The Four Worst Hiring Mistakes
The problem might be you.
To be sure, not every candidate is a rock star. But if you keep turning up dud after dud, the problem may not be the applicant pool. In a quest to find the best workers, entrepreneurs sometimes wind up adopting hiring practices that are actually detrimental to their companies. Here are the four most common problems that afflict interviewers.
Are You a Narcissistic Boss?
Without a deliberate hiring strategy, founders often gravitate toward job candidates who share their personality.
Entrepreneurs’ identities are closely tied to their businesses, so it’s not surprising that companies often absorb many of their founders’ personality traits. A founder-driven culture can be a good thing. Steve Jobs’s design ethos, for instance, helped mold Apple into a successful business. But when founders fill companies with their clones, it can lead to problems.
That’s what happened to Todd Morris. When Morris founded BrickHouse Security, a New York City-based company that sells hidden cameras and other surveillance products online, he was determined to keep the company lean. For the first few months, he worked alone. Over the next two years, he gradually added a handful of employees. Morris picked people who were a lot like himself: driven and independent.
But as the company grew, collaboration became increasingly important. Employees started complaining that there was a toxic work environment. It had become like something out of Lord of the Flies, says Morris. “You couldn’t leave them alone, or they’d be at each other’s throats,” he says.
Morris wasn’t sure how this had happened. With complaints mounting, he hired a consulting firm, PI Worldwide, to help fix the culture problem. The firm administered personality tests to the whole company, including Morris. The results were clear: Certain employees refused to listen to the ideas of others and were clashing with the rest of the group. And those troublemakers were mostly Morris’s early hires. For the sake of the company, Morris had to ask those employees to leave.
Like Morris, many entrepreneurs fail to consider team dynamics when launching their businesses. “The Stanford Project on Emerging Companies,” a study of nearly 200 Silicon Valley start-ups from 1994 to 2002, revealed that most CEOs put little thought into their hiring strategies. As the companies grew and evolved, the CEOs discovered that many employees no longer fit in. “People have the idea that they’ll cross that bridge when they come to it,” says James Baron, who co-directed the study and is now a professor at the Yale School of Management. “They seriously underestimate how costly and difficult that is.”
Without a deliberate hiring strategy, founders often unconsciously gravitate toward job candidates who share their personality traits. “Sometimes we use ourselves as a yardstick,” says Linda A. Hill, a professor at Harvard Business School and the co-author of Being the Boss. But, she says, people tend to overestimate their strengths and downplay their weaknesses. So, by hiring people like themselves, business leaders may inadvertently populate their companies with CEO-level egos.
These days, all job applicants at BrickHouse are required to take personality assessment tests before coming in for an interview. Morris looks for signs that people work well with others, and he is cautious about hiring candidates whose test results indicate big egos. And Morris meets with prospective hires only after they have already received a thumbs-up from a department manager and a couple of potential co-workers.
The changes have already had a noticeable effect. Its 55 employees are getting along, and turnover has dropped 10 percent. And Morris has gained a greater understanding of his own weaknesses. “I had, through narcissism, hired people who were similar to me,” he says. “It created an environment where there was too much conflict and not enough cooperation.”
Treatment:
Be strategic about the company culture. Identify the company’s core values and long-term goals. Hire employees who embody and uphold those values.
Involve key managers and employees in the interview process to ensure that new employees will work as well with their bosses as withtheir peers.
Are You A Perfectionist Boss?
Wonder why it’s so hard to find good people? Maybe you’re asking too much.
What matters more, skills or attitude? Entrepreneurs often say that they value intangible qualities above bullet points on a resumé. But in practice, many are hesitant to hire an employee who hasn’t already held an identical job. And sometimes the quest to find the best candidate becomes a hunt for the person with the longest list of credentials.
