As you review your P & L are you wondering why revenue is down? Or, why are costs up? A single employee termination could be to blame.
Employees who are fired or voluntarily resign cost a company at least 1 times the annual salary. Don’t believe it? Here is what adds up: lost productivity, overtime, temporary help, advertising, time to find candidates, time to interview, new hire training expenses and a rising unemployment tax rate, to name a few. Then you may want to measure how lower morale has damaged productivity.
What can be done to avoid this? Hire right! Here are mistakes to avoid:
- No Job Description. Do not hire without one. How do you know what to ask of the applicant if the job isn’t defined? Ask those who have done the job and supervised the job. Is the role is Exempt or Non-Exempt? Identify the Knowledge, Skill, Abilities, Qualifications and Physical Requirements.
- Poor Resume Review. Time is money. Why bring an under-qualified applicant in for an interview? Use the resume to look for red flags. Look for grammar errors and misspells. Are there gaps in employment? Do they have relevant experience. Do a phone screen first.
- Asking Potentially Discriminatory Questions. The basic rule is that all interview questions should be relevant to the candidate’s ability to perform the essential duties of the job. Before you ask the question, ask yourself “is this relevant?”. Married, have children? Not relevant! All you need to know is if they are they able to work the required hours.
- Ineffective Interviewing. Dig deeper into potential red flags. Ask behavior based interview questions – open ended and job specific. Prepare ahead of time and follow a consistent structure. Follow the 70-30 rule. Candidate should be talking 70% of the time. Let them talk so you can hear the red flags.
- Dismissing Red Flags. They will not go away. Past behavior is the best predictor of future performance. Have you identified how the candidate approaches major decisions, or how they would resolve a customer complaint? What do they exhibit enthusiasm over? What do they avoid talking about?
- No Pre-Selection Processes. Check references! Can’t get the information you need from a former employer? As the applicant to sign a release of liability that you can send over. Conduct background checks and drug screens. Schedule a second or third interview to be sure of your decision.
- Overpaying for Talent. A small business operates on a very limited budget. Before you offer a big salary, make sure it is a necessary expense. Find out what the market rate for the position is. Do competitor research. What does your company offer that other’s can’t? Becoming an employer of choice may help you keep salary costs down.
- Passing Over the Inexperienced. Otherwise known as the green candidate. If you can give them great training up front, could be a worthwhile hire. Greener candidates tend to carry less baggage, are more motivated, have a better attitude, are usually more affordable and are easily mentored. Have you heard the phrase “Hire for attitude, train for skill”?
- Offers of Employment, Gone Bad. Before you pick up the phone, is everyone on the same page? Is there an understanding of pay and benefits by both parties? Making an offer, verbal or written, is not the time for surprises. If everything hasn’t been covered yet, why not call with additional questions and an “initial” offer. Be prepared to negotiate and stay enthusiastic. The last thing you want to do is demotivate a new hire. A demotivated new hire will never produce what you expect or need.
- No New Hire Orientation Processes. If your model is to let them sink or swim, the new employee will likely sink. That will lead to a turnover cost. Which is what you wanted to avoid in the first place. You only have one chance to make a first impression. Before the new employee starts, figure out what day 1, week 1, month 1 and the first 90 days should look like.
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