My Portal Login

Employee Manager

How to Save Your Startup from Costly Hiring Mistakes

We’ve written about what to do if you make a hiring mistake. Now we’ll offer some insight on how to avoid that problem in the first place.

First, some context: a bad hire isn’t just a people problem – it hurts your bottom line as well. Replacing an employee can cost more than 200 percent of their salary – not the kind of money most startups can spare.

Preventing bad hires and avoiding the associated costs requires a two-pronged approach: first, focus on recruiting the right people. Second, make sure you set them up for success in their first days, weeks, and months on your team. Let’s dig into both.

Part 1: Recruit Better to Avoid Bad Hires

Easier said than done, right? We all know recruiting is hard. That’s especially true now, with unemployment below four percent. If you find a candidate you fall in love with, chances are some other employer is falling in love with them, too. If you’re a startup, the other employer may be able to offer a higher salary or a tempting bonus package (though you can certainly compete on benefits, culture, and other perks unique to your company).

Then there’s the question of timing: you have to move quickly enough that the best candidates don’t slip through your hands but slowly enough to allow for proper due diligence.

This is a lot to keep in mind, especially when you’ve already got another job to do.

The good news: you can outsource recruiting and sourcing, so you spend less time on the search process. And you can hire an HR consultant to help create processes for interviewing and evaluating your candidates, which will lead to more consistent results in less time.

In the meantime, focus on these areas to set your company up for success as you look for your next hire:

  • Job description language: Be mindful of who you might be attracting and repelling with certain language. For example, terms like “guru,” “ninja,” and “rockstar” are trendy for startups, but they might be a turnoff for some candidates. On the other side of the coin, writing a description with overly formal or dry language can be a turnoff, too. Think of your job description as an advertisement for your company and its culture. How do you convey what’s special about your organization while still including all the necessary information that a good job description should have?

  • Organization: Top candidates are interviewing you as much as you’re interviewing them. During the recruitment process, getting the scheduling, planning, and communication details right is crucial to demonstrating that your team has its ducks in a row.

  • Interview questions: Finding a balance between knowledge-based questions and get-to-know-you questions is important – but keep in mind that many questions are off-limits based on EEOC guidelines for equal employment opportunity practices.

  • Sample work: It’s reasonable to want to see sample work, but is it okay to ask for a test project? The answer depends on the job in question, the experience of the candidate, and how much time you’re asking them to invest. You want to show the candidate you value results without suggesting that you want them to work for free.

  • References: Checking references may feel like an afterthought when you’ve found a candidate you like, but being thorough can save you headaches down the road.  Get information about the relationship the candidate had with their reference and always ask whether that person would hire the candidate again. That answer speaks volumes.

  • Speed: Again, this is a balancing act. While you don’t want to rush into hiring, you also don’t want to lose a top candidate. If you’re feeling a time crunch, keep communication lines open: ask whether they’re considering other positions, let them know your schedule, and negotiate to see if you can find a timeline that works for you both.

Remember, discipline during the recruiting process may require time and money, but doesn’t cost nearly as much as a bad hire does.

Part 2: Onboard for Success

Recruiting and interviewing strategies will help you find the best people for your open positions. Adjusting the way you welcome, onboard, and integrate a new employee will help minimize the chance that your new hire will fail or quit in first few months.

Here are four strategies that can make a difference.

  1. Focus on creating a great new hire processes. Money’s tight, but time is often tighter. If you’re putting off things that you know you need, like creating a more organized interview-to-new hire process, then find an HR consultant who can work within the budget you have. They’ve done this before and have processes that have been proven to work, so why reinvent the wheel? Working with an expert partner will help you formalize processes and create a structure, which will help achieve better results more often and in less time. Think of it as an investment in your future.

  2. Start by working with candidates on a project basis if possible. This isn’t always feasible or recommended but with certain job types it can work. For instance, design and development work can often be completed on a freelance or project basis. Once you find someone you like, it might make sense to start working with them as a freelancer. If you set expectations correctly and find that your team works well with this person, you can make them a full-time offer (due to budgetary restrictions and unknowns, a lot of startups go this route). Another option, for positions that are less suited to project-based work, is to include a 60- or 90-day trial period clause in your hiring paperwork. You’ll want to work with a lawyer or experienced HR professional to make sure you get the wording just right, but essentially, you want language that makes permanent employment contingent on performance during a trial period. This requires you to set clear expectations and document the person’s progress so you can justify your decision to offer the permanent job or not.

  3. Be intentional about onboarding and making your new hire’s first 90 days great. The first 90 days at new job are critical for creating a positive impression and setting your new hire up for success. You’ve made the hire, everyone is excited, so take advantage of that momentum! A few key onboarding elements to include (beyond the standard paperwork): team introductions, one-on-one meetings with important colleagues, and a regular check-ins with managers and senior leaders to see how the new hire is doing and whether they have any major concerns or questions. (Here’s a good high-level overview of what goes into a strong onboarding process.)

  4. Document the policies, procedures, and key insights you learn from the hiring process. Keep track of what worked and what didn’t. These notes can help inform future processes and the content of your employee handbook. Documenting your ideas and experiences will make it easier to put together the formal, written policies and procedures you’ll need to scale efficiently when you start to hire more people. It will also force you to think critically about what’s important to you as an employer (i.e., in the future state of your business) rather than just as a founder (i.e., in its present state).

Working on expanding your team? We’d love to help you figure out how to set yourself up for success in the long term. Get in touch, and we’ll fill you in on the kinds of HR support we can provide.