Why Hiring the Right People Is so Important for Small Businesses

By Robert Half April 21, 2017 at 2:00pm

Ouch! Gone are the days when you could minimize the consequences of making the mistake of not hiring the right people by "finding a place" for an employee who isn't fitting in.  

Especially for small businesses with fewer layers of management, all workers must carry their own weight. They need to do their jobs with less supervision and greater technical aptitude. The problem? Hiring the right people in accounting and finance is the job of managers, and not all managers know what candidates will flourish in this kind of environment.

Your company can lose big after all the time it takes to recruit, interview, hire and start the onboarding process for someone new, just to find out you picked the wrong person. It happens more often than you may realize.

Survey shows common problems

In a recent Robert Half survey, a strong majority of managers and small business owners — 81 percent — said their companies have made a bad hire. Nearly half (49 percent) said most managers underestimate the complexity of the hiring process, and 65 percent cited problems with their procedure.

In case you aren't convinced how hiring the right people can be so important for small businesses, here are four ways a bad hire can drain your energy and disrupt your company. Appropriately, as an acronym, they spell OUCH.

Opportunity costs of a bad hire

Consider the business you stand to lose if the new employee interacts damagingly with clients or coworkers, or causes you to modify or repeat work that was done. Also consider the wasted time and lost productivity along the way.

On average, survey respondents estimated 45 hours were wasted on hiring and onboarding people who ultimately did not work out. More than half (58 percent) of the respondents said it took less than a month to realize they made the wrong decision, and it took more than twice that time on average (8.8 weeks) to let the person go.

The time it took for a replacement to start working was nearly five more weeks.

Unhappy workers

What, more? A staffing mistake puts pressure on other employees who must pick up the slack for the company. Sixty-eight percent of businesses in the survey put the workload on existing staff while they went through the process of finding someone.

More than half (53 percent) of the survey respondents also reported increased stress on the team that worked with the bad hire. One in five (20 percent) cited decreased confidence in the managers' ability to make good hiring decisions.

Compensation and other expenses

All of this, of course, equates to a loss of money, the bottom line.  

Hiring process all over again

Of course, the expenses and productivity problems continue even after you cut your losses and dismiss the employee, because you still need to go through the process again and find a replacement.

According to another Robert Half survey, it takes four weeks, on average, to fill an open staff-level accounting or finance position, and five weeks to hire for a management-level job.

What should you do differently the second time? Finding good people for your company requires significant planning and skill. Here are four important tips:

1. Check the facts

Prior to each interview, closely review the resume and cover letter to develop a list of questions about the candidate’s work history and experience. Take a careful look at job titles and responsibilities and make a note of any ambiguities you want clarified. Also, be on the lookout for any gaps in employment history that require further explanation.

2. Mix it up

Asking essential interview questions is, without a doubt, one of the most important steps to identifying top candidates. Consider including a few from each of the following categories to help you learn about the candidate’s personality and qualifications:

  • Standard — Standard questions are tried-and-true, because they’re effective. Consider opening with something like, “Where do you see yourself in five years?” or “What are your greatest strengths and weaknesses?” These are good first queries, because they’re predictable, and they get the interviewee warmed up.
  • Behavioral — Asking behavioral questions helps determine how people will function in the workplace. They’re directed at past job experiences, forcing the candidate to provide concrete examples. They also set you up to delve a little deeper. Typical behavioral questions include, “Tell me about a time when you dealt with a difficult client?” or “Give an example of an interpersonal problem you faced on the job and tell me how you solved it.”
  • Off-the-wall — Find out about a candidate’s interests and see how well they think on their feet by throwing a curveball or two. Does the person get flustered easily, or is he or she able to come up with witty responses on the fly? Try asking something like, “If you were a superhero, what would you want your superpowers to be?”

While preparing information you need ahead of time is certainly helpful and allows you to compare responses, don’t be afraid to go off script in the interview. If you tie yourself to your prepared questions, you risk missing out on important information that could arise if the interview flows more naturally.

3. Shake up the format

Many employers ask job candidates to go through more than one interview. Using different interview formats serves two main purposes: It allows the employer to see how candidates behave in various environments, and it also shows how they’ll interact with future coworkers. In addition to the traditional interview, consider holding a panel interview involving members of your team.

4. Conduct reference checks

Think of a reference check as an insurance policy. This is your chance to find out more about a candidate before you make a job offer. Checking a reference is best done by verbally connecting with a real person — ideally someone who has managed your potential employee.

The moral of this OUCH-of-a-story: In the long run, it's more difficult for small business owners and managers to accommodate a poor performer than it is to invest in recruiting a quality candidate.

If you need to hire and don’t want to make costly mistakes, consider bringing in someone on a temporary basis so you can evaluate their career skills and their fit with your company before making a full-time offer. Or bring in temporary professionals to assist your team with the heavy workloads. The right person can lift the burden from your team and keep projects moving. Proper preparation and persistence definitely pays off.

Cost of a Bad Hire infographic

Editor's note: This post was updated recently to reflect current information.

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