As a human resources consultant, the biggest challenge small business owners face when growing their business is recruiting and retaining the best people. Either they wait until the last minute and hire out of desperation or they make mistakes that aren’t so obvious unless they’ve worked in an HR role at some capacity.
A report released by the U.S. Department of Labor states the average cost of one bad hire costs small businesses 30% of the employee’s expected salary. To put this into perspective, if a small business owner hires a mid-level employee with an annual salary of $50,000, the cost to the business for losing that employee is $15,000.
These costs are a result of
- Time and expenses training and onboarding the new employee
- Hours spent reviewing resumes and interviewing candidates
- A diminished client experience, damaged reputation (online review sites, word of mouth, etc..) and potential loss of clients
- Drain in productivity from unfinished projects and not carrying out responsibilities and
- Potential legal fees from discrimination claims
According to CareerBuilder, 74% of employers have admitted hiring the wrong person for a position. The same survey discovered
- 32% took a chance on what they felt was a nice person
- 30% felt pressured to fill the position quickly
- 29% focused more on their skills instead of their attitude and
- 35% knew they didn’t have all the skills required but thought they would learn quickly
Parker Lynch, an executive recruiting and consulting agency, developed an interactive tool where business owners can calculate the cost of losing an employee. This visual tool shows small business owners how impactful each individual hire is to their business. Unlike larger corporations where they’re less affected, small business owners feel the pain at all levels when losing an employee or hiring the wrong one.
Here are four hiring mistakes small business owners can avoid when recruiting talent.
Lacking A Clearly Defined Process
Most companies overlook the importance of clearly defining a process to hire and retain talent. Therefore, they fail to realize their lack of a clearly defined process is what’s repelling them. A disorganized recruiting process is just as harmful as no recruiting process at all. It not only shows candidates their time isn’t valued but it also creates additional and unnecessary work for the company. Companies that lack a hiring strategy are more likely to overlook important details that could negatively impact their small business.
It’s vital companies define and establish a recruiting strategy before publishing the job description. A successful hiring strategy indicates
- What systems will be used to collect candidates’ information and resumes
- How interviewers will communicate with one another regarding their experience with the candidate and
- What follow-ups will be in place for candidates who don’t make it to the next stage
There are a few things to consider when designing your recruiting process such as determining what’s required during the application process and how the interviews will be conducted. For example, is the candidate required to submit a cover letter? If so, are there specific questions that should be answered in their cover letter? Make sure to communicate this in the application.
Having a clearly defined process from start to finish creates a smooth and seamless experience for everyone involved. Some key points to think about are how each interview will be conducted (phone, Skype or in-person), how long each interview will be, who will be conducting each interview and what questions will be asked. It’s important to make sure there’s not a major overlap in questions, otherwise it shows that there’s a disconnect between departments and a lack of communication between people conducting the interviews. This is a red flag to candidates.
A Non-Existent Onboarding Plan
Onboarding begins the moment the candidate signs the contract accepting the position. According to the 2019 Job Seeker Nation survey by Jobvite, 29% of employees leave within the first 90 days of starting their job. 45% of those employees stated it was due to poor onboarding and their day-to-day duties not being what they expected.
Most companies fail to understand the importance of investing in onboarding new employees. They expect the new employee will figure it out along the way. This lack of organization is the quickest way to repel a candidate and show you’re not invested in their development and success. Onboarding isn’t an event, it’s a process that typically lasts up to one year. It not only helps integrate new employees into their position but also into the company and overall culture.
Asking The Wrong Questions
Interview questions help to identify cultural fit as well as experience. Questions such as “if you were an animal, what animal would you be and why?” are a waste of time because while it does require them to think creatively, the answer is irrelevant to identifying cultural fit and skill assessment. A lack of preparation for an interview increases one’s chances of asking an illegal interview question putting the company and its reputation at risk.
It’s obvious when interviewers don’t take time to review a candidate’s resume before their meeting. A lack of preparation can be enough to push away the right candidate or leave them with a poor first impression. To get the most out of an interview, spend a few minutes reviewing the candidate’s resume and profile. Otherwise, interviewers waste time trying to catch themselves up to speed on the basics when they should be digging deeper into the candidate’s goals, experience and determining whether or not they’re a good cultural fit.
Overall, an interview should be a mutual conversation between both the candidate and the interviewer. Companies often forget that candidates are interviewing the company just as much as the company is interviewing them.
Some questions to consider asking should focus on how candidates handle difficult conversations, stressful situations, why they’re leaving their current position as well as inquiring about an employment gap. A strategy I teach my clients is taking points from a job description and turning them into questions to determine their skills, experience and working preferences. For example, to get a better understanding of whether a potential employee prefers a dynamic role or a routine one, ask them – do you prefer working in a dynamic environment or a routine one? It may seem obvious, but some candidates do a quick skim of the job description and miss crucial points. These questions help clarify everyone is on the same page.
Poorly Defined Expectations
Creating a job description helps to identify the ideal candidate for the position. A comprehensive job description helps attract the best, most qualified candidates for an opening. It creates clear expectations of who the position will report to, what is expected of them, the type of experience required, education and certifications needed as well as skills and personality. Job descriptions should be clear and concise while still communicating the culture and personality of the company.
Most small businesses take a throwing spaghetti against the wall approach when it comes to posting their open position. Instead of identifying the best platforms, they post the job everywhere in hopes the right people will see it. Instead, it creates the opposite. It draws in candidates from too many sources creating overwhelm from an influx of resumes making the hiring process more difficult.
There are a variety of platforms to post positions across but not every platform makes sense for each position. For example, if a small business is hiring a social media manager, it would make sense to post the job to Facebook whereas a position in tech would make more sense to utilize Stack Overflow.
I understand how confusing it can be for small business owners to create a solid recruiting strategy that works for their business. As an HR Consultant, I specialize in helping small businesses build out teams, HR departments and establishing strategies that create positive people experiences to help maximize their success and grow their business. Having worked across various industries and countries over the past 7+ years, writing about strategies in my Forbes column and speaking about these exact topics, I’m confident I can help you to create one that works for your small business. Let’s set up a call to chat and see how I can help you get started.