I was having coffee with a friend of mine who is the CEO of an early stage software company. I asked him how much it cost him to hire the wrong individual. I was expecting something like the $240,000 figure quoted in recent Forbes article. He shocked me with his answer- “$2,500,000”. I asked how he came up with that figure. He said in selling enterprise software, it takes 12-18 months to close business. If the individual fails, it costs the company the compensation for the individual and expenses for recruiting, but also the $2.5mm that they were expected to produce. I believe that it is a more accurate understanding of the cost of a poor hire than I had ever heard. He had just had an experience with a seller his wished he had never met.
In your business, a poor hire may not cost $2.5mm, but they may cost you much more in customer loyalty than the money you spend on recruiting, hiring and training the individual. Take a moment to think about how much damage a poor hire can affect your business, whether in a sales role or any other role. It might inspire a different way of thinking about how you recruit, interview and hire.
In a hiring process there are four things to seek. Does the candidate have the skills, the values, the aptitude, and the drive to do the job you are hiring them to do?
There are mistakes that can be made in a hiring process:
· Not having a clear understanding of the competencies that the individual needs to possess to do the job
· Not having a well-defined set of values that you are looking for, and all your interviewers understand
· Not utilizing some sort of aptitude test that measures if the candidate will have success, based on their preferences for a type of work
In an interview, if you have a well-defined set of competencies and values you can increase your odds of finding the right individual for your role. You can also determine if someone has the right drive with an interview group that understands behavioral interviewing techniques. But determining aptitude is not something you can determine in an interview process. You must use an assessment tool and there are a several that are validated and accurate, however you should never use them for more than 25% of your decision. It is only one of four factors.
Having a rigorous, disciplined process for recruiting, interviewing and hiring has a positive impact on your business, your customers and your profitability.
NineRuns has a proprietary process for developing solutions for recruiting, interviewing and hiring of Rock Stars.
