How Do You Hire the Right Person for Your Business?

To hire the right person, start with the constraint in your business, not the CV in front of you. Work out where the business is stuck, write the job description for that seat, decide the three things the job must deliver in 90 days, and test real work before you make the offer. Then track behaviours from week one, so you know within weeks rather than months.

One bad hire can cost you more than a bad year, and most owners don’t find out they’ve made one until months later. I’ve been there myself. Here’s how I hire now, in my own businesses and with the owners I coach.

Why do so many owners hire the wrong person?

Because they hire who they know. A friend, a family member, someone with a good attitude who needed a job at the time. It feels good, and at the start it works. You get by. But as you grow and think about your business as a system, you realise they weren’t the person the business needed.

You might bring someone in for a bit of admin, a bit of sales and some quoting. What the business actually needed was someone effective at follow-up, nurturing leads, business development and lead generation. That’s a different person, hired by design, not because you needed a hand.

Who should your next hire be?

The person who fixes the constraint: the one thing stopping your business from moving forward. Not the next box on an org chart you can’t afford yet, and not someone just because they were an operations manager somewhere else.

I think of every business as a race car with four wheels: marketing, sales, operations and finance. You’re the driver. When you start, you’re also sitting in every one of those wheels, doing all four yourself. Other coaches will tell you to draw the full organisational chart. Take the lesson from it (who sits in each seat), but cash flow is limited, so you need the right person at the right time.

So plan out your customer journey and find where it’s stuck. Is it getting leads? Making sales? Operations? Finance? Then write the job description for that seat.

Say you’re at $10,000 a month and want to get to $20,000. If the constraint is getting the sales in, a great operations manager who happens to be your friend won’t move the needle. An effective sales manager will. And even then, it has to be the right kind of salesperson: someone fast-paced who sells a product is very different from someone who nurtures buyers of a service.

Writing your job descriptions costs you nothing. The wrong hire costs a lot. (If you’re still deciding whether it’s time to hire at all, start with when and why you should be hiring.)

What does a bad hire really cost a small business?

Far more than the wage. On top of the salary and the taxes, wherever you are in the world, there’s the time it takes to train them, the customers they upset, the good people who leave because you made the wrong hire, and the cost of starting it all again when it goes wrong.

The biggest cost is hidden: you, the owner, get pulled back into the job. Say you hired a marketing person who promised great lead generation, but the leads aren’t qualified and nobody nurtures them through to a sale. Or you hired a great salesperson on paper who turns out to be wrong for how your business sells. Either way, you end up doing their job.

You could be spending $30,000, $40,000 or $50,000 a year on that person and still have to do the work that generates the cash flow yourself. And it’s not their fault. You hired them. A business is a cash flow machine, so every hire is an investment: can this person generate more revenue and more profit than they cost?

Most owners act on what’s in front of them. Plan instead: look at the constraint you’ll face over the next 18 months, then budget the cash, find the right people and bring in the right systems for it.

What interview questions should you ask candidates?

Ask what they did, not what they would do: “Tell me about the last time you did this.” Before you even advertise, write down the three things the job must deliver in 90 days, and interview against them. That’s how you find out whether someone can actually do the job.

Start by being honest about what the job is. “I need a salesperson” often means “we need someone to send some quotes”, and that isn’t a salesperson. If you’re an ambitious business, ask whether this person can scale with you.

A CV is the candidate’s own opinion of themselves; they can put anything on it. And a reference call rarely gives you real evidence. So don’t accept jargon in the interview. If an answer isn’t good enough, don’t move on. And don’t settle for the first three people who apply: go for quantity so you can find the quality.

Then, before the offer, give them a short, paid piece of real work. It could be the second stage of the interview. If they really want the job, they’ll do the work. If you’re not happy with it, it’s fine to say no. It doesn’t make them a bad person; it means this isn’t the right job for them, and that’s better for both of you.

This isn’t just my opinion. The biggest review of hiring methods found that structured interviews and work-sample tests predict how someone will do in the job far better than an informal chat over a coffee (Schmidt and Hunter, 1998). When that evidence was re-analysed in 2022, the structured interview came out top (Sackett et al., 2022).

Recruitment companies understand this. If they put the wrong person in a client’s business, they’ve done a bad job. So why is it acceptable to put the wrong person in your own? If you’ve made a bad hire, it’s on you. Get better at hiring and build a proper recruitment process.

If you want to work out which part of your week to hand over first, go to lewishaydon.com/tools and use the free owner time audit.

How much does it cost to employ someone?

The salary is only part of it. Add the taxes, pension, equipment, software and the months before they pay for themselves. Budget for every hire: put the full cost into your cash flow forecast and run the ugly month first, then look at your good and great months.

The true test is whether that person can survive your rough times, so they can flourish in the good ones. Find the worst time of year for your business and check you could still carry them through it.

How do you know you’ve hired the right person in the first 90 days?

Track their behaviours, not just their results. Results can be knocked by the economy or something outside the business. Behaviours can’t. Within six weeks of tracking, you’ll know what results they’ll bring in six months, and by week 12 you’ll know if you’ve got the right person.

Too many owners give a new starter three months to “get their feet under the table”. I hear it from clients all the time: “he’s not settled in yet”, “she’s getting there”. Meanwhile they could sit in the wrong seat for six or nine months, on full salary, and never achieve their own career goals either.

If you hire a telemarketer and they make 10 calls a week, that’s the wrong behaviour; the result is how many leads and sales follow. So in my own companies (one is a marketing lead generation company) and with the businesses I coach, I set up a red, amber, green system. Did they make the calls they said they would? Did they carry out the audit? Did they do what they said they would in finance? Track the red, amber and green flags early, and act on them.

People get nervous about KPIs. Think of them as KBIs: key behaviour indicators. A KPI is an outcome, and a bad period gets blamed on the person. Track behaviours and you’ll often find a hard worker who just needs a bit of extra coaching or support. Give them that dashboard, so you both know whether they’re on track.

And sometimes, if a hire isn’t working, the person to look at is in the mirror. Are you a great employer?

What’s the one thing to do this week?

Before you hire anyone, write down the three things the job has to deliver in 90 days, and run the full cost through your ugly month. Not your great month, not your good month. Your ugly month.

Every business is different; there’s no one-size-fits-all model. If you want to talk through who your next hire should be, bring it to a virtual coffee, or WhatsApp me from the button on the site. You can see how I work with owners, and my prices are on the site.

For the full conversation and transcript, listen to Episode 129 of the Mentor Business Podcast.

References

• Sackett, P.R., Zhang, C., Berry, C.M. and Lievens, F. (2022) ‘Revisiting meta-analytic estimates of validity in personnel selection: Addressing systematic overcorrection for restriction of range’, Journal of Applied Psychology, 107(11), pp. 2040–2068. Available at: https://doi.org/10.1037/apl0000994.
• Schmidt, F.L. and Hunter, J.E. (1998) ‘The validity and utility of selection methods in personnel psychology: Practical and theoretical implications of 85 years of research findings’, Psychological Bulletin, 124(2), pp. 262–274. Available at: https://doi.org/10.1037/0033-2909.124.2.262.