MERITPROFILE

• Dramatically Improve Hiring Success Rates
• The Case for Character Assessment
• Cost of Poor Character Reflected in Turnover
• The Future of Character Assessments
• View Sample MERIT Profile™ Reports
• Find Out More About the MERIT Profile™

Cost of Poor Character Reflected in Turnover

Employee turnover related to terminations caused by character-related issues represents billions of dollars to American business. That alone should suffice to motivate companies to address the problem. While there are differences of opinion in how the actual cost of turnover should be calculated on an individual level, the average of all reasonable estimates would be around 100% of a person's annual compensation when all six key factors are included:

• Direct costs due to a vacancy
• Recruitment costs
• Training costs
• Lost productivity costs
• New hire costs
• Lost business costs

The Saratoga Institute agrees with this estimate as does Dattner Consulting President Ben Dattner, who summarizes the need as follows, "Tools that screen applicants for factors related to turnover are simply making an effort to lower the risk factors associated with 'wrong hires' and 'undesirable turnover.' When we can tie individual test results to consistent projections of success related to desired business outcomes, we are essentially just trying to ensure that we are maximizing the hiring process."

Causes of Turnover

• 60% is due to some form of relational fracture with a boss or peer or a character dysfunction that is manifested in poor performance or behavior.
• 20% is related to the candidate's expectations not being met.
• 10% is from failure to perform the skill a person was hired for.
• 10% is uncontrollable due to changes in personal circumstances.

The Cost of Retaining Poor Character

Another side of this same issue is related not to the losses associated with turnover but the losses associated with retaining the wrong people. Once a person of poor character is gone there is not much else they can do to hurt the organization. But a person of poor character who remains employed represents an internal irritant that can wreak financial havoc of far greater proportion than the cost attributed to their departure.

In our experience, even a company with relatively low turnover can have this problem in significant measure. Let's look at the following chart as an example.

Our contention is that in any organization about 55% of the workforce is competent and motivated while another 30% is marginal and the remaining 15% is either too new to have a measurable impact on results or too unproductive and on the way out. If you examine the roots of why 45% of the employee population is new, marginal or unproductive, you will find a high correlation between character and outcomes because a person's character, as much or more than their training, is at the core of their performance.