Saving Money by Hiring the Right Employee

Hiring a bad employee can turn into a big expense for small businesses. The cost to replace a bad hire goes beyond what most employers calculate. The true price tag of a single hire generally includes the cost of recruitment, training, salary and benefits, and workplace integration. Turnover is often expensive and disruptive. Making good hiring decisions is not just good business; it’s good for your business.

Making a bad hire can come with lots of consequences, sometimes in the form of negatively impacted budgets, productivity, and employee morale — as well as the cost of replacing the bad hire.

From a business perspective, it is very important to make the best hiring decision since employees are a valuable asset. But how do you make the right decisions? Can you 100 percent guarantee that every hiring decision will be the right one? Obviously no method of hiring will guarantee a good hire 100 percent of the time. However, steps can be taken to help ensure that the right decisions are made most of the time.

Step 1: Up-to-date job descriptions

The first step in making good hiring decisions is ensuring that an accurate up-to-date job description is available. A good job description is the basis for a lot of employment decisions and can be invaluable to an effective hiring process. A job description has many uses in the employment life cycle including assisting with your compliance efforts under the Fair Labor Standards Act and the Americans with Disabilities Act, evaluating employee performance, and disciplinary actions to name a few.

Step 2: Utilize referrals and technology

Before a hire can be made, applicants must be sourced. How do business owners find great applicants? One successful method for sourcing applicants is referrals. Referrals can be sourced internally or from industry-specific activities/events. There is also social media and Internet sourcing from sites such as LinkedIn, Monster, and Career Builder.

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Step 3: Effective hiring practices

Effective hiring practices can include recruiting qualified candidates, pre-screening candidates, conducting effective interviews, and knowing when and how to use tools such as background checks, drug testing, psychological testing, competency testing, etc. In establishing effective hiring practices it will be important to be familiar with what questions are appropriate to ask during an interview and which question may create potential exposure to litigation. Making sure that hiring managers have been properly trained in lawful interviewing is an essential part of good hiring decisions.

When interviewing, business owners should use the job description to develop behavioral-based interview questions that link directly to the job-related competencies required to perform the essential functions of the job. Behavioral-based interviews are one of the best tools for selecting the ideal candidate for a position. Behavioral-based interviews involve asking the candidate to provide a description of how he or she has acted or performed in the past. Of course, the questions should be tied to the core competencies of the position. For example, if the position is one where excellent customer service skills are important, a behavioral-based question could be, "Tell me about the most recent time you had to deal with an irate customer? What was your role, what steps did you take, and how did the situation turn out?" By using behavioral-based interview questions, hiring managers can get applicants to respond more specifically rather than providing pre-thought-out answers which tell little about their experience, qualifications, and knowledge. The behavioral-based interview can be a better predictor of the future success of a candidate. Behavioral-based interviewing is just one step in the hiring process but it can be an invaluable tool in selecting the right employees.

Employers may also consider utilizing a recruiting and applicant tracking software solution to help improve the hiring and recruiting process.

Employees can be the biggest cost to an employer. However, they can also be the biggest asset of a company when they are the right employees in the right jobs. Making the right hiring decisions can be essential to the bottom line of any company. Hire the right employee for the right position; make sure they have the training, tools and direction to do the job well, offer working conditions to retain the employee and hopefully save a lot of money in the process. What's not to like about that idea?

About the Author

Karen Nolton-Cox is a senior HR generalist with Paychex. She has over 25 years in employee relations, organizational development, succession planning, training, recruiting, generalist activities, and consulting. She is an innovative and energetic individual with proven abilities in strategic planning with a strong track record of building solid, long-term relationships across all departments and functional levels.