How much can a mishire cost a company?

A mishire can range in cost from $100,000 to upwards of $1 million, depending on the company's size and the impact of the role.

What is a job scorecard and why is it important?

A job scorecard is a blueprint that defines all the necessary qualities, attributes, competencies, skills, talents, and experience for a specific role. It ensures you're clear on what success looks like before you start searching.

What's the difference between a job posting and a job proposition?

A job proposition is written to attract ideal candidates and simultaneously deter unsuitable ones, by highlighting company vision and growth opportunities. A standard job posting often just lists responsibilities, attracting a wider, less filtered pool.

What is a candidate audition?

A candidate audition is a practical exercise where a finalist candidate works on a real job task, project, or sales call. This allows you to see their actual performance before making a hire, reducing the risk of a mismatch.

Should a hiring manager call references personally?

Yes, the hiring manager should personally call references. The goal is to validate what you've learned during interviews, not to discover entirely new information, and the hiring manager is best positioned to do this.

Why is it important to walk through an offer verbally?

A verbal walkthrough of the offer letter helps uncover any potential discomfort or disagreements the candidate might have with the terms. This ensures that when the formal offer is sent, it aligns with all previous discussions and is likely to be accepted.

Key Moments

How to Hire Better People

Don Georgevich

Education6 min read15 min video

Aug 2, 2021|17,590 views|364|33

bad hire mishire hiring mistake hiring strategies hiring strategies 2021 hiring strategies for startups leadership hiring strategies hiring strategies for small business bad hires hiring process

Save to Pod

Key Moments

TL;DR

Bad hires cost businesses up to $1M, but a 7-step framework can boost hiring success to 90% by rigorously vetting candidates through scorecards, propositions, auditions, and reference checks.

Key Insights

Forbes estimates the average mis-hire rate in the US is between 40% and 75%.

A single mis-hire can cost a company anywhere between $100,000 and upwards of $1 million.

The job scorecard serves as a blueprint, defining role accountabilities, first-year outcomes, character attributes, and required competencies for an ideal candidate.

A 'job proposition' is a strategically crafted job posting designed to attract 'A-players' while simultaneously deterring unsuitable candidates.

The 'candidate audition' allows prospects to perform job-related tasks for a day, half-day, or week to ensure a mutual fit before an offer is made.

Reference checks should be conducted by the hiring manager to validate information learned during interviews, not to discover entirely new information.

The high cost and frequency of bad hires

Hiring the wrong person, referred to as a 'mis-hire,' is a pervasive and costly problem across businesses. Forbes estimates that the mis-hire rate in the United States falls between a staggering 40% and 75%. This means that for every two individuals hired, at least one might not be the right fit. The financial implications are severe, with each mis-hire potentially costing a company anywhere from $100,000 to over $1 million. While large corporations might absorb such losses more easily, for smaller businesses—those with revenues of $50 million, $10 million, or even $1 million—these leaks can cause irreparable damage to their brand and overall business health. The root cause identified is the lack of standardized interviewing procedures and proven processes within many organizations. The aim of the framework discussed is to significantly improve hiring success rates, moving from a 40-75% mis-hire rate to 90% or higher.

Create a job scorecard as a hiring blueprint

The first critical step in this framework is to create a 'job scorecard.' This document acts as a detailed blueprint for the ideal candidate and the role itself. It involves defining the specific accountabilities of the position, setting clear first-year outcomes, and outlining the essential character attributes, competencies, skills, talents, and experience required. Whether for a systems engineer, web developer, marketing manager, or director of sales, the scorecard ensures that all necessary qualities are identified. This not only helps in finding the right person but also sets them up for success by clearly communicating expectations and responsibilities from the outset. It's a foundational tool to guide the entire hiring process and ensure alignment.

Craft an attractive job proposition

Moving beyond a standard job posting, the second step involves creating a 'job proposition.' This is not merely a list of responsibilities but a compelling document designed to attract high-caliber candidates—'A-players'—who align with the company's culture and the specific role. Simultaneously, it's crafted to gently deter individuals who are not a good fit. A well-written job proposition communicates the company's vision, growth opportunities, learning potential, and commitment to accountability. It invites like-minded people who seek development and contribution, while pushing away those who misalign with qualifications or aspirations. This strategic approach prevents unsuitable candidates from even entering the interview funnel, significantly reducing the likelihood of mis-hires later in the process. Crafting this document requires significant time and thoughtful consideration.

Conduct a values phone screen

After the job proposition has attracted applicants, the next step is to conduct a brief 'values phone screen.' This is a focused, 15-minute call designed to quickly assess a candidate's expectations and determine if they align with the company's culture and values. The goal is to identify if candidates share the same direction and desire for growth as the organization. If there's a misalignment, the candidate is politely screened out at this early stage, saving time and resources. This quick check ensures that only potentially suitable candidates proceed to more in-depth interviews.

