expanded dates to cover employment gaps. This is an often over-looked area of the reorganization and re-deployment process.  Another study shows that productivity measures increased by 25 percent among employees who participated in an on-boarding training program.

He offers these strategies of reorganization, redeployment and recovery.

  1. Your organization may be behind the curve job designs have not changed with your revamped plan of action. If employees are performing their jobs the same old way, they
    are holding the company back.  Make sure top leaders buy into the strategy and share it with employees down the line so that every worker knows how to put the plan into action.
  2. Internal "hiring" demonstrates that you believe in the training practices of your company and in your employees' accomplishments. Such a policy encourages top performers to take initiative and exercise creative thinking. This means you don't have to train them in crucial aspects of the job, such as the job's scope and how it relates to other employees and departments, because they already know how the company works.
  3. If you want to ensure that each worker fits the job, measure how top performers in the same position do their jobs. Then apply the same assessment to candidates for the position and see how well they match the top performers. This approach works because it applies objective standards to the position instead of requiring you to rate a person via subjective standards or to "hire with your gut."
  4. Paying a salary employees can earn in similar positions is critical to keeping your workforce motivated and attracting top talent. Organizations can compete in many areas—work environment, benefits, growth opportunities—but expecting top performers to stay with you because you offer these things is not realistic if they can earn significantly more money doing a similar job elsewhere.
  5. The best employee selection process ensures that selection standards are job related, validated, and standardized. Leaders might view reference and/or background checks as a bother when they "know" someone is right for a position. But employment experts estimate that nearly one-third of all resumes contain false or exaggerated information.

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