Avoid Hiring Disasters - The company you save may be your own!

Bad, or failed, hires can at the very least wound an organization financially. In the worst-case scenario, the wrong person in a leadership position can cripple a company.
One bad hire can cost 50% to 200% of that person's salary and benefits in hard costs, says LeRoy Robbins, CEO, IIRC, a company that specializes in internet recruiting services and solutions for fortune 500 companies. As you move up the line, bad hires become more significant because of the impacts of their roles. Having to replace that person is enormous, he says.

Hard costs include recruiting costs and other tangible expenses; soft costs include that bad hire's impact on company morale, increase in workload and customer service.
To break down the costs even further, H. Martin de'Campo, managing principal and founder, Humanatek.com, a strategic recruiting consulting firm, says a good rule of thumb is that the hard costs of a blue collar employee who is a bad hire tend to be from 1.5 to 1.7 times the annual salary, plus the burden of benefits (which are roughly $7,500 to $11,000 a year). For management or white-collar employees, it's between 2.0 to 2.2 times salary and the burden of benefits, which includes severance.

Costs aside, for a biotech start up, a failed hire at the executive level can cause a company's demise, says Tricia Tamkin, President of the HR company Padigent.

Attract the right people in the first place
One of the first things a hiring manager can do to avoid the bad hire is look in the right places for candidates, says President and CEO of MedZilla.com, Frank Heasley, PhD. MedZilla.com is a leading Internet recruitment and professional community that targets jobseekers and HR professionals in biotechnology, pharmaceuticals, healthcare and science. We started a niche job board with the belief that specific jobs require specific skills and people. The pharmaceutical, biotech and healthcare organizations that post jobs on MedZilla know that the people who visit the site are at least looking for jobs in the ballpark of their capabilities, Dr. Heasley says. Target your advertisements to the people you want to attract, and make sure your job postings are specific, thorough and well written. If you're using a job board, make sure they have a proven track record in the industry.

Robbins says that he has seen a lot of migration from traditional print to online recruiting. He agrees with Dr. Heasley that you first have to determine where you're finding your best candidates. A 15-year HR veteran, Robbins says he was recruiting before online was an option.

He always felt trapped in that 2-by-4 box, trying to promote the company and position, he says. Now it's limitless in terms of how you can profile your company and what you can do to let people know what it's like to work for your company. My experience is the individual has to fit the basic core values of the company.

Best practices for avoiding bad hires
To avoid bad, or failed, hires, companies are putting in place best hiring and training practices. Precision Response Corp., a 10,000-employee company that provides customer care for fortune 500 companies, has made hiring and training core competencies, says
Bob Tenzer, executive vice president of human resources.
Precision's hiring and pre-employment strategy has decreased its turnover rate by about 130%.
One important element of Precision Response's strategy is that it uses a personalized approach, it calls the applicant experience, to make candidates feel good from the minute the walk through the company's doors. Its recruiters are trained to welcome candidates as if they were welcoming the candidates into their own homes.

Precision Response, Tenzer says, conducts background checks, including criminal background checks, on every employee that it is seriously considering hiring. In some cases, it drug tests the applicants.

Tamkin suggests that employers do backwards reference checks. Instead of checking references with the people the candidate provides, find references on your own. Many people, she says, don't document those conversations because of legal issues; nevertheless, this type of background check offers great insight into a candidate's real abilities.

Fruitful interviews to eliminate the bad apples
People who will directly oversee the candidate should interview with that candidate, says Tenzer. Precision Response's interview process includes one-on-ones with recruitment office personnel, and, if those go well, interviews with the operations people with whom the candidates will be working. We want the folks in the field to take ownership in their new hires, and we think that contributes to the new hire's success as well, Tenzer says.

Don't limit your interviews to looking at a candidate's skills, says Beverly Kaye, EdD, CEO and founder Career Systems International, a talent solution consulting company. Rather the interviewer should ask three questions in addition to whether the candidate's skill set matches that of the job, says Dr. Kaye, co-author of the book Love 'Em or Lose 'Em: Getting Good People to Stay.
Also ask: Does the person value what this company stands for and is producing? Is this person interested in doing the work? When you only focus on skill, you don't consider if the person is really turned on and interested in using this skill set or are they bored silly, she says.
Finally, ask: Does this person fit into the company's culture?

Interview for exclusion rather than inclusion, Tamkin says. Many HR professionals who are under pressure to fill positions-especially when there's a shortage of talent-interview for inclusion. They look, she says, for reasons why the candidate is a good fit with the company. But change in approach, interviewing instead for exclusion, helps weed out bad hires. When you're interviewing for exclusion, rather than looking at what fits in your organization, you want to be looking for red flags-things that don't seem to fit right, she says.

Tamkin says red flags include if a person isn't currently employed. Even in this economy, it suggests that the person didn't do a great job at her last place of employment. Employers should pay attention to the verbs the candidate uses to describe his accomplishments. Those verbs should correspond with the position for which the candidate is interviewing. Another red flag: if a person says he's an independent consultant. Verify the role has been for the long-term and is not just something to stick in instead of admitting to being unemployed.

Behavioral interviewing, or personality profiling, allows employers to isolate and dig deep into a particular situation that the candidate has experienced. This type of interview should be part of the process when employers are seriously considering a candidate, Tamkin says. These are revealing, confronting such issues as When is the last time you had a major conflict with your boss?
For those inexperienced in the art of behavioral interviewing, Tamkin says credible personality tests are available online and help to dig deeper into the candidate's real abilities and weaknesses.
And that's not allÖ

Even if everything goes smoothly to this point, things can still sour after the first days, weeks or months of employment if the new employee's expectations aren't in line with those of her boss, says Conrad Prusak, president, Ethos Consulting, Inc., Transitions consulting company, for CEOs and companies in transition.
There are four sets of expectations, he says: the candidate's expectations of himself; the candidate's expectations of his boss; the boss's expectation of the candidate; and the boss's expectation of himself. Almost never are all four sets of these expectations explored, Prusak says.

Prusak recommends that candidates and bosses write down expectations of a job to make sure they match. The boss should write down in the job description what the expectations are of the candidate and before the candidate accepts the offer the candidate should write down what she thinks to see if the two match, he says.

Performance Response assures that expectations are clear by inviting new hires to a pre-employment presentation the day before they start work to acquaint new employees as much as possible with the responsibilities of their jobs. The expectations become clear and new hires get a sense for the environment. The strategy gives new hires a chance to self-edit, Tenzer says, to make sure the job is for them before starting the next day.

Don't keep a bad hire in place for too long
OK, so you've made the bad hire, clearly the wrong person for the position. Tamkin says, get rid of them quickly. A major mistake the people make is once they realize they have made a bad hire, they don't get rid of them quickly enough. They hold on irrationally and emotionally to someone who ultimately ends up hurting their business. This means you need the right documentation up front, she says.