Your entire business is a system, and people are its most important components.
Jim Collins, author of Good to Great said, “Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people.”
Mis-hires are Expensive
In recent years, studies have provided shocking information about the high cost of hiring the wrong person. Mis-hires are every expensive. Some analysts estimate a cost of three to six times a person’s base salary, and double or triple that for managers and executives. The right or wrong hire can make or break a small business!
So, if you don’t have time to create an effective hiring system, expect to waste far more time overcoming the consequences of a mis-hire!
In my experience, few small-business owners actually have a formal system in place to ensure they attract, select, promote, and retain the best and the brightest. Your hiring system should have several subsystems, each leading you closer to the perfect candidate.
- Do you have an advertising system that attracts the right people?
- Do you have a screening system for quickly eliminating all but the most qualified candidates?
- Do you have an interviewing system that reveals insightful and crucial information?
- Do you have an evaluation system for grading and comparing candidates?
You can find best practices for hiring in books and articles on the Internet. If you do much hiring, this business system will have a significant financial impact on your company. Remember: The full cost of a mis-hire is not always apparent, but it is real, and it is expensive!
Try This Component
Let me share with you a nifty component of a hiring process that will get you better results.
One savvy business owner I’m acquainted with created a step-by-step hiring system that includes a “Hiring Packet.” The red 9”x12” envelope contains all the forms—component documents—necessary for a candidate to go through the company’s entire hiring process.
The packet includes an employment application, a telephone interview form for a secretary/receptionist to screen applicants, a job description, two manager questionnaire/evaluation forms for interviews, W-4 and I-9 government forms, an employment agreement, and a 30-day-after-hire evaluation form. The envelope also includes information about the company and a copy of employee policies that are given to the candidate to read. The person’s resume and references are added to the packet along the way.
Once a Hiring Packet is started for a person, it travels through the process and remains active until the 30-day evaluation is complete. Documents are then put into the employee’s permanent file.
A Hiring System That Works
This Hiring Packet is the central piece of an outstanding hiring system. You can, of course, alter what is in the packet to suit your needs. This component standardizes the hiring process, saves a great deal of management time, and helps ensure that the best candidates are hired.
Could your hiring system be improved? Would a Hiring Packet be helpful? Get someone to gather or create the necessary documents, and assemble a few packets. A little innovation to get the right people on-board will prevent costly mis-hires and yield a big payoff!