In every business there are things we do eat that into our profitability. Sometimes it’s the things we don’t do. Once you see them, you can either start or stop doing those things and improve your bottom line.
This week, we’re returning to issues that eat into company profits with a discussion on employees.
A few weeks ago we discussed the importance of hiring slowly and firing quickly.
This week, I want to talk about making sure your new hire is compatible with your business, in both personality and skills.
Hiring the wrong person costs money. It costs more than just the time and expense you went through before hiring, and the time and expense to make sure you fire them legally and properly. There’s the lost productivity while you deal with someone who isn’t capable of doing the job they said they could do. The wrong person on a job can cost you goodwill with a client and, if the problem is bad enough, they’ll cost you your reputation.
If they are in a management position, they can cause you to lose employees you’d like to keep if you don’t catch and fix the problem quickly enough. If they are in sales, you don’t want to think about the leads that were wasted or, even worse, misdirected if they were dishonest.
How do you figure out what job applicants will be right for your company?
Our “hire slowly, fire quickly” article discussed using the three-stage hiring process described in the book, Markup & Profit Revisited. I’d like to add a few other suggestions.
Background checks: There are limits to what can be checked and it varies by state, but you should at least consider drug testing as well as talking to past employers and investigating their driving records (if they will be driving to and from jobsites, especially if using company vehicles).
I still get upset at myself when I think of some of the people I hired in our construction company. My biggest disappointments were when I found out someone was being dishonest. If your state permits a criminal background check, that would be a good idea. I don’t believe that a criminal conviction should automatically prevent you from hiring someone, but it depends on the situation and the history. It’s better to know than not to know. If they will be working in homes, it’s important that you check the sex offender registry, which is public record.
Under federal law, you can conduct a credit check if you have their written consent, but if you decide not to hire because of the info on the credit report, you are required to let them know the source of that information. I have mixed feelings about making hiring decisions based on a credit check; many honest people have fallen on hard times and that shouldn’t be a mark against them.
Outside Testing: I believe it’s a good idea to have applicants tested by an outside third party. These tests cover many areas of their personality: work ethic, honesty, character, etc. Are they a leader or a follower? Can they get along with others? Are they organized? Do they want to work alone or do they prefer the team concept? Do they follow directions? A better question: can they follow directions?
This won’t tell you if they can do the work, but it will give you insight on them as a person. The most important might be the ability to work with others, both on the jobsite and in your office. You want to know if they’ll be able to get along with fellow employees and your clients.
Skills Testing: If you’re hiring office staff, you should find out if they are comfortable using electronic equipment, and if they have the skills necessary to perform the tasks you want them to do. You might find an outside firm that does this or develop a few exercises that you can ask them to run through during the interview. You want to know they can actually perform well, not just talk about performing.
On the jobsite, I’m not aware of any company that tests for construction-related skills, and that’s important. Can they read blue prints? Do they know the tools and equipment of your particular trade? What kind of tools and equipment will they bring to the job?
Our Human Resource Manual (developed by Tim Faller) helps you answer those questions by providing placement tests for five production employee classifications (Entry Level Laborer, Carpenter I, Carpenter II, Lead Carpenter and Production Manager). It provides much more, like job descriptions, interview questions, training modules to help employees advance, and detailed job performance evaluation. Before you look, I’ll warn you that it’s not cheap, but it’s valuable; you can download and read the introduction before purchase. If you know of an outside firm that performs these tests, let us know below.
The more you know, the fewer mistakes you’ll make. When it comes to employees, mistakes are expensive, so do your research before you hire.