I recently had the pleasure of speaking to a packed house at #WISHRM While I was there, I shared the story of how I’ve hired from the ground up and shared some tips on managing, building and learning. Shout out to Matthew Stollack for having me! Here is the full slideshare and below is the script:
Hiring is just one part of Human Resources, yet it’s one we’re constantly tinkering with because it sets the tone for the entire relationship. For growing companies, it’s something that can’t really be done wrong, or the consequences can be dire. Not scared of hiring? Think it’s not your problem? Consider these statistics:
- The average cost of a bad hiring decision can equal 30% of the individual’s first-year potential earnings. (From the US Department of Labor and Statistics)
- The successful aren’t immune, and they’ve had to learn from their mistakes. Zappos CEO, Tony Hsieh once estimated that his own bad hires have cost the company well over $100 million.
- 66% of employers said they experienced negative effects of bad hires in 2012. Of these employers, 37% said the bad hire negatively affected employee morale. Another 18% said the bad hire negatively impacted client relationships. And 10% said the bad hire caused a decrease in sales. (A study from the National Business Research Institute)
- 43% of respondents from the same NBRI study cited the need to fill the positions quickly as the main reason that bad hires are made.
- It costs $7,000 to replace a salaried employee, $10,000 to replace a mid-level employee, and $40,000 to replace a senior executive. (From HR.com)
- As much as 80% of employee turnover is due to bad hiring decisions. (From Harvard Business Review)
- 36% of 1,400 executives surveyed claimed that the leading factor of a failed hire, aside from performance problems, is a poor skills match. The second leading factor at 30% was unclear performance objectives. (Study done by Robert Half)
- 41% of companies polled by Vitamin T Staffing Firm estimated that a bad hire cost more than $25,000, and 1 in 4 said that it cost them over $50,000.
- SayIt Communications calculated the ROI of a bad hire at -298%.
- 75% of the demand to hire new employees is simply to replace workers who have left the company.
It’s enough to give recruitment and HR professionals “analysis paralysis”! Hiring for a startup may be very different than hiring for a large organization, but if anything it’s even more crucial, because while I have to follow the same guidelines and rules as ConAgra or Edelman, my resources are stretched further, my “skin in the game” is much more and every payroll, including that of “mismatched” employees comes directly out of my pocket.
So too, with a smaller team. If I hire poorly, either I, or one of my other employees has to pick up the slack. The same is true in larger organizations, except in this case, you often don’t see the problem until it’s too late. Consider this story from Ben Eubanks of UpstartHR:
The Time Thief
A few years ago a manager called me to see if I could look into an employee’s time card. The employee was consistently putting forty hours of work on his timesheet, but he was arriving late, leaving early, and taking long lunches on a regular basis.
So I reached out to the company managing the security access point to get the gate logs for this person. Mind you, this is just getting me the time that he swipes into and out of the gate outside the building, not the specific time he’s at his computer and actually productive.
A quick dump into Excel and a few calculations later… My jaw dropped.
The records showed that this person had worked six to six and a half hours per day on average for as far back as the gate checkin log showed (several months). I was dumbfounded that it took this long for the attendance to be discovered by the managers on site. Just in that one spreadsheet alone the employee had been paid for nearly 200 hours of work he never actually performed.
I quickly launched my investigation, talking with his supervisor and our site manager, gathering all of our time data to make sure everything was correct. You see, as a federal contractor, we were billing the government for all of the time the person supposedly worked. If it could have been proven that we were knowingly allowing this sort of behavior to continue, half of the company’s employees could have lost their jobs overnight–not to mention the fines and other penalties levied by the auditors.
So, after a few days to gather everything, I got the employee’s supervisor and the site lead to sit down with me on the phone from six hours away. The employee came in and I told him what I had found and asked if he had any questions. His only response was, “Can I file for unemployment?”
Then the real story began. The employee was quickly approved for their unemployment claim and started receiving checks shortly after being terminated. I spent the next four months fighting that unemployment claim, trying to get the investigator to understand that this wasn’t as simple as poor attendance or a “one strike and you’re out” policy–the employee put the entire company at stake with his behavior.
A final written appeal won the case for the company (felt like a personal victory for me as well) and the employee had to pay all of their unemployment compensation back to the state for lying about their reason for termination. What seemed like a slam dunk investigation and termination finally came to a close and the organization and I could move on to more meaningful activities.
