Hiring Without the Guesswork

Useful tips on hiring and recruiting employees.

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Most companies are trying to squeeze more work out of fewer people -- and are in no position to pick up the slack a bad employee can cause. The result: you can't afford to recruit and hire the old way. Here's what smart CEOs are doing instead

A few months back Tom Garrison was shopping for an anniversary present for his wife. He found himself in a jewelry store with a friendly salesclerk who showed him a beautiful, but pricey, diamond-studded bracelet. When Garrison balked at the price, the clerk asked him how long he'd been married. Twenty-one years, he said. Well, wait a minute, she gently pointed out: "This bracelet costs only $143 for every year you've been married."

It may be the oldest trick in the jewelry-retailing book, but Garrison, president of Brown, Moore and Flint, a Dallas-based food broker, thought the clerk "really had a good soft approach." In the end he walked out with the jewelry. More important, he says, he left with the name of someone who might make a good employee at his company.

Click. This little episode seems like the quintessential hiring story. Something just clicked, we say. We don't know exactly why, but the job applicant seems right. Or wrong. Or something in between. When it comes to hiring, in fact, many of us are in murky territory. Sure, we look at job experience. Education? Naturally. But a good part of our decision rests on a shadowy collection of vague impressions. We call it intuition, chemistry, a gut reaction.

Others call it a crapshoot. And Garrison, for one, doesn't believe in it. His apparently casual contact with the jewelry clerk was actually part of a painstakingly choreographed process to steer a certain kind of person into his company. He had to learn the hard way -- when lack of customer confidence in his people put his business at risk -- that hiring isn't just another operational necessity, like collecting receivables or marketing. In fact, apart from actually conceiving the idea for your business, hiring those who will bring that idea to life is the single most consequential step you take. With every person you hire, you determine how great your potential successes may be -- or how awful your failures. And if it's always been true that a company's prospects are defined by its work force, it's equally true that now its work force defines them more than ever.

Think about it: when a company lays off workers and runs more lean, each worker has a greater effect on the company's performance; each employee becomes more important. And it's not just the demand for more elbow grease that's raised the stakes in every staffing decision you make. These days you need workers to perform more than their obvious duties -- you need workers who can offer perceptions about your customers, or insights into your production process. In these resource-parched times, an order clerk who can pinch-hit as a salesperson, analyze operations like a consultant, and communicate like a leader would fit the bill nicely.

And if you were to say your business can't afford to sustain the disciplined, continuous recruiting process needed to find such people -- that it's too short on management time, energy, or money -- then we'd argue that you can't afford not to.

Consider the downside of getting it wrong -- the price of a mishire. The tangible costs are obvious: salary, fringe benefits, recruitment and training expenses. According to Michael Riordan, president of Riordan and Associates, a Kansas City management-consulting firm, a salesperson who lasts six months in an office-products dealership, for example, would cost the company about $17,000.

Not a very threatening number, true. But then tally the intangible expenses: the time you, the manager, invest in that person; lost sales opportunities; loss of morale on the sales team. Riordan says such costs can come to seven times the purely tangible losses, bringing the price tag of this particular bad hire to $136,000.

That multiplier may be hard to believe until you consider the ripple effect of the bad hire in your marketplace. "First of all the guy doesn't work out. He does not take care of the customer," says Mike Koether, president of Infincom, an office-equipment distributor in Phoenix that has 5,000 to 6,000 customer contacts each month. "He eludes the team's efforts and erodes the manager's confidence. What looks like a $1,500-a-month hiring mistake becomes a lot more expensive when you multiply that with my annual turnover and the number of customers that are let down."

The cruelest cost, however, is the most subtle: the loss of what might have been. In wrongful-death and personal-injury legal cases, lawyers sometimes argue that their client has suffered "hedonic loss." That means that not only has the client experienced the obvious costs -- forgone income, medical expenses, and pain and suffering -- but he or she has also lost the enjoyment of life. Similarly, our mishired salesperson has cost you all the positive things that would have occurred had you hired the perfect candidate: a reenergized sales team, a fresh flow of new product ideas, your next vice-president of operations -- who knows?

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