Paul Millman has reasons not to fall into this trap. He is the president of Chroma Technology, a Bellows Falls, Vermont-based manufacturer of optical filters for scientific equipment. Before Millman co-founded Chroma, in 1991, he held a string of short-lived sales jobs, including one at a company with which he now competes. Millman had no scientific training, but he absorbed a lot selling optical filters, enough to launch a competing business.
Millman’s views haven’t exactly been reflected in Chroma’s hiring process, however. Chroma is owned and run by its 98 employees. Four of Chroma’s employees serve on a steering committee, which makes most management decisions for the company.
Last fall, when Chroma added some customer service positions, the committee created a job posting requiring applicants to have either a biology degree or at least five years of experience in the optical filters industry. The committee figured that sort of experience would come in handy, given that the new reps would also be charged with helping customers—mostly biologists—select the right optical filters for their needs. But very few people applied. The positions sat empty for six months.
Millman was perplexed by the stringent requirements. “I didn’t have those credentials,” he says. And in the company’s early days, people routinely performed tasks in which they hadn’t been formally trained. One of Millman’s co-founders was even able to develop software for Chroma’s manufacturing equipment, despite never having had a programming job. Plus, says Millman, Chroma already has some scientists on staff.
Every company wants the best employees it can afford, but some businesses have unrealistic expectations. “Sometimes companies expect a combination of Superman and Batman,” says Claudio Fernández-Aráoz, the author of Great People Decisions and a partner at the executive recruiting firm Egon Zehnder International. In reality, the best employees are those who buy into the founder’s vision and are willing to do what it takes to achieve it, says Saras Sarasvathy, an associate professor at the University of Virginia’s Darden School of Business. Those aren’t necessarily the people with the most experience. While studying how successful serial entrepreneurs approach decision making, Sarasvathy found that they placed a greater emphasis on a candidate’s aptitude and commitment than on a candidate’s previous positions.
That is wise because an impressive resumé may give a false impression about a candidate’s potential, says Boris Groysberg, a professor at Harvard Business School and the author of Chasing Stars. In research for his book, he found that star employees from various businesses owed much of their success to their companies’ processes and cultures. When these employees moved to other companies that lacked the same infrastructure, most failed to match their past performances.
Ultimately, Chroma did manage to find a new customer service rep with a biology degree. But it also ended up hiring two reps who did not meet the criteria in the job posting, and both of them have worked out just fine.
Treatment:
Decide which qualifications are truly essential and which skills can be learned on the job. An excessive list of requirements may discourage good people from applying.
Develop an on-boarding program. Even the most experienced hires need time to adjust to a new environment.
Are You Overthinking Your Hires?
So what if you make a mistake? Here’s how to beat analysis paralysis when hiring a new employee.
Any job seeker knows from experience how much first impressions matter. In fact, they probably matter too much. A single interview, after all, rarely uncovers enough information to determine whether someone would be a good employee. To compensate for this shortcoming, many entrepreneurs follow the adage to hire slowly, fire fast. But hiring too slowly can be just as counterproductive as making a snap judgment, especially when entrepreneurs tack additional steps onto the interview process without clear objectives in mind.
Gary Jaffe, CEO of The Booksource, a St. Louis-based distributor of schoolbooks with 135 employees, made that mistake last fall when he began looking for a new sales director. The search ended up taking five months—two months longer than the contract period for the recruiter he enlisted. Each candidate was required to go through two personality assessments and about four hours’ worth of interviews, meeting with each of the company’s three managers. After sitting in on each interview, Jaffe privately questioned the candidates he found promising. His impressions of candidates would often start out positive but deteriorate as the interviews dragged on. “In the first two hours, I would have absolutely hired this person,” says Jaffe. “By lunch, he was questionable.”
There are many reasons entrepreneurs prolong the hiring process. For starters, adding employees at a small company is tricky. “Once you insert a new person into the mix, you change the team’s dynamics completely,” says Lanny Goodman, CEO of Management Technologies, an Albuquerque-based firm that trains entrepreneurs in management techniques. Previous hiring mistakes can also cause entrepreneurs to drag their feet: Because they second-guess their opinions, entrepreneurs add extra rounds of interviews and assessments.
