How Can I Avoid Hiring Mistakes?

Maximize the Return on Your Biggest Investment. Hire Right the First Time.

Human capital, defined as the value of your employee’s skills, knowledge, and experience to your company, is the largest investment you will make as a business owner.  Why then, do so many owners spend more time evaluating and selecting a piece of office furniture or an electronic device than they do evaluating and hiring an employee whose contribution could be hundreds or even thousands of times more significant, either as an asset or, a liability? While we do not know the answer to that question, we hope this article can effect a positive change.  Let’s examine the economic risks and rewards.

Risks: The up-front costs of advertising, reference checking, interviewing, orientation; first year training, incompatibility with other staff, reduced efficiency; liabilities arising from workmanship deficiencies or the inherent unknowns of any unproven new hire; lost revenue any time employment is terminated and the process is repeated.  The sum of those risks would be a few thousand dollars on the low-side and tens of thousands or more on the high-side.  Hiring in a state of desperation can compound these risks.  We know an employer whose intended staffing level is five employees; this employer terminated and recruited eight employees in the first five months of this year.  Huge turnover, huge cost!

Rewards: Virtually unlimited revenue during an employment lifespan, the comfort that comes with proven capabilities and reliability, potential to groom your successor.  The sum of those rewards is easily hundreds of thousands or even millions of dollars.  Recruiting the right people deserves your commitment to excellence in your process.   Unfortunately, of the hundreds of small businesses we’ve encountered, we have yet to see an effective written process for hiring.

We know you want to hire effectively, efficiently, and profitably, so here’s a short list of useful hiring basics to begin creating your own Standard Operating Procedure for Hiring and Development:

1. Use a solid employment application that complies with the law
2. Always conduct thorough background checks
3. Interview using a checklist or guide so you’ll consistently get the information needed for a good decision.  (There are many worthwhile resources available from business associations and the SBA).  Here are some sample topics you might include:
   • What are some of your career accomplishments?
   • Describe your decision-making process.
   • Share an example of how you worked as part of a team.
   • What kinds of work do you like best?  Least?
   • Have you ever had your employment terminated or been asked to resign from a position?  Why?
   • When I call your references, what will they tell me about you?
4. Allow at least 24 hours after the interview before making an offer of employment.  Never hire from desperation.

Every hiring event costs you plenty, and with millions of dollars in potential revenue at stake, your hiring process must be a priority. If you want help, connect with us at: http://Perpetualbusiness.co. We have tools and resources available.