Credit: Ben Eubanks (UpstartHR)
Hiring is important for companies large and small. When I started my company, Red Branch Media, I started it in the erroneous assumption it would be a small consultancy. Meaning me, in my living room, watching Law and Order reruns while blogging and tweeting. Hey, nice work if you can get it right?
Unfortunately, fate had other plans. Within a year, I had four people, then eight, then 12. Today, we’re approaching 20 and have employees in three states. But that number didn’t go directly up.
It seesawed between 2-10-6-20 while I slowly started to realize just how important hiring is to the organization. Here are the lessons I learned in the process:
BEFORE YOU START: Identify the role
Whether you’re staffing a new department, team, department or just trying to pick one person to help you out, it’s easy to let busy-ness drive your decisions. We were about to hire a lot of new people after an influx of business and my team started saying things like “I can’t wait till the new people start!” I stood there, mouth agape and reminded them that the second the new people started, their work load would double until they were trained. I had the same thought the first time I had to hire an assistant. I thought only of the grunt work I would pass off to her, and not the long hours of training her to do it properly (and fixing her mistakes).
Keep in mind this issue will multiply if you have not properly identified the role. Decide what tasks are taking you (or the hiring manager, or the team member etc, etc) too much time to justify the expense. Is it tracking sales expenses? Creating new proposals? Managing social accounts? Handling website issues? Organizing the increasingly maze-like filing structure? Obviously, this isn’t always easy when you’re in the HR department but you can train your hiring managers to think this way. Many only think about replacing the guy or gal who left. But in the time that person was there, his or her responsibilities may have changed. Maybe a leadership shift is in place, or maybe the person was doing less than their title indicated. Talk to the team and find out what isn’t getting done.
Because you have to make it sound amazing. Here’s where we discuss the difference between a job description and a job ad. Picture of the side of a shoebox (size, color, etc) next to a picture of the actual (AWESOME) shoe. A job description is “just the facts ma’am”. A job advertisement sells you the job. It’s where you put all the amazing things about the job, as well as the things that make it unique (the bad things) along with all the great things about working at your totally amazing company. If you’re not great at this, find a company (not necessarily a competitor) and find someone who is. Or use a job description generator or wizard available in lots of posting software or on ATSes. RecruiterBox (a client) is the one we’ve used and it works very well.
Lesson 1: Don’t hire friends and family
While employee referrals programs work out swell in the corporate world, clocking in at the highest applicant to hire conversion rate – only 7% apply but this accounts for 40% of all hires, they can spell trouble when building a new team. But don’t take my word for it, after all, my first two hires were my husband and my best friend, both of whom still work for me. But instinct tells me that’s luck. My sister, while a great writer, left Red Branch Media last year for another opportunity, which at the time seemed really devastating. If you are going to hire friends and family, you should take the next few lessons even closer to heart.
Resources: If you are going to hire friends and family, make it via a solid employee referral program — get everyone excited and have a formal process that rarely allows you to get too subjective. If you must hire these people, take them through the same interview and vetting process you would anyone else and use an ATS from the beginning.
Free or Low-Cost ATS solutions: RecruiterBox, SmartRecruiters, CATS, ZOHO
Lesson 2: Be crystal clear about expectations
When you try to sell a job as all candy canes and unicorns, someone’s going to end up with a horn in their rear. It’s just not realistic. You may be doing something you love (I am!) but it’s still going to be hard work if you want to do it well and continue to improve. Even if you don’t feel this way about your job today, it’s imperative to get the education and focus you need to create this attitude of ambition and excitement. Our motto at Red Branch is “Be Better”.
During my first interviews, I told candidates the good things about the job. “You get to be on Twitter all day and get PAID for it!” but neglected to tell them about the difficult issues with the position, “You are on call from the time business opens on the east coast until it closes on the west coast!” And let’s not even talk about the international clients. Even if I didn’t explicitly use this verbiage, I didn’t give our new social media manager the entire, gritty picture and he had to learn it on his own.
Today, I consider it my job to scare people out of their position. Because we’re a startup, they are going to work harder than ever. Because of our fast pace, I don’t have time for excuses or to hold their hand. Now please understand, this is not what I recommend for everyone. I recommend being HONEST. For example, when I speak on this subject, people say, “Well that’s all fine and good for you, but we’re a government contractor and we can’t do XYZ.” or “Our culture isn’t hard, if anything people leave out of boredom and things move very slowly.” THOSE are precisely the thing you need to be honest about. If you are sitting across from an eager beaver or a clear non-conformist, it’s your job to tell them all the things about the job that likely will irk them from day one. By doing this, you will attract the people that will thrive in an environment like yours, challenge those who are determined to shake things up (not always a bad thing) and gently nudge those who will be a drain on the company and wilt in a mismatched culture.
