The New York Times Small Business Summit kicked off Monday with advice from The New York Times “You’re the Boss” blog’s Jay Goltz, who dished out a wealth of wisdom on how to hire the right people.
Goltz started out with a two-part question that entrepreneurs commonly ask: How do you hire a salesperson, and what sort of compensation do you offer?
Often, entrepreneurs think they can’t afford to hire an experienced salesperson, but Goltz countered by asking, “Can you afford a cheap salesperson?” The answer is “No,” because the cheap salesperson is going to end up costing you more than the expensive one.
“Sometimes cheap is worse,” said Goltz, and that is true with outside sales. It’s worth it to spend more to get a great salesperson, and that means paying a solid base as well as a commission. You can’t get the kind of talent that is going to help bring in business when you’re only offering a commission as compensation.
Whether it’s sales or any other position you’re hiring for, it costs money to get experienced, good people on board, said Goltz. And you need to know how to hire those people.
“If you’re going to grow your business, I can’t think of anything more important than learning how to hire,” said Goltz. Unfortunately, business owners are often the worst at hiring, and Goltz admitted he fits that description. He had a lot of turnover until he hired someone who was good at hiring to handle it — and he learned a lot from her in the 10 years she worked for him.
The first step to making a good hire is to interview a lot of people before you make a decision, said Goltz. Out of every 10 people you interview for a job, only one is going to be a great hire — someone who is a legitimately good worker and a good fit for your company.
When you find the person who you think you want to hire, the next step is to check references. Probably the No. 1 reason people end up with bad hires is that they don’t do reference checks, said Goltz. The checks really are valuable, as is reading between the lines along every step of the process.
If an applicant can’t find someone to give them a positive reference, there’s definitely something wrong, said Goltz. If you get a reference on the phone and they fumble, there’s also likely something amiss. Even if a reference doesn’t want to go into detail, you can learn a lot from their tone of voice when they speak about their former employee.
If you’re rationalizing not calling references, you’re kidding yourself, said Goltz. “Not hiring one bad employee is worth a million dollars — if not that, then at least $50,000.”