For smaller businesses on tighter budgets, the costs of making and replacing a bad hire can be heavy.
A bad hire not only affects team morale, but it can also impact the cash flow of a business.
According to the Society for Human Resource Management, the costs of replacing an employee on £40,000 a year can cost a business up to 30,000 in hiring and training expenses.
The costs of a bad (SME) hire
The SME community has a problem with hiring and retaining staff, with UK SMEs losing 14% of their team each year and a shocking 39% of new hires leaving their business within six months.
How can SMEs stop wasting an average of £125,347 on hiring choices that don’t stick? The answer is stopping the problem at its source, the recruitment stage.
Tips for hiring the right staff
With small business owners often making the hiring decisions, it can feel like the happiness of an entire team is resting on their shoulders, here’s how they can do it right.
1. ALWAYS post an accurate and detailed job description
Business owners and senior staff must ensure the job description is thorough and detailed. Leave no space for interpretations or questioning by candidates.
A detailed job description will stop the chances of a candidate claiming their role has been altered in some way following their onboarding.
Imagine the job description is a watertight legal clause which cannot be misunderstood or able to be shifted in any way to suit an employee if they do not enjoy the role.
Posting an accurate job description will attract the candidates who are actually interested in the role on offer. What’s more, they will be more likely to be satisfied with the job and stay.
2. Include senior staff in the hiring process
Hold a series of meetings with staff that are involved in the recruitment process. It’s important that everyone is on the same page regarding the kind of candidate needed to fill the role. This will help ensure that everyone is happy about the kinds of tasks they need to complete to support the entire team.
Any unclarified points about a particular employee’s role may lead to tensions within the office after they are employed, and could affect the relationships between managing staff.
These tensions can include other staff members feeling that they need more support from the candidate, or that another employee is reaping all the benefits of the new hire. This can also create increased anxiety in the new employee, who may feel unclear about the breadth of their new job role, and who they should be reporting to.
3. Call candidates before you invite them in
After you have arrived at a shortlist of candidates (cross-checked via a list of team-agreed skills), hiring managers should arrange a casual 5-10 minute phone call with the top candidates.
This will help them quickly assess if the candidate is the right fit for the company culture, has the right professional behaviour, and if they have a basic interest in the business.
The calling stage cuts down on wasted time during interviews with underprepared candidates, meaning you only have to take a couple of candidates to the final interview stage.
This allows you the time to conduct lengthier meetings to challenge and get under the skin of the candidates who have made the shortlist.
4. Prepare ‘thoughtful’ interview questions
This is where employers should take the time to prepare for the interview as much as the candidates.
Don’t waste time asking them vague questions such as what they’ve been doing since leaving university. This could encourage a garbled response from a candidate who may just rattle off their CV. Instead, take the time to prepare some critical questions.
Asking ‘tougher’ and more considered questions will not only challenge candidates but it should also encourage the brightest and the best to analyse their own skills and attributes in response to the questions.
This will encourage candidates to think creatively while revealing their personality, which will help you decide whether they are a good culture fit.
5. Contact their previous employer and test their skills
Allocate time to undertake background checks when lining up final candidates for a role. This includes chasing up referees and directly contacting the last company the candidate worked for.
When it comes to stated vocational skills a candidate claims to have, why not send them a test as part of the remote evaluation process? This will be an effective way to dissuade candidates who may be bluffing certain credentials from taking their application any further.
Although the fact-checking process takes time, it’s going to save you a lot of wasted effort down the line by stopping you from hiring the wrong candidate. A candidate who fakes their CV will be one that struggles in a role where they are under-qualified, resulting in wasted hours, poor quality work, and stressed line managers.
SME case study(s)
Claire Crompton, Director at The Audit Lab
On hiring her first employee:
One of the best things I’ve learned over the many years of interviewing in both previous jobs and my current business is talking to the interviewee as if they’ve already been hired. When we interviewed our first member of staff we made sure to ask them about the perks they’re interested in, what drives them as a person and how they’d like to be managed. We wanted to start a business that was built around the employees, and the best way to introduce perks into a new business is by asking the first people through the door, what perks they’d like.
On streamlining the hiring process:
With every new starter, a company needs to change and to adapt. The dynamic of the team is constantly evolving and as a business owner, I need to make sure we keep up with this, through constant review of perks and protocols with every new hire. I make sure to streamline our interview process by first seeing what the staff want from us, and then how they feel about what we’d need from them and finally, are they the right fit for our already existing team?
