If you’re like most entrepreneurs you’ve learned how to hire the old-fashioned way–by painful trial and error. The problem with that (besides the cost and heartache) is that even if you’ve found things that work, you’re likely not hiring as well as you could by getting a bit of outside coaching.
Here are the four most costly hiring mistakes that I’ve observed business owners make over the past 20 years I’ve been coaching entrepreneurs, and how you can avoid making these same mistakes yourself.
Mistake #1: Not knowing exactly who you need to hire.
How can you reliably and consistently find the right hire if you don’t systematically start any hiring efforts by clearly reducing the role to a concrete job description?
Yes intuition and subtle cues in the interview will lend a lot as you listen the story behind what your prospective hires share in the interview. But if you want to increase your odds of making a good hire, start with writing out a clear job description.
Too many entrepreneurs rush this step in their urgency to make a hirer (see Mistake #2 below) and as a result their hit rate on successful hirers is very low.
Gut check time: What is your hit rate of successful hirers? In other words, over the past 5 years, what percentage of your hirers would you consider successful?
Mistake #2: Hiring out of urgency.
You know the scene. A business is growing fast and they desperately need to make another hire. Or a company loses a key team member and they are scrambling to replace them.
Over the past 20 years I’ve coached thousands of business owners and one thing is extremely clear–when you hire in haste your odds of making a bad hire skyrocket.
What do you do about this? Get ahead of the curve.
Lay out your hiring needs into a 24 month timeline including the clues you’ll see along the way that will help you know the timing of when you’ll need to make key hires. What metrics can you track in your business that will be leading indicators about when you should pull the trigger and hire more? Is it total sales? Number of new engagements? Etc.
Also, make sure that you’re building out your systems and controls as you go so that you have the structure in place should you need to replace a key team member. Have each key team member cross training his or her understudy too.
These simple steps will help you hire more deliberately versus rushing the process out of desperation.
Mistake #3: Talking in hypotheticals during the interview process.
Asking a job candidate hypothetical questions about how she would handle a specific challenge, or how he would approach a certain situation is a major mistake. Why? Because almost all of your finalists for the job will know the right answers to say. What you want is find the ones who actually have applied and executed on these right answers.
Ask for concrete and specific examples from their recent business history that shows they have done the right answers. There is a big difference between common sense and common practice.
Mistake #4: Being dumb about compensation.
One of the most stressful areas for most business owners has to do with how much they’ll pay their team. My best advice to you is to remember you can’t win on money, you can only tie or lose.
Negotiate too sharp a deal and you’ll undercut the relationship right at the start. Pay too much and you’ll pollute the relationship for the opposite reason.
Aim to be in the fair neighborhood, paying people what the market values their talents and skills are. But don’t expect to win just on money, because even if you do, is that likely to help you find the hire you really want long term?
Money is just one of a string of rewards you can “pay” your people with; in many cases it is midway down their list of wants or lower. Remember the non-financial rewards that often matter even more than the money. These include things like giving your team cool projects and interesting work, letting them earn autonomy and real control of many of the details of their work and environment, sharing information and respecting their insights, and helping them find meaning in the work they do.
I hope you use these four hiring insights to help you build a team of loyal talent to help your business scale.
Also, to help you grow your business and get your life back, we just put the finishing touches on a powerful free toolkit which includes 21 in-depth video trainings on how to intelligently scale your company. To access this free toolkit click here. Enjoy.
Originally published at www.inc.com