Profit Begins with Your People

By Ben Baldwin, an EO Toronto member and the co-founder and CEO of ClearFit

Have you ever hired someone who didn’t turn out to be what you expected? Did that seemingly well-spoken, educated and experienced interviewee turn into just another “warm body” consuming valuable office air, or worse, turning off your best customers?

At some point, most entrepreneurs have made bad hiring decisions. Often the people who appear the best on paper—or in an interview—have the most to hide. In my business, we call it a “cultural malignancy” when a senior-level hire fails to fit in with their team. This type of poor hire can affect team performance, and in the process, entice staff to leave. Worse yet, a poor hire can cost a company a lot of money.

The U.S. Department of Labor estimates that, in addition to their salary, the average cost of a bad hire in America is 30 percent of their first-year earning potential … and that’s if the mistake is recognized and corrected within the first six months. The longer it takes a boss to recognize and correct his or her mistake, the more the costs climb and the greater the negative impact the bad hire has on the entire business. There is some good news, however— bad hires can be avoided! Here are some steps I take to avoid bad hires in my business:

Step 1: I’m clear about who I am looking for. Before I start the hiring process, I create a list of questions that help me assess what it is I need in terms of employee productivity. Here are some sample questions I use:

  • What are the outcomes I need from this hire in the first year? Second year?
  • Do I need a leader, or someone who is simply good at following instructions?
  • Will this person be interacting with customers?
  • Will they mostly work in a team or autonomously?
  • Do I need someone innovative and creative, or someone who is organized?

Step 2: I establish deal-breakers for skills and experience. When it comes down to determining the kind of person I want to employ, I make it a point to establish the necessary “must haves” for my ideal candidate. If I find a person who is a good fit for a job, most skills can be learned. I won’t know if someone with 10 years experience is any better than someone with five until they start doing the job, so I have to carefully judge the candidates based on my defined criteria.

Step 3: I customize interviews for each candidate.  When it’s time to set up an interview, I focus on a candidate’s behaviors/experiences; specifically, the things I’m unsure about. If every interview I conduct is the same, than I’m not maximizing my time. What’s more, I may be missing something important. During an interview, I ask the candidate to walk me through specific examples of his or her past behavior, instead of asking generic questions like, “What’s your greatest strength/weakness?” I dig deep. I get them to verbally paint a picture of who they are and what they’re like at work.

Step 4: I use hiring tools and have others in my company interview the candidates, too.  In the world of hiring, there’s a term for quick judgment called the “halo effect.” It refers to the impression someone leaves when they first meet that person. The problem with this snap judgment is that it can accidentally anchor an interviewer’s opinion about an interviewee— often inaccurately. This is why some leading companies are using validated personality assessments for their sales hiring. The twist is that they perform these predictive personality assessments before interviewing any candidates, oftentimes well before they review the actual resumes. Another approach is to have other people at the company interview the candidates. By doing this, you acquire other perspectives, and eventually, support within the organization.

Step 5: I check the candidates’ references myself. By checking candidate references myself, rather than having someone do it for me, I wind up learning a lot about the people I’m interested in hiring. During the interviewing process, I make it a point to specify the specific references I want the candidate to provide, so I don’t end up receiving a listing of the candidates’ friends. I also remind candidates before the interview that I’m going to call their references about the answers they provide me. This helps keep their exaggerations to a minimum.

When it comes down to it, a bad hire can have a drastic affect on your business … if you let it. While managing difficult or poorly performing employees is a task many business leaders try to avoid, it’s a necessary function and one that should be taken seriously. I’ve learned that the biggest mistake employers make is avoiding the problem. They stay away from the employee and place added burdens on the employees they actually trust. In my experience, the best thing to do is to learn from your mistakes so that the next time you hire someone, you can avoid the ordeal from the beginning.

Categories: Business/Finance Tips Human Resources

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