Hiring a new employee represents an investment far greater than a new salary to pay every week. While the exact cost can be difficult to pinpoint and will vary from business to business, when you consider the cost (both in dollars and in labour spent on the process) of recruiting, training, and integrating a new hire into your workplace, the price-tag on a new hire can get steep fast! Depending on the size of your business, the new hire's skills and position, and what field you work on, just getting a new body in the office can cost anywhere between $2500 to $11500, ouch!
That's money you're out right off the bat. As an employer of course, you're hoping that the skills and productivity the new employee brings to your business will make up for the cost, but according to a survey of 610 CEOs conducted by Harvard Business School, they estimate that typical mid-level managers require 6.2 months to reach their break-even point, let alone start generating profit for the business.
That's assuming that you hire the right person for the job the first time. Poor hiring decisions are even more costly. If your new recruit doesn't have the right skills, under-performs, or is otherwise a bad fit for the business, you can spend months burning good money after bad. You're out on the cost of hiring, lost productivity, and more nebulously, the opportunity cost of what you missed out on if you hired right the first time.
All of that is to say that picking a new hire is no small decision. Good recruitment is a combination of science, art and good luck, so when you're looking to expand your workforce, keep these guidelines in mind to make sure you get the right person for your business!
Figure out exactly what you need and hire for it
It may sound crazy after just going over what a new employee costs, but far too many businesses hire without thinking through exactly what they need! They may have a general idea of what they want, but have not thought through the actual specifics – what the day to day tasks will be like for the new hire, what skills they need, experience, and what personal attributes will be necessary to be successful in the job. They end up casting a broad net, looking for a grab-bag of skills and requirements that may or may not be useful for the position they are looking to fill instead of focusing on what's important.
Take a look at what areas your business is struggling with, why you feel the need for extra manpower. eShares CEO Henry Ward has a rather unconventional way of looking at new hires that may be helpful when determining your needs. "Hiring is not a consequence of success. Revenue and customers are. Hiring is a consequence of our failure to create enough leverage to grow on our own. It means we need outside help...It is humbling to go back to the labor market, hat-in-hand, asking for help.” You have a problem you need someone else to solve, so make sure you know exactly what that problem is before expecting them to fix it.
Identify what a new hire would ideally do for your business and go from there. Write a detailed job description that accurately reflects what the employee will be doing if hired (misidentifying the job sound more prestigious or less demanding will only come back to haunt you later when the employee is unsatisfied) and what skills and traits will be required. Once you have a clear goal and set of requirements in mind, you'll already be on the path to finding the right new hire!
Interview to find the best
Interviewing new hires is a skill unto itself. It may be helpful to do a little soul searching at this point and determine if you know exactly how to best conduct an interview. If you're not quite sure which questions to ask or how to pinpoint the best employee yourself, it may be time to look outside your own company and contract the services of a recruitment firm that specializes in this field.
When interviewing, look at it as a fact finding mission. Find out exactly what the potential hire's skills and experience are. Don't be afraid to ask for concrete examples of skills and situations the hire has found themselves in before. Ask follow-up questions to vague or general answers. It may seem impolite, but finding the right fit for your business is best for both you and the new hire in the long run.
A good interviewer should be a good listener. If you find you are talking a lot while conducting an interview, you're probably doing it wrong. Remember, you are not selling the job, the job description the potential hire responded to has already done that. Your role now is to screen for a potential hire, and that means finding out about them. Listen carefully to everything they say and ask questions based on their responses.
Having an interview committee review the top candidates and discuss their potential advantages, skills, and possible concerns can be an effective way of whittling down the list of competitors. This should be a discussion and an element of the decision making process, however, you may not want to make it a vote. Deciding on candidates by a voting process tends to select for hires with few objectionable qualities, someone who ticks the boxes. You want to hire for strength, for the person that will be the best at the role you're looking to fill, even if that means they are weaker in other areas. The final hiring decision should rest with the department manager or a key senior employee, not a committee.
This sounds cruel, but don't take a new hire's word on everything. Check in on their educational credentials. Call their references. If you're not familiar with the businesses they've listed as former employers, do a quick Google search to make sure they are a legitimate business in the field the candidate says they are. A criminal record check may also be required depending on the nature of your business (be sensible when requesting this, if it isn't truly necessary, don't ask).
While it is a fine line to walk, you should check on a potential new hire's social media presence. This is not an excuse to act like a private eye and dig up dirt on every potential new candidate, and you need to be careful of letting trivial things influence your hiring decision ("what kind of monster likes The Monkey's but makes fun of The Beatles?”). Still, we live in a world where the line between our digital personal lives and professional lives has never been thinner. If you see references to criminal behavior, or they are on every day trashing their current employer, or evidence of deception ("I just snowed the idiot interviewing me with a phony degree!”) you'll be glad you did.
Again, you're looking for actual problems and concerns. A person's selfie habit, love of Morrisey albums, and Words with Friends addiction is not information relevant to a hiring decision. It can be a slippery slope to start digging into employees like this, so use a light touch.
When you've found the right person, get them and keep them
You've found your person. They're perfect for the job, the right skills, great attitude, good fit, the whole package. It's time to seal the deal and make all this effort worth it.
When making your employment offer, be sure to do it in person. Know what they are currently earning (most potential employees will freely share this information during the interview process) and be prepared to do better (the right person is worth it). Explain to the hire why you selected them and go over all the expectations and requirements again. Get a verbal understanding of both the role and expectations the hire will be taking on and the expected compensation for their work. Once its settled, get it on paper with a formal contract and provide them with all the key points of your corporate policy. Give the hire time to review the details and hold a final meeting to go over it all together, answer their questions, and shake hands.
Now that you have the right employee, make it a strong and lasting relationship. As established, the cost of hiring a new employee is significant and you don't want to repeat the process again a year later. Offer a competitive wage and benefits package to the best of your business' ability. Continue to incentivize performance throughout an employee's tenure and promote from within whenever possible to ensure continued engagement. You want everyone to stay hungry for the next opportunity inside the business instead of letting their eyes wander elsewhere.
Retaining great employees is as important as good hiring practices. Remember, if you think they are great workers, other businesses will, too. Don't spend all the time and effort to find the right person only to let them slip through your fingers and work for another business!