Resources: You can do this with revamped job ads, phone or video screens, a cultural FAQ page and with a primer for all interviewers.
Lesson 3: Skills Pay the Bills but Work Ethic Rules
How do you test for skills and work ethic? By giving assignments before you’ve hired. I don’t recommend doing this for actual work product as that can get you in hot water legally. I also don’t recommend trying to test for strategic skills this way.
Equation for a great pre-hire skills test:
- A simple fictional client/problem + some background information on the internet (of a totally different company) +
- A specific set of time and parameters (i.e. 300 words/2 days/outline) +
- A deliverable =
When appropriately placed in the interview process (meaning you’ve done the phone or video screen, reviewed the resume, had the in-person and are this close to an offer) this does a couple of things.
- Gauges the work ethic (duh). Many people simply aren’t willing to do even a minimal amount of work for a job they don’t yet have. While I appreciate not giving away solid real work or strategy for free, this is different. We call it an assessment, because it is one, and if you can’t write 300 words for a spot at my company, I can guarantee you won’t make it at my company. Keep in mind if you are hiring for a spot, you NEED to make sure the test is the same (per position) for each candidate.
- Assess the ability to follow direction. I also use this in my job postings as do many recruiters. Small directions in the body of the job ad that require just a little extra attention from the jobseeker. Lines like:
- Include the word “Marketing Manager” in the subject line of the email
- Email firstname.lastname@example.org and say in one tweet why you’re the right person for the job
- Don’t submit a resume, just a quick email about why you’d like this position.
Of course, you want to see a resume and don’t need a subject to tell you what a jobseeker email is. What we’re really doing is gauging whether or not you’re praying and spraying like an automaton. The same holds true with this tactic. Did they follow the directions? Can they meet deadlines? Are they paying attention to their job search or just kicking tires?
- It shows if they can do the work. We’re an agency so I have to fill many different kinds of roles from admin to project manager to AV geek and PR pro. I give sample radio spots or a quick and dirty brand guide, a simple press advisory or a 300-word mini blog post. So I’ve tested their skills while testing their work ethic and have been able to weed out resume padders, tire kickers and those who simply can’t be bothered.
Resources: You can do this with video interviewing tools with proctoring built in, an online assessment or your own (consistent) processes (which you should document for safety’s sake.)
Lesson 4: Find the Right Ones for YOU
Have you ever noticed in apocalypse movies or tv shows about our dystopian future that the ones who survive…adapt? And also that they all magically got laser hair removal and keratin treatments before the catalytic event happened? No…just me? Okay. But the real key here (besides laser hair removal, it will change your life, I swear) is adaptability. Or something. adaptability is super important to Red Branch but you may need structured thinkers, or people motivated by compensation or those who work well with others.
It’s learning to identify these things that is so difficult. Mostly because it’s costly, difficult and generally on the onus of the applicant. But how is it possible to hire for culture if you haven’t identified it yet?
That’s crazy you guys.
Which is why companies like Gallup started plotting and charting the attributes of people inside the company versus those outside the company. It made matching so much easier. You see the same things in tools like eHarmony’s new Elevated Careers (client!) tool, matching intrinsic values in people to company identified values. It’s because culture is not as important as cultural alignment.
Of course, a company doesn’t have values. It has people and some of those people are in leadership and some of them aren’t, but their collective values on teams and in departments and overall contribute to the company’s general culture. We use a tool called Vitru (client!) to create a constantly changing and moving map of our values and the values of the people who make up Red Branch Media. It allows us to see how, when and where (yep even that) our people will work best.
A great example of this is in two of our employees. From their resumes, interviews and even first few months, the two girls couldn’t have seemed more different. However, over time, both emerged as some of our strongest team members, despite many outward differences. When they took the Vitru test, they scored almost identically. I literally was able to see all the ways in which they would (and do!) work well together.
