7 Hiring Mistakes to AvoidFrom skipping the reference checks to hiring friends, these common blunders can cost you in productivity and profits.
Hiring decisions are some of the most important ones you make as a small business owner. While a good hire can help your business succeed, a bad one can cost you dearly. According to one widely cited statistic, the average cost of a bad hiring decision can equal 30 percent of the potential earnings that employee generates the first year.
Career and small business strategist Mike McRitchie shared the biggest hiring mistakes small business owners make and how to avoid them.
Hiring too fast
Too often, a small business owner is looking to hire someone quickly because they need the help now. In the rush, an owner may take dangerous shortcuts.
“While they may start off well by putting an ad on Craigslist or posting on one of the big job boards, they may rush through and quickly review the resumes, choose their best three to five candidates. Then they interview three to four (one doesn’t respond). And from those interviews they have one pretty good choice and one okay choice,” said McRitchie. If the pretty good choice doesn’t work out, “Now you’re back at square one.”
The bottom line: Slow down. Cast a wide net, and take the time necessary to properly vet the candidates.
“Often you’ve made your decision after the first 30 seconds of the first interview and you rush through the rest,” said McRitchie. This can backfire, he noted. “The first choice may have some fatal flaws that you overlooked but would have noticed if you hadn’t rushed.”
Not checking references
No matter the size of your business or how many people you need to hire, McRitchie said there are interviewing and hiring basics you can’t afford to skip, such as drug screens and criminal background checks. He also recommended small business owners do a credit check, especially for anyone who will have access to financial information.
“An even bigger basic step, especially if you are hiring people within a small industry where you know some of the players, is to contact people that person has worked with to get the full story,” McRitchie said. “Even a well asked question that results in a pregnant pause could tell you all you need to know.”
Hiring based on stats or skills rather than attitude and work ethic
“Using a resume as a rough guide to confirm that someone fits the hiring need is important, but don’t assume they have to be a perfect match to your job posting criteria,” McRitchie said.
He suggested small business owners look for people who are motivated to work hard and are team players. “That is something you can often hunt down from prior coworkers’ feedback. If you focus just on their skills or past work history, you may end up hiring people with a great resume who just won’t stick around or blow things up behind them for others to clean up,” McRitchie said.
Asking thoughtful interview questions such as “What do you think it means to be a team player?” can also help determine if a potential hire will work hard and will fit in with your team.
Hiring from the wrong pool
Look beyond candidates who are currently unemployed. “I don’t know who coined it first, but this stuck with me: ‘Don’t hire the cream of the crap,’” McRitchie said. “Don’t only dig in the pool of unemployable people who are available. Good talent wants to work with other good talent.”
He recommended looking at employed individuals who may be ready to make a change.
McRitchie said hiring friends can be risky for your business and your friendships.
“If they aren’t good at doing the work, and you’re just hiring them because they’re your friend, don’t,” he said. “You can kill a friendship if they aren’t up to par.”
Hiring friends can also be detrimental to workplace moral. “You can kill your work environment as the other staff sees you playing favorites.”
Hiring people who aren’t as good as you
Of course, no one knows how to run your business like you do. But employees can and should contribute skills you don’t have. The best managers know when to bring in people who are better at a particular job than they are.
“Hiring people who are better at a job than you will upgrade your company’s results and ensure that you have a high performing team. Ignore this at your peril,” said McRitchie.
Trying to save a few dollars
McRitchie said it pays off to pay an employee what he or she is worth.
“Look at the cost of hiring. If you hire wrong, it can cost you as much as the person’s annual salary in lost productivity and rehiring costs from a bad decision,” McRitchie said.
If the position you are filling is particularly important or high level, McRitchie said you need to first make sure the person is a good fit for the organization — and then pay them appropriately. “Typically, trying to save $10K to even $50K on a $100K annual salary hire is not worth it. They will save or make the company much more over their time with the company if they are good.”