Hiring is hard.

It's a simple statement that might appear too succinct, but hiring is indeed hard. Because it's hard, it is easy for a hiring manager to settle on a candidate without really considering the cost of making a bad hire. And even if the hiring manager is aware of the cost of making a bad hire, there's still a strong chance they don't adjust their process to account for this challenge. We're going to go over the costs of not adjusting and why you should never settle on a hire.

According to Northestern University: "There are many tools available to calculate the cost of a bad hire. While not exact, the U.S. Department of Labor’s estimate is simple – the average cost of a bad hiring decision is at least 30 percent of the individual’s first-year expected earnings. If you take an employee with an annual income of $50,000, the cost to the organization can be $15,000. Others argue the cost is actually greater."

In the space of Software Engineering, where salaries can range from $100,000 - $450,000, 30% is a real gut-punch.

There is also a little-discussed-but-equally-valuable time cost involved. If you consider the hours spent in sourcing, recruiting, reviewing resumes, work samples, phone interviews, in-person interviews, and multiply it by all of the people involved in the hiring process, and multiply that by the number of candidates that went through the whole process, you get a time estimation, which you can then equate to dollars. Let's do the math:

Sourcing / Recruiting: web tools make this fairly easy these days, but let's say you put 5 hours into it. Let's say this effort yielded 100 quality candidates. Then you add in reviewing all of the individual applications, which takes 5 mins per resume. Let's say you filter those resumes down to 15 that you want to pass on to a tech interview, which conducting a tech interview takes 1 hour per interview. Then you decide to bring 3 candidates in for an in-person interview, which takes 2 hours. And finally you spend 2 hours to make a final decision.

Now the calculations: 5 + (100 * 5 / 60) + (15 * 1) + (3 * 2) + 2 = 36 hours (or roughly one week's worth of work).

Now let's take a rounded off salary for the hiring manager, $120,000 for simplicity sake, and do the math to get one week's worth of value: 52 / 2 = 26, 120000 / 26 = 4625 / 2 = $2,307 wasted on a bad hire. And the hiring process outlined above is pretty lean in comparison to most, so the cost would more realistically be in the tens of thousands. But sticking to the example process, and you hire a software engineer for $100,000, then the cost of them being a bad hire is: 100000 * .3 + 2307 = $32,307 in total, wasted.

So, how does a hiring manager mitigate the risk of making a bad hire?

Be selfish when hiring.

Using selfish in this context is admittedly a bit mendacious and clickbaity, but the point being made is that a hiring manager should never settle for anyone less than the person who surpasses the criteria threshold. So what should a hiring manager do in order to not settle?

1. Source!
2. Have a great job description
3. Be very involved in the review process
4. Have a consistent scorecard
5. Get others/many opinions
6. Do reference calls!
7. Always be selling the opportunity
8. Make an offer they can't refuse

Sourcing & Job Description

Passively sourcing is a no-brainer, but Hiring Managers should also actively source people they want. If you have a great opportunity for them, they’ll listen. This means your great opportunity must be well described, but not too detailed. Why be cautious of being too detailed? When job postings are very specific in details, especially in the qualifications/requirements section, you run the risk of really good candidates self-eliminating because they don't have the exact experience. An example of something like this is using years of experience. Saying "Minimum 5 years of experience" will tell a candidate of 3 or 4 years of experience that they are not qualified despite how talented and skilled they might be. Another example is saying "You must be proficient in X-tool or X-language." Most tools and programming languages are similar enough that if a candidate is proficient in several, but not the ones you use in your stack, they'll probably be fine within a few weeks. A few weeks of bumps is a VERY small price to pay when getting an ideal candidate.

Be very involved

From resume review to sample review, the Hiring Manager should not let a single candidate slip through that hasn't been vetted by them. Why? Because they are the person who will eventually be responsible for the hire. It's easy to pawn off the work to another party, because who really wants to be sifting through hundreds of resumes. The risk in doing so, however, is fairly high. Unless the people you are delegating the review process to are very trusted and completely understand the hire you are after, the Hiring Manager needs to have eyes on all materials. This also means being very invovled in the phone screen as well. The Hiring Manager can't always do all of the phone screens, but there are scripts they can supply to the person handling the interview, and with a little bit of coaching on what topics to drill deeper in if they arise, and with thorough note taking, the Hiring Manager can make a decent evaluation and decision on whether the candidate should move to the next stage.

Consistent scorecards

As a candidate passes their way through each stage, it's important to have a consistent scoring system based around the criteria the Hiring Manager views as essential for this candidate to be successful in the role and within the organization. The scorecard should be easy to fill out but also thorough. An example of this would be a list of needed attributes (e.g. Technical Skills, Motivation, Empathy, etc) that a successful candidate would have, and a way for the reviewers to rate them in each of these categories. Rating on some arbitrary but consistent scale helps keep the scorecard writing short. The reviewer should have the option to explain the score they gave, but writing explanations (as well as reading them) should not be the focus. The quantitative scoring provides plenty.

Get opinions!

Feedback on the process, on candidates submissions, on interviews, on the scorecard, on the job description, on everything. It's imperative to have those different perspectives giving the Hiring Manager feedback. But don't let those opinions make the decision for you.

The same philosophy should be shared with regard to the candidate as a person, too, which is why reference calls are so important. Getting opinions from people who know the candidate better than anyone can be the most helpful tool when making a decision. Because of this, it's very important to have a strong game plan when doing those calls and making sure you are getting the details you are missing. Filling holes in the candidate's profile will help guarantee that the Hiring Manager is getting exactly who they want.

Always be selling

The Hiring Manager should treat every correspondence with the candidate as if the candidate is a paying customer; that means smiles, words of excitement, curtousey of the candidate's time and efforts on submissions, and giving them the five-star treatment. Be prepared to answer questions on why your company, what makes it a great place to work, and where are areas that do need improved. That's right, don't hide those things. Be truthful but in a constructive way. This will make your positive wording around people and culture even more positive, because you will appear honest.

Make an offer they can't refuse

The Hiring Manager shouldn't get into a negotiation as part of their first post-offer correspondence with a candidate. Making an offer the candidate can't refuse is simply having the candidate tell you what they want. Good candidates know how much the job should pay and they will be very reasonable in their ask. Occasionally it will be higher than you expected, and that is okay. If you don't have the budget for it, then tell them the top dollar amount you can afford. Either they will accept it, or they won't. This is not a negotiation but an agreement. If the candidate can't agree to the terms presented, then they can walk away without feeling remorse. If they take the offer then they know there was no more to gain. All other scenarios are pure win-win. The candidate will feel incredible that they got exactly what they asked for.

Conclusion: Being selfish when hiring means not settling

Hiring is hard and expensive. There is no escaping it. Having a thorough hiring process to get the right/perfect candidate will be costly, but it will be nowhere near as costly as making a bad hire. Hiring Managers need to be very invovled, use persuasive language in the job description and in each correspondence. Consistent scorecards ensure that the candidate is evaluated on the most important criteria, and reference calls are far more than a box to check. Make an offer the candidate can't refuse by having them simply tell you what they want. If these things are done, then being selfish when hiring will pay massive dividends for you and the organization.