10 tips to avoid hiring the mistake of the century

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If you think recruiting is a pain, think about how much worse it is to wind up hiring the wrong person. It's a lesson that small companies only learn from bitter first-hand experience.  

In fact, about 62 percent of small business owners have made a wrong hire in their history, while slightly more than half of them reporting having settled for candidates who were not as qualified as they had hoped originally, according to research by the placement firm Robert Half.

What's more, the cost of a bad hire can turn out to be expensive -- roughly the equivalent of 20 percent of an employee's salary, or $6,000-$15,000 for an average US worker. The amount climbs even higher if you're forced to replace someone who has specialized skills or occupies a senior position.

For startups and small businesses, the impact of early hires is amplified by the fact that this core group of people functions like a small family, each with their own personality and role. Since they will help set the groundwork for the company's culture, there's particular incentive to get this right.

Obviously, every organization wants to hire wisely, especially in a young company. That puts the onus on the hiring manager to find the telltale signs that reveal a job applicant's suitability.  

Rules of the road

This isn't easy. Interviews are a lot like first dates and there's little sense in rushing in. Someone might possess all the talent in the world, but if they don't jive with their team -- as well as with the company and its values -- it won't work.

Making a judgment call about an applicant's ability to handle a job's demands involves myriad considerations that vary according to the position being considered. But one common theme is the virtue of patience.

"We've learned to make decisions on hiring a bit more slowly, and to put a lot more effort into understanding the candidate's true motivations than to be overly excited by a kickass interview," says Katherine Espinoza, CEO of Rebrandly, a Dublin, Ireland-based software company that creates URL shorteners for branded links.

For Espinoza and others who do the hiring at smaller companies, it's worth taking the extra time in an effort to peer beyond the resume and gauge a prospect's ability to acclimate to less structured, more freewheeling atmospheres than those found in Fortune 500 firms.

"I don't want to overgeneralize here, but I do think that people who thrive in multinational companies like IBM or GE tend to enjoy the structure, process and procedure that's associated with being somewhere big," says Espinoza. "On the other hand, to thrive in a startup you need to be very comfortable with ambiguity, be able to produce work autonomously and transition quickly from task to task without getting slowed down by the lack of structure."

Regardless of the time it takes, careful vetting also reduces the odds of being badly surprised months later on. People are infinitely more complex than what fits on a resume and you're hiring the person, not the skill set listed on the paper.  

"I think one of the hardest -- and most interesting -- things we see during the hiring process for tech roles is that there is so much talent, but finding a culture fit is much harder," said Wences Garcia, CEO and Co-Founder at MarketGoo, an e-commerce software development company. "Basically, the question we hear a lot from our peers is, 'The skills are there, but how do I make sure this person isn't a jerk?'"

While the process depends on no small amount of informed guesswork, there are general rules of the road that guide hiring managers as they ferret out the intangibles.   

Be picky

If you're serious about building an excellent team, don't settle for second-stringers. Keep the results of that Robert Half study pinned to your wall. It's to your advantage to decide in advance what your ideal candidate looks like.

Downplay first impressions

Don't let yourself get bowled over by an amazing first interview. Instead, use the initial meeting as an opportunity to gauge the candidate's personality and ask lots of open-ended questions to see how this person thinks and carries themselves -- all the while asking yourself how this person might work with your core team.

Cull the dull

Look for candidates who have taken the time to think about how they might fit into your team. Have they done their homework and come to the interview armed with interesting questions? If someone tells you that you've "covered everything" and has no follow-up questions, that's a give-away.

Set clear expectations

Explain the day-to-day tasks required by the position, the key performance indicators (KPIs) that will be used to measure performance and the goals against which applicants will be measured. Establishing those criteria from the beginning will make all the difference between the candidate succeeding in your company or getting frustrated later on.

Straight talk

If things sometimes get frantic at your shop, don't be afraid to speak frankly about what new employees will likely encounter on the job. If someone's scared off by frank talk, it's better to find out before -- rather than after -- the fact.   

Let's get small

Be as honest and detailed as possible about what it's like working in a startup or small company. Truth be told, this isn't going to be for everyone and applicants should know what to expect -- especially if they hail from bigger organizations. Make sure that they understand the difference between working for a small outfit versus a bigger company and are eager for the challenge.

Culture counts

Get other employees involved in the process so that you can gauge whether there's a fit with the team culture. Also, other employees can provide a valuable second opinion in case you missed something. If you're recruiting for engineers, involve the developer team in the hiring process.

Carpe diem

If you find someone with the right talent who also fits in with the culture you're trying to build, feel free to shape the position to fit the individual, not the other way around. Since they will be helping to mold the culture of the organization more than you'll be molding them, do what you can to seize the opportunity.

Don't be slow to admit mistakes

Nobody wants to admit they made the wrong decision, but poor hiring decisions happen. So if you do hire the wrong person, don't prolong the inevitable. Adopt the age-old adage: Hire slowly, fire quickly, when it's clear that this wasn't meant to be.

Basic signoff checklist

All told, the hiring process ought to start with a phone screen followed by at least a couple of interviews focused on either the technical requirements of the job or the candidate's ability to mesh with the business culture, its norms and its values. Lastly, set up an interview with the CEO for the final say in the process.