THE SELECTION process is the key to your success as an executive and to the success of your company. The first law of management is selection. Ninety-five percent of the success of any enterprise is determined by the people chosen to work in the enterprise.
If you select in haste, you will repent at leisure. Most hasty hiring decisions lead to sorrow later. A hiring decision involves not only your life and your activities, but also the life, complexities, attitudes, personality, skills, and involvement of another human being. It involves people in areas that affects their lives as much as anything else, other than their families. When you have to hire, therefore, the best rule is to hire slowly and to select carefully.
Hiring is an art. It cannot be hurried. It is like painting a portrait or preparing a gourmet meal. Occasionally you can do it quickly, but in most cases you have to take your time to be sure to make the right decision.
When you are in the position of hiring someone, it is common to make the mistake of hiring as a solution to a problem. You are overloaded with work. You have a hole, a job that needs to be done because somebody has quit or the company is expanding.
You therefore look upon hiring a person as a solution to this problem. You then go into the marketplace, grab someone, and throw that person at the problem. You hope that the new hire will somehow plug up the hole.
This is the worst of all approaches. Many entrepreneurs or people starting and running small and medium-size businesses make this mistake of looking at people as solutions to problems. This is absolutely the wrong attitude and approach to the business of hiring.
Poor selection is very expensive. Don’t ever think that if it doesn’t work out, you will just fire the person and get someone else. This is the attitude of a manager who is inexperienced or incompetent and who should not be in the position of hiring people in the first place.
Hiring is expensive for three reasons. Number one is that you lose your time—the time that it takes you to go through the selection process, prepare, interview, hire, and train the new individual.
Second, you lose the amount of money that you spent in salaries or wages, benefits, and training on your new hire, because everything learned is lost to the company when the person is fired and departs.
The third thing you lose is that individual’s productivity, plus the productivity in between the firing and when the next person comes on board.
In addition, firing is expensive in terms of morale. In any company where a lot of firing goes on and there is high turnover of staff, you invariably have low morale, low performance, and low productivity because everybody is continually wondering if they are going to be next.
According to the personnel experts, it costs between three and six times the individual’s annual salary to hire someone and then lose them when they don’t work out. These are just the actual financial costs. This is why companies that have high rates of turnover are almost invariably low profit companies. The companies that are the most profitable have turnover rates that are as low as 1 percent or 2 percent per year.
Even if you are in a hurry to find the right person and get someone into that job, practice what Shakespeare said: “Make haste slowly.”
1. Think of the best hire you ever made. Who was it and how did you go about making your decision?
2. Think about the worst hire you ever made. What mistakes did you make? What did you learn?