Improved Interview Process Reduces Turnover

Hiring capable, talented people is universally recognized as a key element of business success and a major challenge for most companies. The fact that many interview processes favor a prepared candidate, not necessarily the right candidate, contributes to this challenge. A prepared candidate will excel in a typical interview, responding comfortably to predictable questions regarding their resume in a way that accentuates positive traits and highlights applicable experience. Despite their best efforts to interview effectively, hiring managers are often left with more than one candidate they feel positively about and rely on "gut" instinct to make a final selection. Although an experienced hiring manager's instincts are useful, a well-designed interview process dramatically increases the probability of selecting the right candidate.

Take for example a consumer packaged goods customer of mine who was experiencing consistent employee turnover in the customer service department. Their training programs were solid and the department was well managed. We reviewed the interview process and determined there were opportunities for improvement. The interview process in place could be summarized as follows:

- Define the characteristics of a desired candidate. Write a detailed job description. Post a job listing on Career Builder.

- Review resumes and choose three to five candidates for face-to-face interviews.

- Start interview with a request for the candidate to "tell us about yourself" and focus heavily on resume content and past job responsibilities for the remainder of the interview.

- Present two or three questions designed to gain an understanding of the candidate's character. For example, "tell me about a time when you disagreed with your boss and how you handled it."

- Schedule a second interview for "impressive" candidates and ask another manager to sit in.

- Repeat interview process to probe any areas of interest or concern uncovered in the first interview.

- Managers confer, select a candidate and make an offer.

Management's primary critique of the existing process was that it only provided a view of the candidate in a standard interview setting. As one manager put it, "All of the quality candidates seem to interview well." After a couple of brainstorming sessions the following additions were made to the existing interview process:

1. Require a cover letter: We added a clear statement in the job posting that only applicants submitting a cover letter would be considered for the position. Requiring a cover letter provides the opportunity to assess an applicant's written communication skills, tests the candidate's willingness to follow directions at the most basic level, and prioritizes the review of resumes to the most serious applicants.

2. Conduct a preliminary phone conversation: We chose a group of twenty of the most qualified applicants for open customer service positions and spoke to each of them on the phone. This initial call took less than five minutes, gave us a sense of the candidate's interpersonal skills and personality fit, allowed for a quick assessment of verbal communication skills, and served as a preliminary resume fact check. Our group of twenty was reduced to a top five in less than two hours.

3. Include "scenarios" in the face-to-face interview: Once we had selected candidates for face-to-face interviews, we developed one or two real world scenarios that might occur on the job. Each candidate was presented with the same scenario and responses were compared. For example, the following scenario was presented to customer service candidates:

"It's your second week on the job, you are entering a 'hot' order for a key customer and the system says the product is back ordered. You are pretty sure a shipment of the product came in yesterday but may not have been received in the system yet. You call the Shipping Manager to see if the product has been received and might be made available for shipment. The Shipping Manager rudely replies that he is too busy to check right now and you will have to call him back later. He hangs up before you can reply. What do you do?"

Scenario interviewing provided valuable insight into each candidate's problem solving skills, ability to resolve conflict, and general personality traits.

The customer implemented these additions to their interview process for three new hires in customer service and the results have been outstanding. Turnover has been eliminated over the last 18 months, productivity in the department has improved, and positive customer feedback has increased.

Contact us for more detail and let us know if your interviewing process could use some attention. We would love to assist!

Buyer Looks Beyond Price to Reduce Cost

In real estate - "it's location, location, location". In politics - "it's the economy stupid!". When it comes to cost containment, "it's price, price, price" right? Well, not exactly. Purchasing professionals that suffer from price bias often limit their company's ability to control costs. Take the following example of a manufacturer that turned an 8% price increase from a supplier into a 20%+ cost reduction.

I was once asked to assist the materials manager of a large manufacturer in negotiating a new corrugated box contract. The supplier was proposing an 8% increase. During my first meeting with the materials manager (let's call him Bob), I learned that Bob's goal was to reduce the proposed increase from 8% to 4%. Bob had done his research and explained to me that rising raw material prices in the corrugated box making industry likely justified the increase, and, that he had forced this particular supplier to absorb increases in previous negotiations. In his opinion, negotiating down to a 4% price increase would be a victory, and could easily be achieved by threatening to move the business to another supplier. Incidentally, Bob felt my involvement in the process was entirely unnecessary.

So what was the problem with Bob's approach? Simply put, his fixation on the amount of the proposed price increase blinded him to several opportunities. For example, Bob overlooked the fact that corrugated boxes were only one component of the company's overall packaging spend, and that the supplier providing the corrugated boxes also supplied several other packaging items. In addition, he failed to review how boxes and other packaging materials were actually utilized in the plant. In short, Bob knew a lot about buying packaging, but not very much about how packaging was being used.

I was able to convince Bob to modify his approach. Together, we not only eliminated the 8% corrugated increase, but saved the company an additional 15% on overall packaging costs. Here are the five steps we followed:

Set the Goal: Rather than settling for reducing a proposed corrugated increase from 8% to 4%, we targeted an overall savings on packaging of 20%. I knew that the company had not engaged in a comprehensive packaging review in over 2 years, and my experience told me that significant savings opportunities were likely.

