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HiringandKeepingtheBestPeopleHBE001_fm_.qxd10/02/200211:27AMPageiTEAMFLYTeam-Fly®TheHarvardBusinessEssentialsSeriesTheHarvardBusinessEssentialsseriesisdesignedtoprovidecom-prehensiveadvice,personalcoaching,backgroundinformation,andguidanceonthemostrelevanttopicsinbusiness.DrawingonrichcontentfromHarvardBusinessSchoolPublishingandothersources,theseconciseguidesarecarefullycraftedtoprovideahighlypracticalresourceforreaderswithalllevelsofexperience.Toassurequalityandaccuracy,eachvolumeiscloselyreviewedbyaspecial-izedcontentadvisorfromaworld-classbusinessschool.Whetheryouareanewmanagerinterestedinexpandingyourskillsoranexperiencedexecutivelookingforapersonalresource,thesesolution-orientedbooksofferreliableanswersatyourfingertips.Otherbooksintheseries:FinanceManagingChangeandTransitionHBE001_fm_.qxd10/02/200211:27AMPageiiHARVARDBUSINESSESSENTIALSHarvardBusinessSchoolPress|Boston,MassachusettsHiringandKeepingtheBestPeopleHBE001_fm_.qxd10/02/200211:27AMPageiiiCopyright2002HarvardBusinessSchoolPublishingCorporationAllrightsreservedPrintedintheUnitedStatesofAmerica060504030254321Nopartofthispublicationmaybereproduced,storedinorintroducedintoaretrievalsystem,ortransmitted,inanyform,orbyanymeans(electronic,mechanical,photo-copying,recording,orotherwise),withoutthepriorpermissionofthepublisher.Requestsforpermissionshouldbedirectedtopermissions@hbsp.harvard.edu,ormailedtoPermissions,HarvardBusinessSchoolPublishing,60HarvardWay,Boston,Massachusetts02163.LibraryofCongressCataloging-in-PublicationDataHarvardbusinessessentials.Hiringandkeepingthebestpeople.p.cm.—(Theharvardbusinessessentialsseries)Includesbibliographicalreferencesandindex.ISBN1-57851-875-X(alk.paper)1.Employeeselection.2.Employeeretention.3.Employeemotivation.I.Title:Hiringandkeepingthebestpeople.II.HarvardBusinessSchool.III.Series.HF5549.5.S38H372002658.3'1—dc212002010627ThepaperusedinthispublicationmeetstherequirementsoftheAmericanNationalStandardforPermanenceofPaperforPublicationsandDocumentsinLibrariesandArchivesZ39.48–1992.HBE001_fm_.qxd10/02/200211:27AMPageivContentsIntroductionxi1TheHiringProcess1AttractingtheBestPeopleDefiningJobRequirements2RecruitingPromisingCandidates7Interviewing10EvaluatingtheCandidates21MakingtheDecisionandOffer25Don’tForgetProcessImprovement28SummingUp292BeyondtheHiringBasics31DetailsYouNeedtoKnowOnlineRecruiting32WhentoUseaProfessionalRecruiter38CaseInterviewing40HiringBasedonEmbeddedPersonalInterests42HiringforMicroculture49PsychologicalTesting52SummingUp553KeepingtheBest57EssentialRetentionStrategiesWhyRetentionMatters60WhyRetentionIsSoChallenging66MasterPageAHBE001_fm_.qxd10/02/200211:27AMPagevTheSpecialChallengesofaDiverseWorkForce69WhyPeopleStay75WhyPeopleLeave77TwoRetentionChampions79ManagingforRetention:AnOverview81SummingUp854Market-WiseRetention87CompetingintheWarforTalentNotAllEmployeesHaveEqualValue88Market-BasedRetentionStrategies92SummingUp995DevelopingtheTalentYouHave101StrategiesforTrainingandDevelopmentTheDevelopmentDilemma103SkillTraining104CareerDevelopment108HandlingCPerformers112SummingUp1146WorkplaceFactorsThatAffectHiringandRetention115FocusingonCultureConsiderYourCulture116EmployeeBurnout119Work-LifeBalance123SummingUp1337WhenAllElseFails135KeepingTalentedEmployees,EvenAfterTheyLeaveKeepingValuedPeopleinYourOrbit136HiringFormerEmployees139ExitInterviews141SummingUp142viContentsHBE001_fm_.qxd10/02/200211:27AMPageviAppendixA:SampleJobDescription143AppendixB:TargetedInterviewQuestions145AppendixC:LegalLandminesinHiring151Notes155Glossary159ForFurtherReading161Index165AbouttheSubjectAdvisor169AbouttheWriter170ContentsviiHBE001_fm_.qxd10/02/200211:27AMPageviiHBE001_fm_.qxd10/02/200211:27AMPageviiiThisPageIntentionallyLeftBlankHiringandKeepingtheBestPeopleHBE001_fm_.qxd10/02/200211:27AMPageixThisPageIntentionallyLeftBlankIntroductionThisbookexplainstheessentialsofwhatmanagersandbusinessownersneedtoknowabouthiringandretaininggoodemployees.Effectivehiringandpersonnelretentionarethetwobasesoffutureorganizationalwell-being.Ifthatseemslikeanoverstatement,con-siderthis:Thesuccessofmostoftoday’sbusinessesdependsmoreonhumanassetsthanonphysicalorfinancialassets.Buildings,equip-ment,manufacturingfacilities,andmosttechnologiescanbereadilypurchased,butthehumantalentandknow-howneededtodriveourknowledge-basedindustriesaremuchhardertocomeby.Hiringdecisionsareamongthemostimportantdecisionsmadebymanagers,andthisbookexplainstheessentialsofwhatmanagersandbusinessownersneedtoknowaboutthisprocess.Withouttherightpeopleintherightpositions,neitheracompanynoritsin-dividualunitscanturninexceptionalperformance.Goodhiringdecisionscreateafoundationformoreeffectiveperformancebyemployees,teams,andthecompanyoverall.Conversely,badhiringdecisionsdragdownperformanceandarepainfullyexpensivetocorrect.BradfordSmith,aconsultantwhohelpsmajorcorporationswiththeirhiringdecisions,hasestimatedfromhisstudyoffifty-fourU.S.companiesthattheaveragemanagerial“mis-hire”costsacom-panytwenty-fourtimestheindividual’sbasecompensation!1Howisthatpossible?Smithpoin