Hiring Better Employees Produces Better Results

It’s easier said than done. The real challenge is using reliable practices to hire the better employees.

As resources become tighter, managers in the retail service sector are searching for ways to be more efficient and one place they should look is their hiring practices, says a University of South Carolina industrial-organizational psychologist.

Rob Ployhart, an associate professor of management in USC’s Moore School of Business, and his colleagues, Jeff Weekley of Kenexa and Jase Ramsey at USC, have completed a study providing hard evidence that hiring better people contributes to better store effectiveness in terms of sales figures.

“Intuitively, every hiring manager knows that employing better employees is going to lead to better results,” Ployhart said

“The reality, though, is that many retailers maintain a certain amount of skepticism about the value of investing in frontline service employees. With high turnover rates, a problem many HR managers face, and few apparent differences among applicants, many organizations simply opt to fill their sales and clerical staffs with enough warm bodies to meet their staffing demands,” he said.

The researchers set out to provide proof to HR managers that hiring better people can increase sales revenue. Their study will soon be published in the Academy of Management Journal.

Working with a large retail department store chain headquartered in the United States, they examined 114,198 employees across the country.

Employment applications and individual test scores were analyzed using scientifically proven practices to determine job-related knowledge, skills and abilities of the employees. The tests were based primarily on personality, situational judgments and experience and provided an indication of whether applicants possessed the abilities to perform the retail job.

Ployhart noted that when it comes to making sound personnel selections, industrial-organizational psychologists have a proven track record of developing and assessing employment tests. “Their knowledge is based on evidence and scientific principles,” he added.

Unfortunately, he said, little of this evidence-based knowledge makes its way to HR practitioners, who, too often, use hiring procedures that are not scientifically valid. “However, the retail chain in our study used scientifically valid hiring practices,” he said.

In the study, stores with a greater percentage of employees with higher test scores outperformed those stores with workers who had lower scores.

In fact, stores with the higher skilled employees averaged about $4,000 of sales per employee per quarter more than those stores with employees whose test scores ranked lowest. That’s an average growth of 3-5 percent per quarter, which accumulates over time and can be quite significant, noted Ployhart.

All stores have good sales people but there must be a critical mass of them to make a real difference, says Ployhart. “Having good people throughout the store increases the likelihood of customers returning and spending money. There is also the positive promotion of the store through word-of-mouth testimonies from satisfied customers.”

One of the keys is to match sales people with the job. That requires knowing the characteristics of the position and then putting the right people into that area. “No matter what methods a store employs to hire its employees, it is important to match people to the demands of the job as well as the goals and realities of the organization,” he said.

So, how do hiring managers improve the hiring of frontline retail service associates?

“It can be done by using proven recruiting, selection and retention tools,” said Ployhart, adding that though it may be more costly than many of the tests on the market, it very likely will be an investment that will reap dividends. Moreover, he points out the results can be measured in dollars and cents figures so that HR managers will have hard facts proving the value of their selection procedures. That, in turn, can be convincing to top management.

“Anything that will improve the profit margin is something they understand. So placing greater emphasis into the selection process can result in the hiring of higher caliber employees and that means better sales figures,” said Ployhart.

“That’s the main message of our study,” he added.

The Society for Industrial and Organizational Psychology (SIOP) is an international group of more than 7,000 industrial-organizational (I-O) psychologists whose member’s study and apply scientific principles concerning workplace productivity, motivation, leadership and engagement. SIOP’s mission is to enhance human well being and performance in organizational and work settings by promoting the science, practice and teaching of industrial-organizational psychology.