Resources: Gallup Strengthsfinder, Vitru (free), RoundPegg, Good.co
Lesson 5: Make their first day, the best first day possible
We have a client Click Boarding (client!) that does nothing but onboarding. That’s it. No end to end system, no extra modules. Just onboarding. It’s so important that it’s literally the only thing they do. 60% of companies don’t set onboarding milestones for their employees. They don’t think it will matter as long as the candidate can do the job. I didn’t actually realize the importance of onboarding, my employees did. Yes, the HR expert, the longtime blogger and white paper writer, speaker and all, totally blew this crucial piece of the puzzle. Instead, my team, likely feeling sorry for the new hires and seeing more than one person not last past day one, devised a total schedule for a new group of hires that left nothing to chance. While the slogan of my client “Create the best first day” had not yet crossed my team’s mind at the time…they had the same spirit. A new hire shouldn’t be left at a dusty desk with a coffee mug clutched closely to his chest. It shouldn’t be bogged down with a giant binder and a faint idea of where the bathroom might be.
How you ask?
- Get the paperwork out of the way (or better yet, get a system that requires no paperwork)
- Have their computer and phone ready before day one
- Assign them a mentor and give them specific things to go over during their time together
- If you have values, state them and then ask the mentor to show these values in action within the company
- Show them around the building and introduce them to their team members and people they will see regularly
- Have someone help them set up their email, social accounts and intranet.
- Have a colleague in their department show them basic tasks related to their jobs (if applicable)
- At the end of the day, round them up for an inspire speech and answer any questions they have
Lesson 6: Know When You’re Wrong
There are people you just can’t hire. Maybe they want too much money, or they are remote and the position can’t be. It could be that they’re a family member that simply isn’t qualified, or a neighbor who sure could use the money and seems smart enough. It might be someone who fits all the skills but rubs all the hiring managers and future team members the wrong way. Sometimes you get this before you hire them and sometimes you don’t. See hiring, as we discussed earlier, isn’t just about the interview and the onboarding process. Because sometimes you can ace all the lessons above and it still isn’t working out.
If it’s not working out, as a leader…and this will be tough, you need to get in the mindset that it might be your fault.
I know. Deep breaths.
Here are all the things you can do before letting someone go:
- Change their team. I had an amazing employee who was so taxed from working within a client team that all we had to do was move her to improve performance.
- Change their working arrangements. Another Brancher was not able to perform at work due to illness in his family. We figured out a work from home arrangement that allowed him to take care of a sick parent and get his work done.
- Change their role. One of our best content creators started out ping-ponging from one department to another before both she and I recognized her true calling was content.
- Change their supervisor. Sometimes a manager and an employee just don’t mesh. Scoot people around if you see this is the case.
- Change your expectations- I had a great writer who produced lots of smart, funny content that was FILLED with grammar and spelling mistakes. For a few months, I sent them back but then realized, why not let him do what he did best? I hired a proofer and poof, problem solved.
- Change their environment. Some people thrive when allowed to work from home. Others find themselves in need of human contact. If you see someone wilting away, see if a change in environment is in order.
- Change their seniority. Sometimes a leadership move is necessary. We tried to stay away from hierarchies for a long time but it’s necessary sometimes.
- Go away. I go away every July in order to clear my head and give my team space to focus. It’s a great time to allow them to perform at their peak without me peering over their shoulder and/or a safety net!
See if it’s something awful like stealing, time theft, or flat out lying, you probably would have caught that. I believe, truly I believe, that people want to work. I’m not out to make work “fun” and I won’t bend over backward for someone who is chronically disrespectful, but everyone that’s at Red Branch Media today had to work through something….
Lessons Infinity: Performance and Input
Hiring from the ground up means diddly spit if you don’t gauge performance. After all, easy doesn’t mean great and anything less than great means mediocre and I doubt anyone wants to be mediocre for the rest of their lives.
We have performance reviews every two months. And it takes FOREVER to schedule, document and actually implement, but we do it anyway. Why? Because as our workforce grows, it can be even harder to find time to sit face to face with the people who ALREADY work here and hear what they need, how they’re doing, what they’re learning and telling them how to solve complex problems in the workplace they may not have encountered before. It’s also crucial to discuss reality and what they need to improve upon.
Input: As I said earlier, my employees have instigated many of our best hiring reforms, but I still tightly control every aspect from my end. Because in the end, a bad hire is on me. Whether they were bad because I missed it in the sourcing stage, or didn’t catch their attitude problem in the interview or caused it myself by giving them a terrible onboarding experience…it’s my fault. So I continue to ask my people their thoughts on applicants and candidates (just from the resume and interviews and only based on work product).
We have an every two-month performance review system that was homegrown and works for us. As we grow, we expect to implement a more formalized process (performance reviews are documented and secure) and we’ll likely use information gleaned from clients like ClearCompany and ReviewSnap and an always on tool like iRevu (client!) or 15Five.
Hope you learned something!
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