Many small businesses have survived the economic downturn by reducing overhead and maximizing operational efficiency. As the economy improves, some companies are experiencing turnover as employees jump ship for what they perceive as a better position elsewhere. Are these good employees gone bad? Or were they just bad hires in disguise?
The Harvard Business Review reports that up to 80 percent of employee turnover can be traced back to bad hires, suggesting that perhaps the final frontier of small business belt-tightening is refining the hiring process.
Careerbuilder reports bad hires cost an average of $25,000. This doesn’t even include intangible costs such as lost productivity, damaged morale or loss of company reputation among customers.
Here are a few suggestions to help you minimize the chance of a bad hire:
Build a bench.
A well-developed succession plan will tell you who you will need and when, whether you have the talent in house, or if you’ll have to go outside to get it. Say you have one good field supervisor who could become a great branch manager in 24 months, but your growth plan calls for opening two new branches in the next year. Those gaps in your succession plan will help you plan and budget for meeting your hiring needs.
Know what you need.
To hire successfully, you have to manage your talent assets like you run your jobs. A successful maintenance contract starts with a clear scope of service. Likewise, a successful hire starts with a detailed job description.
Your job description should list the main responsibilities of the position, the skills required for success and the core competencies of the ideal candidate. It should also provide a brief context for how the role contributes to the overall success of the organization.
Solicit input from stakeholders who really know what it takes to do the job. If you’re the business owner and you haven’t worked in the field for years, don’t rely on your memory of how you used to run a crew. Go ask the people who run your crews now what skills and characteristics they need in a successful candidate.
Identify the traits and skills of your top performers already in the job and use them to benchmark the ideal candidate. This will save time in screening and interviewing, and can also help predict how an individual will perform in the job by comparing their past behavior with your ideal.
Hire for fit, train for skills.
The top reason people leave an organization is conflict with a team member or supervisor, so it’s better to hire someone with potential to learn the skills you need, who you know will be a great team player.
To check for fit, have the finalists meet with several members of your team and even with managers in other departments. Take the candidate to lunch for a more casual test of how the person interacts in a team setting.
If you don’t have in-house recruiting staff, you may want to work with a contract recruiter who specializes in the green industry. They can screen applicants to cull the best candidates and perform valuable skills and behavioral assessments that will streamline the selection process.
If it comes down to two or three equally good candidates, it may be time to do a gut check. Here is where your emotional intelligence should come into play. If you are drawn to one candidate more than another, ask yourself why. Be honest. Is it because they are more like you? Do you need someone like you in this position? Or would it be better to have someone not like you to complement the team dynamics?
Regardless of what your gut says, be sure to practice due diligence with background and reference checks.
Hedge your bets and cut your losses.
Sometimes it’s hard to build a bench when you just need a body in the seat. A growing trend among employers is to offer temp-to-permanent or contract-to-hire assignments to their top candidates. This is a short work period (30-90 days) that allows the company and the candidate to decide if the potential hire will be a match long-term.
During the trial period, evaluate the employee on quality of work, working well with others, attitude, attendance, customer interaction and how they meet deadlines. These critical criteria will reveal a bad hire early on so you can cut your losses and get back to growing your company.
No matter how quickly you identify a bad hire, you’re still going to waste money by having to replace them. The key is to waste the least amount of time and money by applying the same discipline to your hiring process as you do to your production processes.
The author is an independent communications consultant in Glenwood, Md.