Hiring and on-boarding a new employee is a major investment for an employee who might not be the right fit for an open position. And the cost of hiring the wrong person — whether it’s an entry-level employee or senior executive — can take a toll on the team and organization as a whole.
During an interview with Business Insider, Zappos CEO Tony Hsieh said, “If you add up the cost of our bad hires and bad decisions they made, including their bad hires, it’s a domino effect. It’s probably cost the company $100 million.”
But, when there’s work to be done, it can be tempting to hire anyone who seems semi-qualified to do the job. Hsieh says when he’s making a hire, he focuses less on the short-term work and more on the long-term goals and culture of the organization.
“We’ve actually passed on a lot of really smart, talented people that we know can make an immediate impact on our bottom line,” he says. “If they’re not good for our culture, which is more of a long-term goal, then we won’t hire them. We’re willing to sacrifice the short-term benefits for the long-term gains.”
Impact on the team
Healthy workflows and positive morale can come crashing down through one hire’s bad habits, negative attitude and poor performance. It takes time and energy to build a constructive and dynamic workplace culture, which can easily and quickly be poisoned by one bad hire. And, when a disengaged employee doesn’t pull her weight, good employees will pick up the slack, which can cause burn-out and could eventually result in your great employees quitting.
Impact on customers
The cost of earning a new client or customer is much more expensive that keeping existing customers. One negative interaction with a disengaged, negative employee could cause that customer to sever ties. This one interaction could also affect your brand and reputation on a bigger scale.
To ensure most hires are great ones, here are four easy tips.
Check candidates’ references
By making just a few phone calls, you can learn invaluable information about your candidate. While you can learn a lot from them during the interview process, references are free resources that can tell you about an employee’s past.
Add a second interview
To ensure each hire would fit with Zappos’ culture, Hsieh instituted a two-interview process: one to make sure the candidate has the necessary skills and a second one with the HR department to confirm the candidate would be a good fit culturally. By adding a second interview, Hsieh brought in a different perspective and level of analysis to help select the right candidate.
Set clear expectations
Discuss responsibilities and goals during the first week of employment for your new hire. Then, set up frequent check-ins or status meetings to provide feedback and answer questions.
Treat the process like a courtship
Zappos treats the hiring process like a courtship. Before they’re hired, high-level candidates interact with Zappos’ employees in relaxed social settings or company events. Zappos says this allows the employees who are not participating in interviews to meet the prospective employee informally.
Despite best intentions and thorough interviews, bad hires still happen. Selecting employees that have both the necessary skills and are a good cultural fit is crucial.
By following the steps outlined above you will go a long way to minimizing bad hires and selecting employees that have both the necessary skills and are a good cultural fit. And, in the process you may just save the company $100 million!