The costs of hiring the wrong person in your business (and how to find the right fit)

A business can only be as successful as its people, and this is particularly true for smaller businesses that must rely on every team member pulling their weight and creating value.

While a strong hire can boost your company’s bottom line, reputation and team morale, the flip side is a mistake in onboarding a ‘bad fit’ can do just the opposite – costing your customers and existing staff, and leaving behind a mess that could take serious time and cost to rectify.

“The question is: how long does it take you to spot the bad hire?” asked Performia’s Australia and China Director Gareth Jekel, who spoke recently at SmartCompany’s breakfast briefing about finding and keeping the right people in your business.

“Because sometimes it can be three or four years down the track and you realise this person has actually been undermining the company, and been the cause of retention and customer issues,” said Jekel.

Recent SmartCompany research found 18 per cent of small business owners said their hires were worse or much worse than expected, and concerningly, 56 per cent of respondents said they had no strategy to constantly improve the quality of candidates and staff to meet expansion and staff replacement.

So how can small business owners ensure the quality of their staff and avoid the risk of onboarding a poor fit?

Learn more about how Performia can help you find and keep the right people for your small business.

Linus Chang, founder and CEO of data recovery business BackupAssist, spoke about his experiences with hiring a ‘poor fit’ and the value he found in seeking outside help to find the right person for his business.

“Hiring staff was hit and miss,” Chang says of the time before he sought outside help. Seeking candidates with traditionally attractive professional traits did not always guarantee a good outcome.

“Initially, I had a high focus on intelligence and aptitude, which were necessary for technical jobs. I liked smart people. However, that didn’t always mean that they worked out.”

Chang reflected on how hiring could sometimes feel like a gamble, especially because he didn’t necessarily have a lot of experience in recruiting.

“In the early days, there were definitely mistakes made. I was new to business, and hired a former colleague to be our general manager. She was an outstanding and intelligent person, and had a background as a project manager,”  he says.

“Unfortunately, I didn’t realise the differences between project manager and general manager, or how people would react in different situations.”

When things go wrong

Aside from hiring potentially toxic employees, a small business owner may find themselves in a position where an employee lacks competency, is a poor cultural fit and/or resigns within a short period of time, which can come at a great cost for a small business.

Chang learned this lesson the hard way, as this employee introduced consequences that Chang was unable to foresee at the time and which snowballed into larger problems.

“Although I learnt from her, ultimately there were cultural issues that got in the way of good communication, and the business had some tumultuous times and crises when important things slipped through the cracks,” says Chang.

“She left after one year, leaving me and my business partner to take over and rebuild.”

Deterred by his earlier experience, Chang recognised the need for a more measured approach to that would remove any preconceptions or potential biases in his next hiring round.

“Knowing that we needed to hire a general manager eventually, but having made a mistake before and finding it difficult to know who to trust, was like being caught between a rock and a hard place.”

Chang found seeking outside help to get the next hire right was the key to getting his business back on track.

“Performia introduced us to the distinction between “result” and “activity”, and how to find and distinguish people who are focused on each,” he says.

“It introduced us to understanding human behaviours. Obviously, knowing these distinctions and how to write job ads that attract the right types of people has been very important for us.”

Aside from avoiding hiring a bad fit, something that small business owners may not consider is the cost of missing out on a ‘good fit’, a star employee that can take your business to new heights.

Chang highlights the value of external advice was the help he received in identifying his ideal General Manager candidate, who was perhaps not the most obvious choice on paper.

“The General Manager we eventually hired has been with our company for nine years now. What was surprising is that her previous two positions were in the automotive and textiles industry – completely unrelated to computer software! So it was a learning for us that a good manager for us can actually come from an unrelated industry.

Chang’s main lesson from his experience was to cast a wide net and be methodical when it comes to recruiting instead of taking the easiest route, saying a common mistake would be “hiring for convenience (“I know a person…”) instead of going to the job market to find the best person available”.

Chang offers his advice for small business owners to protect themselves from the consequences a bad hire.

“Hiring well is the key. Our laws in Australia are such that it can be a hassle to replace someone if it turns out that they’re the wrong person for the job, and if not done correctly, a business owner can face a variety of risks including legal action,” he warns.

“Therefore it’s important to do due diligence prior to extending the job offer. Measure twice, cut once, as the saying goes.”