39th Edition — November 3, 2019
One study showed that 40 percent of new hires fail within eighteen months, and other estimates are even higher.
Michael Travis, Executive Recruiter and Author
1. Finding Great Talent
If you think attorneys and car salespeople have bad reputations, don’t forget headhunters. The recruiting industry needs an overhaul because this simple and fundamental value is rarely carried out 100% of the time –
“Headhunters are in the business of doing what’s right when no one is looking for both their clients and their job candidates. Always.”
I’m a fan of Michael Travis and his boutique search firm. He’s also the author of one of my favorite books on this subject, Mastering the Art of Recruiting. I appreciate his key insights as to what job candidates want which in turn helps employers become better landing spots for new-hires:
+ Career advancement
+ Work at a promising company
+ Interesting and challenging work
+ A great boss and talented colleagues
2. Predictive HR Analytics
If you work with this guy, be assertive and logical because he creates processes and procedures for others to follow. He hates small talk and measures results. Be mindful that he tends to prefer taking charge of a situation and working independently. He may be direct and business-like, often seeking to offer advice for improving efficiency. While he can seem overly blunt, he often offers helpful advice for growth.
Well, I’m not sure I’d want to work with that person. Then again, that’s what a new software application guessed was my personality based on a combination of insights found on LinkedIn.
Monthly, I scour the scores of business books to be released over the following 3-6 months. When I find a book that looks interesting by any new author such as Greg Skloot (Predicting Personality), I start searching for blog posts, interviews, and LinkedIn content by the writer. That effort led me to a personality software app created by the author’s company.
While I’m skeptical of most personality assessments on the market – remember, this is a billion-dollar industry – you might have some fun trying the software app called Crystal which is a Chrome extension.
You be the judge on whether this software is fun, a fantasy, or fundamentally factual.
3. What is HR Analytics?
Only half the businesses I work with have an HR function, but none of them are using HR analytics to drive decisions on talent marketing, hiring, and staff development.
This is a topic that requires far more education than this newsletter writer can provide. If this topic intrigues you, start with this simple masterclass by Dr. Fermin Diez who has also written two books on human capital.
If your company hosts monthly brown bag lunches for professional development, consider this topic and video as a starting point. Some of your idea takeaways might be:
- identifying cause-and-effect reasons certain employees stay by age group
- identifying simulations and forecasts for ‘what is likely to happen’ related to employee attrition
- developing an HR analytical mindset
4. Quality of Earnings
Does a small to mid-sized business need to spend in the hundreds of thousands of dollars on a Quality of Earnings (QoE) report from their CPA firm? Big CPA firms will say yes if you are trying to sell or buy a company.
My (cautious) concern with such reporting is that the focus is on the numbers themselves. The driver behind the request of such reports is generally:
- senior management is seeking validation to an unreasonably high valuation multiple
- board members may distrust management’s aggressive accounting policies
What I find missing in these QoE reports is 1) the competitive landscape, 2) whether the search for customers is push or pull driven, and 3) an overall assessment of the business model.
If we stick with the CPA-centric view of QoE reports, then this is an area where every financial leader should have a better-than-average competency level. Accordingly, the best book addressing QoE is Financial Shenanigans by Schilit, Perler, and Engelhart. You don’t need to read it from cover to cover. Skim and but read the sections you find the most interesting. Also, get the fourth edition, the latest.
5. Fundamental Financial Questions Every Leader Should be Able to Answer
Regarding financial shenanigans, every non-financial leader in your company should be able to easily answer the following questions with no hesitation at all:
1. When can revenue be reported too soon?
2. Why are one-time income events excluded from net operating income?
3. What is an example of cookie jar accounting/reporting?
4. What is the difference between operating and financial cash flow?
5. What is one example of a misleading financial metric?
Impossible? I work with CEOs who at one time had a poor financial acumen with the inability to synthesize finances with all operating activities. Not all, but most of the CEOs I work with can answer the above questions. Your head of supply chain, sales, marketing, HR, and other managers need to know these answers because they are the ones driving financial results, good or bad.
Thank You For Reading
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Take care and have a great week. Always be learning.