The Smart Money

The headline in last week’s government labor report showed unemployment was holding steady at 5%. Not much excitement there, but a deeper dive showed a couple of interesting tidbits:

  • Healthcare and Business Services led the way with the most growth in employment.
  • The labor force participation rate dropped significantly (300,000 Americans left the labor force — either leaving jobs or abandoning their job searches). The drop in labor force participation is keeping the unemployment rate artificially low.

What are the HR implications?

The healthcare and business services sectors may feel continued pressure to raise compensation in order to attract talent. Hiring managers within these industries should ensure that they are getting what they pay for – verifying the talents/skill sets of people that they are bringing into the organization.

Pre-hiring testing/assessments help confirm that employees have the talents/skill sets that they claim and can help companies from making a bad hire. A bad hire costs employers more than just wasted time/compensation – it reduces morale and drives up turnover within the organization – producing a multiplier of ripple effects into additional, hidden/indirect costs.

According to www.glassdoor.com, Zappos found it was spending $100 million on bad hires and now offers employees a $3,000 separation bonus to exit the organization if they are unhappy within the first few months.

The bottom line: whether you’re in a growth industry or not, it pays to make smart hiring decisions. As President Reagan used to say: “Trust, but verify.” Employers should verify that they are getting what they pay for.