13 Most Common Mistakes Made When Hiring

These entrepreneurs share costly hiring mistakes they've made so you can avoid them.
November 09, 2011

There’s little doubt that making a hiring mistake is expensive both in terms of time and money, neither of which most entrepreneurs have enough of to waste. The rub, unfortunately, is that most entrepreneurs tend to make the same hiring mistakes over and over again. Here is a list of their most common mistakes, shared by those who have learned a thing or two from making them.

1. Going cheap

Since entrepreneurs are usually tight on cash, it’s all too common for them to go shopping for new talent with a specific dollar figure in mind. That’s a mistake, says Amar Panchal, CEO of Akraya, a Silicon Valley-based IT consulting firm, who regrets passing on talented people simply because he thought they were beyond his budget. “Don’t stick to your pay scale rigidly,” he says. “If you come across a unique talent that fits your company, be open to pay for it.”

2. Not writing a job description

Most small business owners have an aversion to red tape, so it’s no surprise that most would rather keep things simple when it comes to hiring. One example might be skipping the time it takes to write up a job description for the position you’re trying to hire. That’s something that Sherri Comstock, the owner of The Cheshire Cat and The Spotted Crocodile, two boutiques in the Chicago area, admits to. “I think one of the biggest mistakes we’ve made is not defining the job as well as we should,” she says. “Sometimes it is difficult to fully explain the position if you are growing and have never actually hired an employee for that particular job. But if the position is not well-defined before you hire the person to fill it, a bad fit is all but inevitable.”

3. Overvaluing pedigree

It’s a no-brainer that a company always wants to hire the best person possible to fill an open job. But how do you know who is the best? If you base that decision on the big-company credentials and experience that a candidate pastes all over his resume, you may be in for a disappointment, says David Rice, the founder and president of Chicago-based New Home Star. “An entrepreneur wants so badly for her or his company to be seen as legitimate that we'll do nearly anything, including hiring people with very big resumes,” says Rice, who left his big company job in 2007 to start his own business, which provides marketing and sales services to home builders and developers. “I made the assumption that success in one company would equate to success in my new company. What I didn’t know was that your early hires need to be very adaptable and capable of doing well at many jobs. I didn’t know this, so I didn’t interview for it.”

4. Overlooking personality fit

Entrepreneurs tend to make decisions based on their gut. While that can be a positive thing at times, it would be a mistake to rely on just your gut when there are an increasing number of personality tests and tools available to help screen potential candidates on aspects such as how detail-oriented they tend to be or how conscious they are about status. “You want to make sure someone is equipped with a personality that will be the best fit for the position you’re trying to fill,” says Ralph D'Andrea, president and CEO of ITX, a technology services provider in Pittsford, NY, who uses tests from craftprofiles.com for his new hires. Not only can such tests provide clues to a candidate’s strengths and weaknesses, they can also provide benchmarks for the kinds of personality traits that fit best in certain positions.

5. Rushing a decision

When a fast-growth company decides to hire someone, it tends to create an impetus to hire that someone, today. That can mean that your company is willing to settle on whatever candidate walks in the door next–a big mistake, says Alex Membrillo, co-founder of Atlanta-based Cardinal Web Solutions. Membrillo admits that when his firm, an interactive marketing agency, recently decided to bring in a new sales person, they decided to hire someone who they knew wasn’t a perfect fit just so they could get someone in the door fast. The result? The new hire lasted just three months and cost the company thousands of dollars. “In the future we will wait as long as it takes to get the perfect fit,” says Membrillo.

6. Hiring friends

The guys that are a good time to drink with don’t necessarily make the best employees, says Megan Smith, founder of Brownstone PR, a public relations firm in Philadelphia. While knowing someone before you hire them has advantages, it can also cause problems, such as blurring the lines between business and personal relationships. “Just because your best friend will always have your back if a bar fight were to break out, it doesn’t necessarily mean they have a vested interest in your business and the direction you wish to take it,” says Smith.

7. Hiring similar skills and personality traits

It’s natural that we like to surround ourselves with people who are similar to us. That’s fine if you’re setting up a book club, but not so smart when it comes to hiring. Ideally, your goal should be to hire people with different and complementary skills to your own. Same goes for personality. “My two worst hires were candidates who had the same Myers-Briggs letters that I have,” says Bibby Gignilliat, founder and CEO of Parties That Cook, a San Francisco-based company that provides corporate team building events like cooking parties. “They were difficult for me to manage since we were so much alike. My best hires have been people who have opposite Myers-Briggs and who bring skills to the table that I don’t have.”

8. Actively recruiting a candidate

Let’s say you get tipped by a friend or partner in your industry that someone working for a competitor is looking to jump ship. While that person might indeed be a fit in your company, don’t make the mistake of trying to actively recruit him or her, says Chuck Blakeman, founder of the Crankset Group, a consulting company based in Denver. “If you have to roll out the red carpet or even work hard to get someone to join you, they are the wrong fit,” says Blakeman, who has hired 22 people in the past year. “They need to want it worse than you do.”

9. Botching the interview process

Interviewing may be more of an art than a science, which means it can be easy to make mistakes doing it. One mistake entrepreneurs tend to make during interviews is spending a disproportionate amount of time selling the company, telling their own story and going to great lengths to describe the type of person they’re looking for, says Janna Mansker of The Berke Group in Atlanta, who has spent 18 years training business owners on how to hire. “When they finally get around to asking the candidate some actual questions, the candidate shapes all his or her answers to appeal specifically to what the owner has indicated he's looking for,” she says. “The result is that the owner gets fooled into thinking this is the perfect person for the job and the company, only to find out after the fact that it was all a sales pitch on the part of the candidate.”

10. Not checking references

In their rush to get a new hire in the door, entrepreneurs might figure it isn’t worth their time to check the candidate’s references. Bad move, says Bruce Hurwitz, president and CEO of Hurwitz Strategic Staffing in New York City. Hurwitz recommends that you talk to a candidate's references, especially former supervisors before extending an offer of employment. “Listen closely not just to what they say, but how they say it,” he says. “If there is no enthusiasm, even if the words are all positive, they are sending a message (and covering themselves in case of a lawsuit).” If you’re hiring a salesperson, make sure you ask to see copies of their commission statement and W2 as a way to fact-check their performance, says D’Andrea of ITX.

11. Jumping rather than wading in

It might be a mistake to hire on someone full-time when you could hire a freelancer or a consultant who can not only fulfill a job’s requirements, but also do it more cheaply than a full-timer, says Smith of Brownstone PR. “I’ve seen entrepreneurs spend months conducting multiple rounds of interviews only to let the employee go after only a few months because they couldn’t afford to keep them,” she says. You could also “try out” candidates by having them perform one or more aspects of the job before your hire them, says Gignilliat of Parties That Cook.

12. Handing over equity

While it might be standard operating procedure for tech companies to hand over equity to new hires, it’s a mistake not to at least put a vesting schedule in place until new employees prove themselves, says John Scroggin, founder of Scroggin and Company, a legal services firm in Roswell, Georgia.

13. Failing to provide support

Even if you have done everything right in terms of extending an offer to the best candidate for your company, it doesn’t mean your job is done, says Chris Smith, the co-founder of Arryve, a Seattle-based strategy consulting firm. “Many times the difference between a happy new employee and one that abruptly quits is how they have been welcomed and supported into the company,” he says.

(Get more hiring tips.)