6 Most Common Reasons Businesses Fail – Part 2

by Brian on April 20, 2010

So we covered Reason 1 why businesses fail… Lack of a Common Goal.

Today we’re looking at Reason 2… Bad Hires.

2. Bad Hires

Nothing brings a sinking feeling to the bottom of my stomach faster than when I realize I made a bad hire.

I take hiring a person very seriously. It’s a huge financial investment for the company. It’s a huge time investment on my part. And it’s a life investment for the employee.

A fast way to suck away profits is to continually make bad hires.

Bad hires cost a lot of money in payroll, payroll taxes, paying the person to train them, missed opportunities and so on. I could go on all day, the point is… Hiring someone is a costly expense.

If someone quits or has to be fired within the first few months, the business will typically not recoup their investment.

We can all point fingers at whose fault a bad hire is… Ultimately the responsibility comes back onto the person who made the hiring decision.

Every employer has made at least one bad hire. I’ve certainly made my share. Though, as my career has progressed I make less bad hires.

Several years ago a great business coach helped me organize the way I interview. The great thing is, it works very well and it’s not a company specific way of interviewing.

3 Interview Process

1. Phone Interview

  • 90% of the candidates I speak to will be weeded out through the phone interview. Doing the initial interview over the phone saves a lot of time.
  • Through the phone interview I tend to ask more questions than give answers. My goal is to see how they sound and communicate over the phone.
  • If I even think for a minute that the person isn’t going to be a good fit, I don’t bring them in for a face-to-face.

2. Expectations & Overview Interview

  • The 1st part is a meet and greet to recap the discussion in the 1st Interview, address and questions or concerns I may have.
  • The 2nd part is for me to set the exact expectations of what I expect from that person as an employee.
  • The 3rd part is to discuss compensation and answer any and all questions the candidate may have.
  • The 4th and final part is when I give the candidate the specific task of leaving me a detailed voice message of exactly why they want the position and what they can bring to the table.

3. Orientation & Offer

  • If the candidate is a fit… I have them come in for an extended interview where I make them and offer and walk them around the office and introduce them to everyone.

Here are a couple of things I do for every interview.

I have a written set of questions in front of me.

  • This is so I can take notes.
  • And it keeps me on track.

Here are some questions I always ask.

  • “Tell me about you?” A common response I hear is “What do you want to know?” I respond with… “Whatever you want to tell me.” Then I keep my mouth shut and let them talk.
  • “Why do you think you can do this job?”
  • “Why should I hire you?”
  • “If I gave you a script would you work off of it?”

I try to see if I can catch them in a lie.

  • I don’t like people who B.S. me… If something doesn’t make sense, I ask about it. I also dig into what they are saying. The way I look at it is, if someone is going to lie to me in an interview, they are for sure going to lie to me while they are an employee.

I make sure the person is going to fit in with the culture of the company.

  • If I have a sales floor that likes listening to reggae and punk music through the day, but the person I’m interviewing hates a loud music and noisy environment… I’m not going to hire that person.

Here are a few things you can do right now to help reduce the amount of bad hires you make.

Get a 2nd person involved in the interview process.

Getting someone else’s perspective can sometimes prove to be invaluable.

Go with your gut.

If you don’t think a person is going to work out, don’t hire them.

Give your new hires a fighting chance.

I’m a firm believer of giving 3 months to most employees to get their job down and get proficient with it.

I’m a very firm believer of giving a salesperson 3 months to succeed once they are out of training. Within 90 days of on the job experience, a sales person should have their numbers in line to stay consistent.

What next?

There is a lot more that goes into hiring. It’s a very time consuming process.

One thing to consider is hiring an outside placement agency. You have a temp for 3-6 months… If they aren’t working out, get a new one the next day. If they do work out, yes you pay a premium to transfer that temp employee to a regular employee… but it’s well worth it.

I’ve had success with placement agencies. If I need someone who is proficient in ACT, Quickbooks and has good customer service and AR experience… All I have to do is place 1 phone call, instead of placing multiple ads and sift through resumes.

But, it took me a while to find a good placement agency I was comfortable using.

What are some things you do to try do reduce bad hires?

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