I have had my fair share of bad hires over the years; let me tell you. It has cost my law firm well into the six figures in wasted payrolls, management problems, lost opportunities, correction of problems, etc. I do not spend a lot of time dwelling on it because I do not want to waste time thinking about lost investments on people.
For most businesses, the largest investment you make is in people. The biggest line item on your expenses is payroll. And your best chance at growing and making more money is through leveraging the time and labor of others.
So who you hire matters, and you should probably ask yourself a few questions before hiring a new employee and truly figure out if a potential employee can do the job you need them to do.
I admit, I do not always check references. Although I should. Probably half a dozen of my former employees had new employers call me on a reference check. Of those, more than half had lied to their prospective employers. This put me in an awkward position, because I am not willing to lie for people. But I wonder if there are other bosses who might do it just to be nice, to avoid conflict, because they want to get that ex-employee off of their unemployment account, or because the employer is afraid that telling the truth about their employees in a reference check will get them sued. It is awfully tempting with some employees to be nicer about them than they deserve when responding to a reference. (Of course, employers, be careful giving a positive reference about an employee whom you know is a serious liability just to get rid of them, because that could also come back to bite you.)
So that got me thinking. Can you really trust references? Probably not by themselves. So I am trying something new: background checks and skill testing.
Background checks are a good idea, and I should have been doing them all along. You need to know whether your new hire is lying about her college degree. California has some strict rules about background checks for potential hires, however. For example, the potential employee must be given notice of the background search (with what will be looked at, in writing) whenever a background search agency is used. Also, the potential employee must consent to such a search, and he or she must have an opportunity to get a copy of the public records the employer gathers. If the employer gathers public records itself by way of doing a cheap background search, it must allow new hires to decide whether they want a copy of the public records gathered, or whether they want to waive receiving a copy (this is usually an option found on employment applications as a small box or initial line).
Most potential employees, of course, will not have any criminal records. A bankruptcy may not indicate anything really bad, either. Our own government cannot keep itself out of debt; can you really blame John Smith the Office Assistant for buying too many TVs? I’ve had employees with bankruptcies, criminal histories, arrests, alcoholism and other personal problems in their past and all have turned out to be great employees.
My bad employees tend to fall into two categories: (1) drama queens/anti-social or (2) incapable of doing the job, no matter how hard they try, but also incapable of seeing that.
So I am experimenting with skill, aptitude and personality testing now. I have had several former employees straight-up lie to me about what they could do. After they were hired, they spent a lot of wasted time trying to figure out how to do things they stated that they could do already, or trying to hide their ineptitude. This not only wastes my time and money, it aggravates me because I cannot trust the person.
So far, every employee whom I have given a skills or aptitude test to has turned out well. I do not have a lot of advice regarding testing yet, because I am new at experimenting with it. But I am hopeful.
I will say this: make sure you use reputable testing agencies or batteries, especially if you are a big employer. You do not want to get sued for discrimination because only white males from Princeton pass your tests. I am very hopeful, however, that testing will help me identify the Dunning-Kruger Effect sooner.
By the way, I still advocate strict adherence to probationary periods, with formal reviews after 90 days! Some people are just not good fits and will slip through the preliminary hiring cracks, only to fail abjectly once they enter your organization. Weed them out! Remember, there are reasons why big businesses do some of the things that they do… and it isn’t because they are just evil, Kafkaesque machines with too much money. Sometimes they have things in place that small businesses should adopt for their own protection and success.