Hiring Right: A Hidden Common Denominator to all Successful Entrepreneurs – Part 2
After directly working with over 75,000 business owners around the world in all kinds of industries in the last 24 years, I have concluded that over 55% of business failures and 84% of serious business crises are not due to unfavorable economic environments, lack of resources or lack of marketing power:
They are due to bad/wrong hiring decisions!
Hiring right definitely provides the most powerful leverage for your business. In fact, I call it the 1,000% leverage factor, or the factor of 10 – for the following reasons:
- Hiring is a dangerous bet which can directly impact profitability. A new employee who is fired within 3 months can cost up to 10 times what you invested to get him/her on the job.
- If you fire a bad hire or lose a good one after one year, the consequent financial, organizational and emotional losses can add up to 10 times the yearly salary and other compensations.
- Hire the right person for any job and you will find out that his/her real value in the company can be multiplied by a factor of 10 compared to his/her cost of employment. Besides doing the job, that employee is avoiding you headaches, worries and/or costly mistakes. He/she is also saving you personal time – which allows you to concentrate on what you should be doing to expand the business!
Have you ever heard of any investment opportunity offering you a potential return of 1,000%? I haven’t. But I know that investing in the right people not only provides the best return for your business, but also the luxury of reducing stress, worries and uncertainties about the future. And yes, it does start with recruiting and posting. KNOW?
Dunn and Bradstreet’s research shows that 96% of businesses in America fail due to managerial incompetence. Specifically, per Jessie Hagen – former VP at US Bank, 56% of business failures are due to hiring mistakes such as hiring friends, relatives or people without checking if they had the needed skills.
Over 85% of business owners recognize that hiring is too painful of an experience to try to become great at it. They would rather delegate the job to someone more “knowledgeable.”
Add the current economic conditions and you discover that for most, hiring is an unworthy task in the daily management of their business. It is true that when fighting to survive, a company’s main concern is to reduce the cost of doing business – and employees represent the largest area of expenses. Therefore hiring is often relegated to secondary, future plans.
Do not make that mistake. Make sure you have control. Being well prepared for your next hiring mission starts with the following state of mind:
- Recognize that expanding your business at optimal speed and minimal cost (financial, organizational and emotional) is directly dependent upon hiring right. It is a strategic move that can affect your business more than any other decision.
- Get personally educated on the subject of hiring. You need to become a great headhunter.
- Educate your partners, executives and key employees on the importance of understanding and being involved in the hiring process.
- If you work with a professional recruitment firm, do not just “dump” the responsibility on them. Ask to coordinate and be briefed on their working methods. You must be able to understand AND control the full hiring cycle.
- Ideally you want to develop a standard hiring procedure within the company. This is the best way to develop optimal control on the subject and to avoid legal trouble. Too many business owners neglect the potential liabilities related to recruitment. The Department of Labor and the EEOC are enforcing discrimination laws more than ever. So you’d better be ready!
If you can’t put enough attention on optimizing your hiring process, talk to us. We specialize in helping small businesses attract and select good people, at a fragment of the cost of a bad hire and usually twice as fast.
Best-Selling Author “No Fail Hiring 2.0.”
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