R. Brad Lebo, Ph. D., has worked in both large and small organizations and as a practicing psychologist. His current pursuit is the application of psychology in business settings, helping organizations hire, develop and align their people.

Q: Can you talk about the cost companies face for hiring the wrong employee?

Lebo: The costs of mishires are associated primarily with the cost of rehiring someone. So if you make a mishire and have to go out and hire someone else after 3 to 6 months, then you’ve lost the paid salary as well as the time and costs associated with hiring someone new. That can be six times the cost of an annual salary. When you calculate lost opportunity and misdirection it can be much more. A chief executive who takes a company down the wrong path and eventually to bankruptcy, for example, can cost many, many times more than the executive’s annual salary. For smaller businesses, it is mostly the cost of having to hire somebody else and the lost opportunities that came along while the person you fired was in the position.

Q: Given that more and more baby boomers are retiring, do you think the market will face a leadership gap?

Lebo: This is simple demographics. There are 75 million baby boomers, 45 million Generation Xers and 75 million of so-called Millennial Generation, Generation Y. So there is no question that as baby boomers retire there will be a gap in the number of available leaders among the Xers to take their position. When I talk about leadership, I am talking about the top echelon of the company as well as key managers up and down the rank and file.

Q: What can you do to make sure your key employees are aligned with the company mission?

Lebo: As an executive, you need to be clear about your own priorities and goals, and make sure your subordinates know what they are. Some of the companies I work with post goals in conspicuous places. People know, for example, that the goal is to turn around a key report in a week or two weeks. It’s also important to hold subordinates accountable for those priorities and goals. Often there is not a lot of specificity in what a subordinate should be doing. For example, for the salespeople developing new business you might set a measurable goal of 10 new accounts per month. So, A, be clear about your priorities and, B, find a way to measure them.

Q: Can you talk about some of the assessment tools that can be used in hiring and development?

Lebo: There are tools like the DISC assessment, which profiles personality traits or characteristics. So you can determine if a person, say, is good at directing others or at following rules or giving presentations, or if a certain personality is at least oriented in those ways. There are tools such as motivational surveys that can determine if a person is, say, motivated to direct other people, to accomplish a certain task or to be in close personal relationships with coworkers. You can also assess critical thinking ability with the Watson-Glaser Critical Thinking Appraisal, for example, or Raven’s Progressive Matrices. So you’re getting the idea of a person’s intellectual horsepower. I should say that none of these tools alone is grounds for saying yes or no. They just give you more data.

Q: What can business leaders do to better manage stress?

Lebo: In addition, to taking care of themselves in a medical sense, they can join a peer group such as Inner Circle. Such groups provide a forum for leaders to tackle the issues they face and to do so among peers. Inner Circle and similar groups provide an opportunity to receive or give objective feedback and end the isolation of leadership.