Share the Goal with Employees and Suppliers: Engaging employees and suppliers to uncover cost saving ideas was a key element of our approach. Bob and I spent several hours in the plant reviewing how packaging materials were used and asking employees to share their cost saving ideas. In addition, we invited the two current suppliers of packaging materials along with two additional suppliers in for separate meetings and shared our 20% cost saving goal with them. Each supplier was provided the opportunity to audit packaging areas and recommend improvements. We made a point to assure each supplier that any unique, cost saving ideas they shared with us would remain confidential from their competition. This was critical to motivating suppliers to provide their best ideas and resources.

Test & Validate: Employees and suppliers helped us develop several ideas we were confident could work. For each idea, we wrote a specific set of performance criteria that had to be met for the idea to "pass" and shared it with employees responsible for that particular packaging function. For example, one department used a plastic film to protect parts from dirt and scratches during shipment. A supplier recommended an alternative plastic that was 33% thinner with similar protective characteristics that would save the company $20,000 annually. Employees in the department helped us write a performance specification to ensure the new plastic provided equal or improved protection to the current plastic.

Establish a Trial Period: Once an idea and/or material had been tested and approved by the employees in the plant, a full trial order was placed with the selected supplier. We targeted an order size that would allow for 30 days of testing. If the trial order performed consistently to the written performance criteria over the 30-day period, the new product/supplier was approved and an agreement was signed.

Monitor, Measure, & Report: A monthly reporting format was developed to ensure that the performance and cost targets we had set were being met or exceeded consistently. Monitoring, measuring, and reporting gave us an opportunity to catch any below par performance, take corrective action, and ensure that all participants in the process were aware that their hard work was paying dividends.

The impact for Bob and his company of broadening the scope of cost reduction beyond "price, price, price" resulted in reduced costs of over 20% within the packaging category. Bob was recognized and rewarded for his contribution, and best of all, he was able to apply his new found skill in other critical cost areas.

Please contact us if you have an area you'd like to review for cost savings. We'd love to help!

Leverage Sales Inertia

Many of the companies I work with and observe have certainly benefited from the growing number of new tools available both on and off-line to sell and market their products and services to target customers. However, I find that more often than not, it’s an old law of physics that companies must understand first if they are to increase sales and improve profitability: INERTIA.

Sir Isaac Newton described inertia in his First Law of Motion way back in 1687. Summarized, it states that, “In the absence of a net force, a body is either at rest or moves in a straight line with constant speed.” Anyone that has ever managed a sales force would agree that the laws of inertia Newton first defined hundreds of years ago might be the perfect way to summarize the behavior of many a modern sales rep. Inertia can be a powerful barrier to growing sales that have flattened or are in decline. However, the good news is that there are a variety of positive ways to introduce what Newton called a “force impressed” to increase productive sales activity, and once increased, the laws of physics will work in your favor.

My favorite “inertia breaker” is a targeted, customized, 30 to 90 day sales blitz. This is often the perfect catalyst to move bodies at rest into action. Designing and implementing a successful sales blitz doesn’t require hours of experimentation or a degree in physics. Just follow 3 simple rules and you and your sales team are almost certain to generate lasting, revenue enhancing results:

1) Set the Goal: Schedule a kick-off meeting. Make sure you define the goal of the blitz and answer the question sure to be on your team’s mind: “why are we here”. Assuming sales are stagnating or declining, outline the situation for them and discuss openly the impact on company profitability. Tee up the blitz as a catalyst to re-focus the team on achieving the company's true sales potential.

2) Define the Target: By definition, a blitz targets a specific result. In football, it is designed to sack the quarterback. For your purposes, make sure to define a specific product, service, or customer segment you want to attack. I find it helpful to engage in a brainstorming session with the team at this point. What product or service does your company have that is unique? At what customer type does that product best fit in your marketplace? Don’t ignore existing customers during this process. Sometimes the best opportunities are right under your nose.

3) Measure & Communicate Progress Frequently: There are several reasons to do this. For one, remember that sales people (good ones anyway) are competitive and like to know whether they are winning or losing. In addition, measuring and communicating frequently demonstrates that this initiative is important, and that leadership is watching. You might add a spif or other way to recognize significant contributions.

Banyan recently worked with a customer in the contract packaging business to design and implement a 90 day sales blitz using the principles above. The blitz generated over 100 new projects and increased sales by over 47%.

As Mr. Newton taught us, "An object will retain its state of motion, including stationary, unless acted on by an equal and opposite force." If you’d like some assistance getting things moving, please contact us. We’d love to help.

Darrin Dingman is President of Banyan Business Partners, a consulting firm providing outsourced executive management talent and hands-on consulting services to entrepreneurs, owners and C-level executives looking to add human talent to their organization without making long-term financial commitments.

Contact Darrin via email: darrin@banyanbiz.com