The Value of Intelligent Hiring Practices
Smart hiring strategies can contribute to higher sales.
Title: The Consequences of Human Resource Stocks and Flows: A Longitudinal Examination of Unit Service Orientation and Unit Effectiveness (Subscription or fee required.)
Authors: Robert E. Ployhart, Jeff A. Weekley, and Jase Ramsey
Publisher: Academy of Management Journal, vol. 52, no. 5
Date Published: Forthcoming (October 2009)
In the retail business, where it’s not uncommon for nearly three out of four workers to leave after just a few months on the job, searching for the perfect employee may seem like a futile exercise. But after examining the applications and subsequent performance of more than 114,000 store employees at a major U.S. retailer, the authors of this paper argue that hiring practices and employee training programs can in fact have a significant effect on overall sales.
The retailer had a rigorous hiring process — in addition to an employment application, each new staff member filled out an orientation survey that allowed the company to gauge such factors as educational success, emotional stability, and agreeableness — and the researchers clearly correlated better test scores with store success. Stores staffed with higher-skilled workers averaged about US$4,000 more in sales per employee each quarter than stores with lower-skilled workers. One reason these stores performed so well, the authors contend, is that by spending additional time and resources screening employees during the hiring process, the retailer was able to place people in positions that matched their skills. That, in turn, produced better customer satisfaction and increased store profitability.
Bottom Line: Intelligent hiring practices can contribute to increased sales. Companies, even those with high turnover, should institute rigorous guidelines to ensure they are choosing the best applicants for their jobs.
- Bridget Finn is the Web editor of strategy+business.
- Michal Lev-Ram is a freelance journalist based in the San Francisco Bay area. She is a former reporter for Fortune and has covered technology and business news for Fast Company, Business 2.0, and www.CNNMoney.com, among other publications and Web sites.