That was the case for Jaffe. After firing two of the company’s executives, he had begun to doubt his ability to make good hiring decisions. “It’s so frustrating when you get it wrong,” says Jaffe. “It takes so much effort to fit this person, and you say, ‘Why is this not working?’ ” He was determined to get it right this time.
One of the most promising applicants for the sales director position was referred by a trusted source. Jaffe’s father, Sandy, who founded The Booksource and had been its CEO, had met the candidate in a business mentoring group. But despite the family recommendation, personality tests, and rounds of interviews, Jaffe was still unsure. So he invited the candidate out to dinner. After an evening of polite small talk and Southwestern cuisine, Jaffe finally made an offer.
But even after all that, Jaffe is again trying to fill the position. Less than three weeks after the sales director joined the company, Jaffe fired him.
No matter how many times you interview candidates, there’s no way to accurately predict how well they will perform. Entrepreneurs who drag out the hiring process put off the ultimate test of a candidate: time on the job. Plus, as the months pass and pressure mounts to fill critical positions, entrepreneurs sometimes find themselves making the same hasty decisions they sought to avoid in the first place.
Treatment:
Set clear objectives for each stage of the interview process. Make sure follow-up interviews aren’t rehashing the same discussions from previous meetings.
Limit the number of people evaluating candidates. It’s wise to seek a second opinion, but involving more than two or three other managers can make it difficult to get a clear assessment.
Trust your instincts. As the hiring process drags on, you are more likely to ignore red flags.
How to Make Hiring Less Frantic
Recruiting is like selling: You need to develop a pipeline and build relationships. Here’s how.
At some companies, new employees are emergency purchases. With limited time and funds, entrepreneurs seek employees only when it’s absolutely necessary for their company’s continued growth. Then they frantically attempt to fill the positions.
Recently, that became an issue for Nick Bock. In the early years of his company, Five Nines Technology Group, an IT consulting firm in Lincoln, Nebraska, Bock didn’t have to worry about hiring. He added only a handful of positions a year. And because Five Nines had quickly earned a strong local reputation, the office received a steady stream of resumés from computer engineers, even when there were no jobs to fill.
But lately Bock has struggled. Eighteen months ago, after taking on several new clients, Five Nines had to more than double its head count, from 23 to 47 employees. Bock hadn’t anticipated how difficult it would be to staff up. After quickly tapping out his leads, Bock scrambled to find suitable candidates. Meanwhile, his team of engineers was putting in extra-long days to handle all the new work. One person quit. Bock tried to smooth things over by giving out bonuses.
Recruiting is a lot like sales. It involves developing a pipeline and building relationships. Bock realizes that now and has made recruiting a priority.
He schedules meetings with promising engineers even when Five Nines doesn’t have any openings. And when there is a vacancy, Bock publicizes it on job boards and the company’s Facebook and Twitter pages. He also asks employees to spread the word. Bock personally reviews each job listing, occasionally recommending changes to better attract the attention of skilled candidates. He also tries to scoop up talent at the earliest opportunity. If a candidate seems like a good fit, he will extend a job offer before finishing the round of interviews.
Bock’s new approach has already had a big effect on Five Nines. The company now hires at least one employee every six weeks. Still, Bock thinks he could do more to streamline the hiring process. “I would love to always have one or two people queued up and ready to go,” says Bock. “I don’t know if we’ll ever get to that, but if you don’t have something you’re striving for, it’s easy to slack off.”
Treatment:
Make recruiting an ongoing process. Maintain a list of prospective hires, even if there are no immediate openings.
Create an employee referral program. Also tap social networks, professional organizations, industry trade shows, and local universities.
Stay in contact with talented prospects through occasional lunch dates or meetings.
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