Texas Business Dispute Blog

Monday, February 22, 2016

Making Your Business Prosper, Not Just Survive: Hiring All-Stars and Avoiding Bad Apples on Your Team

By:  Ladd Hirsch (Dallas)

Hiring the wrong people can quickly push a company off course, especially a growing private company.  This seems obvious, yet statistics show that companies do a remarkably poor job of hiring.  Gallup reports that, companies hire employees 82% of the time who have the wrong qualifications or who are not a good fit for the business. This report is even more troubling in light of research by the Harvard Business School, which determined that it costs an average of $12,489 to replace a poorly performing employee, and that figure does not include the legal risks that are involved in terminating employees.

For business owners, the questions this data raises are: (1) why are companies doing such a poor job of hiring, and (2) how can they fix the problem and consistently hire great employees?

Hiring Decisions are Important Company Investments

Hiring a new employee is an important investment opportunity for the company -- a chance to add value to the business, but not without risk.  Under this approach, the company considers the costs and benefits of different employees, evaluates the potential returns on the investment, and makes a hiring decision only when it is clear the candidate will add value – both to the bottom line and by contributing positively to the company’s culture.

 Far too often, however, companies make hiring decisions by rushing to fill an empty chair.  We all know the expression “haste makes waste,” and a business acts hastily when it hires the first person who is viewed as the best available option at the time.  If the business owner requires that more patience, effort and careful thought be invested in the search process, it will allow for the  company to find and hire the person who is the actual best fit for the job.

Exercising Due Diligence in the Hiring Process is Critical

Taking the time to seek out a wide variety of candidates, and fully vet each candidate is crucial, and well worth the time commitment.  Businesses routinely conduct significant diligence before they approve of purchase/sale transactions, and hiring decisions should be treated the same way.  

What does due diligence look like in the hiring process?  The answer will vary to some extent by industry, but will include an in-person interview that covers each of the following areas:  (i) past work experience -- both successes and failures; (ii) education and skill sets, (iii) goals, ambition, and personal character, (iv) the specific work to be done and (v) the employee’s aptitude for the work and whether this person will be a team player. 

Using a recruiter can be ver helpful in locating the most talented employees for the business because a top headhunter will not only identify the most promising candidates, but will also help the company focus on its specific needs and how best to fill them.  There is a significant expense involved in retaining the services of a recruiter, but it is money that often pays large dividends and avoids future costs.  Headhunter fees are much less than the cost of high employee turnover and the effects of firing employees who prove to be the wrong fit.

 As a final step, the company should require background checks of all potential employees.  This is an area that necessitates legal guidance, however, because it implicates many issues, including the Fair Credit Reporting Act, ban the box statutes and federal discrimination regulations/laws. The consequence of skipping this step can be serious if the employee candidate has undisclosed legal issues that would be revealed in a background check. 

Hire Slow, but Dismiss Fast

If a company does end up hiring an employee who has attitude issues, is not a a team player, and/or demonstrates a lack of commitment to the job and the business, the company needs to decide promptly if these issues can be resolved.  If not, the company needs to cut ties with the employee without delay, or it will only prolong a dysfunctional situation within the business. Seeing a problem employee at the company detracts from employee morale, often leads to a decline in customer service and ultimately hurts the bottom line. 

Conclusion

Hiring great employees is the lifeblood of a successful company and sustains the creative energy that is essential to the continued success of the business. The downside of a poor hiring decision, however, has many negative consequences.  It is therefore surprising that companies often seem reluctant to embrace this process when the effort to locate and hire outstanding new employees is one of the most important investments a company can make in its future.


 


Archived Posts

2017
2016
December
November
October
September
August
July
June
May
April
March
February
January
2015
December
November
October
September
August
July
June
May
April
March
February
January
2014
2013


With offices in Houston and Dallas Texas Business Divorce a division of Diamond McCarthy LLP assists clients throughout Texas including Austin, San Antonio, Midland, Fort Worth, Galveston, Amarillo, Abilene, and Waco.



© 2017 Diamond McCarthy LLP | Disclaimer
2711 N. Haskell Avenue, Suite 3100, Dallas, TX 75204
| Phone: 214-389-5300
909 Fannin Street, 15th Floor, Houston, TX 77010
| Phone: 713-333-5100

Meet the Team | What you Need to Know | Practice Areas | About

Legal Web Development by
Zola Creative


Business Dispute News

The information provided on this site is not legal advice, and is not intended to be legal advice. You should consult an attorney for advice regarding your individual situation. The decision to hire an attorney is an important decision, and should not be based solely on advertising. We welcome your calls, letters and electronic mail, but contacting us does not create an attorney-client relationship. All attorney-client relationships that are formed with our law firm will be documented in a signed, written agreement. Please do not send any confidential information to us until an attorney-client relationship has been established.

Our prior results in other cases do not guarantee a similar outcome in a future case. The results we have obtained for our clients depend on a variety of factors that are unique to each representation and each set of facts.