Charlie Johnson, Founder and CEO of BrighterBox
On hiring his first employee:
Despite being a graduate recruiter, finding our first employee wasn’t as easy as you would imagine. We were getting CVs through constantly for other roles, but not many graduates actively seek a career in recruitment as they are bothered by the stigma attached to the role. Once the soft skills are explained, for example ‘being a people person’ and ‘being super organised’, more and more people seemed to warm to the idea of recruitment.
On streamlining the hiring process
Now, four years on, we have learnt quite a lot in the hiring process and now have a more streamlined approach, including a customer service task and paid trial day or two. We have found that this really gives the candidate an insight into the day to day workload and shows just how important it is to be able to spin multiple plates at the same time.
Alina Cincan, Managing Director at Inbox Translation
On hiring her first employee:
My first ever employee was my partner and co-founder of the business, so everything came naturally and went smoothly. But I’d say that doesn’t really count, so I will refer to the first ‘proper’ employee that came a few years later (as well as subsequent hires).
When we had to hire our first employee, having no prior experience in HR, and wanting to make sure we do everything properly, we prepared thoroughly (online courses, articles, tips from HR professionals etc.), therefore the process was one that was well documented and pretty much streamlined right from the off. It’s a process we used for subsequent hires and we’ll most likely not change any time soon.
On streamlining the hiring process:
For small businesses who don’t have a dedicated HR department and no budget to hire a specialised HR company to take care of evaluating candidates, it might all seem like a daunting and overwhelming task, but it need not be with the right attitude and skills in place.
It is essential to do as much research as possible to see what the best practices are, applicable legislation and so on. I personally found LinkedIn Learning courses really useful.
Step one – write a very good, very detailed job description; you will be surprised how much you will actually learn about your own business during this ‘exercise’.
Step two – (during the interview) – instead of hypothetical questions (What would you do if…), ask situational questions (Can you tell me about a situation when you did….). These are much more relevant and revealing.
If possible, have candidates complete a practical task before the interview, one that is as close as possible to what they would be required to do if hired.
Jamie Field Managing Director at TopLine Film
On hiring his first employee:
I hired my first employee once I reached capacity. I wanted to take on more work, but I couldn’t do it all myself. I decided to hire a Camera Operator and Editor to share the workload. I advertised the role online and was inundated with candidates.
It was tough to choose the right person because I had so many candidates to choose from. Ultimately, I chose based on a combination of their qualifications, how they performed during the interview, and their chemistry and compatibility with me.
On streamlining the hiring process:
Having since hired many more members to our team, I’ve learned a lot. I realised that I should have included a technical test in the interview process since the person I chose wasn’t quite up to scratch, to begin with, and needed more training than I had imagined.
I also realised that I had put too much importance on qualifications. I ruled out candidates who didn’t have a degree, for example. Now I understand that a person’s ability to do the job isn’t something that can be summarised by whether or not they have a degree. Some of the best candidates might not have a degree, and it would be your loss to exclude them.
Now, when we are bringing on new people we always include a technical test and we try to consider applicants regardless of their background. It has worked very well for us.
Dean Sadler, CEO and founder of TribePad
On bad hires:
A bad hire could potentially destroy your business before you know it. So making the right decision starts at the moment you begin to write the job description. Skills and experience are indicators of talent, but you also need to be clear and honest about the personality you want to attract.
Use the job description as a point to filter between the right and wrong applicants, to save both yours and the candidates’ time. A lot of this process can now be automated. So make sure you use the right tech to help make your job easier. I’ve made some bad hires in the past, and that’s largely because I focused on a person’s skills and career history, rather than who that person really is.
A wrong fit culturally can really impact your work, so the next step is to go beyond the application page, and dig deeper into who this person is.
To do this, you’ve got to make them feel comfortable, put them at ease. What I like to do is meet a candidate in an informal setting. A bar, a café or restaurant. That way they’re more open and transparent about who they are. You’re hiring a person, not a robot. So while they may have gotten top marks at university, and have a strong career history – you need to assess whether they fit the bill in real life.
On streamlining the hiring process:
This means you shouldn’t just ask the candidate about their skills for the role. Ask them about themselves and their family. For example, a favourite question of mine is “what would your family think about working with you?” You need to try to find out what makes them tick outside of work, to really see who that person is. Ultimately, you know your business inside out, so you should have an idea of how that person will or won’t fit in. So go with your gut and trust your instincts.
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