January 21, 2013

Startup companies have to deal with a great amount of risk in the initial phases of their business. Things can get very messy in a fast-moving environment. It is therefore extremely important to make the right decisions when hiring new employees. Ideally, new employees should have the following qualities, which are necessary to help your startup succeed:

  • Highly motivated to achieve the goals laid out by management
  •  Dedicated to go beyond the call of duty
  •  Interested in the task and responsibilities of the position
  •  Hard working, with a proven track record
  •  Professional in their approach

In practice, however, it is often the case that employers make bad hiring decisions and consequently, bring on talent that is unable to properly fill the position. This can cause their business to stagnate or, worse, fail. In order to prevent this, it’s crucial to pay attention and carefully plan the hiring of new employees. There are a few common hiring mistakes entrepreneurs make due to lack of experience in tackling human resources of an emerging company. We want to cover these in detail to help you avoid making the same mistakes.

Family And Friends

Hiring Family MembersFirst of all, due to the lack of time and money, startup founders often employ friends and family members to help them out when starting their business. They do not take into consideration that these people might not share the same professional goals as them, although they have much in common on the personal level. Such decisions may result in conflicts both within the company and outside of work as well. Having a bad family hire that harms your business and puts strain on family relationships is definitely not where you want to be!

When the startup founder realizes he needs help in expanding the business, he often employs a single person to perform a huge multitude of tasks, and ends up having an inefficient employee who does not meet deadlines, or cannot keep up the pace with the demands of a growing business. Laura Calandrella, of Young Entrepreneur Council, confesses that she made a bad hire when she started the career as an entrepreneur and hired a business adviser. Although the person she hired seemed competent enough, she did not keep the deadlines, neglected the office work, and did not pay much attention to punctuality. After working for her for ten months, her employee left the job and Laura was faced with a disaster.

Having relied on this one employee, Laura’s business suffered badly and after ten months she had to admit that her business had not grown due to her bad hiring decision. If she had planned the hiring more carefully and understood that interviewing a few applicants with different backgrounds and levels of expertise, she would have had a better chance to find the right person with the right vision to work with.

When interviewing applicants for startups, it is important to recognize those who share your work philosophy and are able to work for months under stress. Only those people who share the enthusiasm and embrace the risk of a startup are able to persevere during difficult periods that are bound to happen in your business.

Hiring family members can put you in a difficult position.  You can read more our failed partnership with a family member here.

“Close Enough”

Another story is that of Adrienne DeMaster, an IT manager for a small company in the US. As the workload was growing in his department (consisting only of two people), he advised hiring a skilled programmer to be in charge of the project they were working on. During the interviewing phase, they found that most applicants did not satisfy their requirements and finally found one programmer who seemed skilled enough. When talking to the candidate, he appeared to have the right knowledge and skills, so they entrusted him with the project.

After some time, it became apparent that the skills of the newly hired project leader were fairly limited. He did not work well with the team and eventually caused the whole project to fail. Adrienne tried to improve the situation by assigning the new employee to a smaller project, which resulted in another disappointment. Unfortunately, this new hire could not keep the pace of the company and seemed reluctant to adjust himself to the working atmosphere.

This poor hire cost the small company not only a lot of money but also a great amount of time wasted on trying to improve the work of a single employee. If they had paid more attention to the choice of applicants and made the interviewing questions more detailed, they would have discovered during the interview that the applicant did not possess the adequate knowledge and skills for the job. Instead they were impressed by what he wrote in his resume and by what he said he could do. They did not take time to examine his specialty by using more objective testing and by engaging in a more specific conversation during the interview.

The Interview Funnel

Hiring FunnelJay Golitz, of New York Times, writes about his experience of hiring wrong people at his startup, a quickly growing factory business. He lays out the worst responses he got as an employer after hiring not so qualified managers. The responses range from rude, to ungrateful, to unproductive, and even disinterested. All these scenarios can ruin a startup business especially in the initial phases where it is most prone to failure. As Jay learned from his own mistakes, you have to carefully choose the future co-workers and invest more time in interviewing them. This combined with an effective training program can help avoid wasting time in working with bad employees who aren’t committed to the job.

A carefully planned interviewing process is one of the keys to successful hire. The interviewer needs to examine the profiles, check all the provided information, and interview the applicant in much greater detail by asking good open ended questions. However, some bad hiring decisions can be fixed, if the employee is found to have potential, is trainable, and gets a long well with the existing team.

Turning A Bad Hire Around

Fixing a bad hireA example of turning around a bad hire is Chris Anderson, founder of Breezi, a website building tool, who had difficulties with his new customer service manager, Dan.

From the very beginning it was evident that Dan could not keep up with the company’s pace and his performance was poor. However, Chris decided to try a more personal approach and scheduled frequent consulting meetings with Dan, so that he could increase his performance bit by bit. Dan responded well and proved to be a much better employee after Chris devoted some time and effort.

We utilize a similar business process within our organization, known as the Skills Transfer Process. It allows us to closely monitor the development of managers and employees and to ensure they understand the skills we’re trying to pass on. You can read more about this in detail here.

Bad hiring can be extremely harmful for a startup company, so it is advisable to spend a fair amount of time hiring and avoid mistakes up front. This will prevent greater damage in long run through lost time, efficiency and revenue.

Have you ever had a bad hire? How did you deal with it, what did it cost you, and what did you ultimately learn? Please share with us in the comments below or give us a shout on Twitter!



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Discussion

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  1. I seriously wonder if anybody manages to avoid the hiring friends and family trap without stepping into it once or twice. It’s so easy to believe that your situation is different, and that you can avoid or transcend the problems that inevitably arise. That is one of my key learnings for future businesses – select partners and employees for best fit and contribution.

    • Joe Magnotti says:

      Well, hopefully they will avoid it from now on. It also makes objective decision making easier when evaluating employees if they are not related to you. As the boss these decisions are tough enough, no need to make it worse.

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