Would you hire some additional employees if you could find them? And maybe even let a few under-performers go if you could be assured of finding stronger replacements? If you answer “yes” to these questions, you certainly aren’t alone. In my coaching work with businesses, the challenges to success that I most frequently hear about are apt to involve people. While this is certainly not a new issue (some business gurus state that 80% or more of all business difficulties are personnel-related) there are components to the current market that give this some new dimensions. According to several recent studies, employee turnover is expected to be 50-65% higher than in previous years.  This will make employee retention a far more critical issue than in the past. Address the following three issues, and you will be well on the way to staffing your business for optimal performance.

Not everyone is a good fit for your business, even though he may be a great fit for another company.  Most would-be employees seek work based upon a combination of factors: personal interests or giftings, availability of work, and pay scale.  Similarly, employers hire people who are available and who seem to have the necessary skills for the work.  However, there are quantifiable ways for employers to evaluate a potential employee’s suitability for a certain job; and your first concern should be creating clarity about the company’s core values.

The stated core values of many companies can be found on their website and occasionally on the wall of their office. Yet it is not uncommon to find employees or even company leaders who do not really know what these core values are. If people in the company don’t know what they are, it shouldn’t surprise us that the core values are not a critical part of the hiring process or incorporated into the management and review process. Consequently, the functional core values of a company may be vastly different than those that are formally stated.

This is a setup for a mediocre culture at best and more commonly a toxic culture. Unhealthy cultures are one of the primary reasons employees don’t stick around. Employee turnover is expensive – commonly considered to cost a company anywhere from four to eight months of salary. It also takes a toll on company culture. You can quickly tell how this spiral has a major effect on company performance.

Jim Collins’s work Good to Great popularized the business-as-bus metaphor in which “right people” were those who fitted the culture of the company and were said to belong on the bus. “Wrong people” did not fit the culture of the company; and while many of them are still good people, they simply aren’t aligned with the way the business operates. They need to get off the bus and find one that is right for them.  Failure to have a group of people fully aligned with the stated culture wears away at the culture and eventually becomes toxic in its more troublesome forms. The first and foremost principle in acquiring and retaining great people is to have a clearly articulated set of core values that distinctly define the company culture and is used in selecting new hires and managing existing people. People who do not fit that company’s culture are freed up to find a cultural fit.

The second component of Collins’s metaphor is to have people who belong on the bus (they are a good culture fit) in the correct seats on the bus, where they are able to work from their unique ability or operate in their sweet spot. This primarily has to do with their skill sets being aligned with the expectations of their role. Sometimes you have a “right person” for whom you simply don’t have a seat on the bus. They won’t be happy for any length of time, and neither will you as the employer. Their performance might lag because they aren’t well-suited to their role. Or they may be far too expensive for their role—and the chance of a “right seat” position opening anytime soon is simply unrealistic. Letting them go actually helps them free up their future.

You are a “for profit” business and not a “social services organization.”  Simply stated, wrong people must go.  Right people for whom there is no right seat must go. Both of these misfits impact the performance of the business in ways that constitute a “people problem.” You must have people who fit your culture and are skilled at their roles. Right people in the right seats. Doing the tough work of getting your people aligned is essential; and in some ways, it’s always a work in process.

These two principles are the bedrock of people management inside the company, and you must master them to succeed. Yet the broader picture of our present cultural moment and its workforce dynamic are also worthy of your attention. With the rapid pace of change in our contemporary culture, there are more significant differences between the generations than likely at any previous time in human history. This diversity forms a third factor in the equation and must be addressed.  Global migration and the technology revolution (impacting communication styles, language trends, and social evolution!) make the existence of five very different generational groups in the same workplace can bring nearly unprecedented challenges. Leadership must rise to the challenges represented by this growing diversity and build a culture that utilizes the strengths of each generation while keeping generational barriers from becoming an impediment to healthy company culture.

We must acknowledge that each generation does tend to value different things. For some it’s a regular paycheck. For others it’s work-life balance. Some are deeply committed to social and environmental issues, while others approach such matters in a much more pragmatic way. Some of these issues can be mitigated or managed by clearly defining company core values. Leaders who are aware of generational differences will be better able to hire a diversity of age groups and utilize their strengths to further company progress.  Avoiding a significant portion of the working population makes hiring more difficult than it needs to be.

Communication is more sensitive in this climate, and to avoid addressing the issue will only alienate a segment of the workforce potential. Leaders and managers must work hard to grow their personal awareness of these generational and cultural challenges and then expand their skill set: the goal is to build a diverse group of people into a cohesive team around a collective vision guided by shared values.

While I’m certainly no master of understanding the generational dynamics, I have experienced their effects myself in addition to seeing the issues played out in families, schools, churches, and businesses. One of the recent works that brings a great deal of insight to this topic is Tim Elmore’s A New Kind of Diversity. He focuses primarily on the challenges created by generational diversity and offers well-researched guidance on ways of bringing generations together.  Consider adding this to your reading list as a means of growing your people skills to help you achieve better people results.

This article originally appeared in The Shed Magazine and is online here.