Execute competency interviews tied to the scorecard

Step four involves conducting thorough interviews, ideally at least four sessions of about an hour each. These are 'competency interviews' where questions are directly linked to the job scorecard created in step one. The purpose is to rigorously validate whether a candidate possesses the attributes and qualifications defined in the blueprint. This structured approach serves as a crucial check and balance, allowing for the acceptance or rejection of candidates based on objective criteria. During these interviews, it's also beneficial to conduct 'sample trial closes.' This involves asking candidates to visualize themselves in the role and discuss salary expectations. Getting candidates to commit early to a potential salary range helps in understanding their motivations and prepares for crafting a competitive offer for top performers.

Implement a candidate audition for practical assessment

Before extending an offer, step five introduces the 'candidate audition.' For the three to five most qualified candidates, this stage involves having them perform actual job-related tasks. This could include solving a problem, working on a project, participating in sales calls, or attending meetings. The audition provides a practical, 'in-action' assessment, moving beyond what candidates say they can do to what they can actually demonstrate. It’s a two-way street: the company sees the candidate's capabilities firsthand, and the candidate gains a realistic feel for the job. This process is vital because many individuals are skilled at interviewing but may not perform well in the actual role. It also allows candidates to self-select out if they realize the job isn't a good fit, thus preventing new hires from quitting within the first 30 days, which would constitute a costly mis-hire. A final trial close is conducted during this phase to confirm their continued interest and alignment with compensation terms.

Conduct thorough reference checks personally

Step six emphasizes the importance of calling references, a step often overlooked due to time constraints. This involves speaking with past managers, colleagues, or even customers to validate the information gathered throughout the interview process. The primary goal is to confirm what has already been learned, rather than to uncover entirely new, potentially negative, information. If references corroborate the candidate's qualifications and performance as presented, it significantly increases confidence. Crucially, the hiring manager should conduct these reference checks personally, rather than delegating them to HR. This ensures a deeper understanding of the candidate and their potential fit within the team. Scripts can be utilized to ensure all necessary points are covered and validated.

Finalize the offer verbally before written confirmation

The final step, step seven, is the offer stage. Before presenting a formal written offer letter, walk the candidate through it verbally. This ensures that all aspects of the offer, including compensation and terms, meet their needs and align with discussions from previous stages. This verbal confirmation uncovers any lingering discomfort or disagreement. By addressing these points proactively, when the formal offer letter is sent, it is essentially a confirmation of previously agreed-upon terms, greatly increasing the likelihood of acceptance. This meticulous approach, from scorecard to verbal offer, is designed to systematically minimize mis-hires and maximize the chances of securing 'A-players' who will contribute to the business's growth and success.

Mentioned in This Episode

●Organizations

Seven Steps to Hiring A-Players & Avoiding Mishires

Practical takeaways from this episode

Do This

Create a detailed job scorecard defining role, outcomes, attributes, and competencies.

Write a job proposition that attracts top talent and filters out unsuitable candidates.

Conduct a 15-minute values phone screen to assess culture alignment.

Ask interview questions tied directly to your job scorecard to validate candidates.

Use sample trial closes during interviews to gauge salary expectations and candidate commitment.

Implement candidate auditions (work samples or projects) to see candidates in action.

Thoroughly call references yourself to validate learned information, not to discover new.

Walk through the offer letter verbally with the candidate before sending the hard copy.

Avoid This

Don't skip setting interviewing standards or proven processes.

Don't rely solely on interviews to sort candidates; use job propositions to pre-filter.

Don't conduct generic interviews; tie questions back to the job scorecard.

Don't skip candidate auditions; some people are good at interviewing but not at the job.

Don't farm out reference checks to HR; do them yourself as the hiring manager.

Don't present a surprise offer letter; ensure all details have been verbally agreed upon.

Common Questions

Forbes estimates that the average mishire rate in the United States falls between 40% and 75%. This means nearly half of all hires could potentially be a mismatch for the role.

Topics

Business & Entrepreneurship Talent Acquisition Career & Skills Hiring Process Interview Techniques Recruitment Strategy Employee Selection Candidate Screening

Mentioned in this video

Organizations

Simple Hiring System

The website mentioned for users to download a guide on the seven master steps to hiring A-players.

Forbes

Mentioned for estimating the average mishire rate in the United States to be between 40-75%.

Found this useful? Build your knowledge library

Get AI-powered summaries of any YouTube video, podcast, or article in seconds. Save them to your personal pods and access them anytime.

Try Summify free