Sounds crazy right? Defining your business’ core values can actually save you money. Really?
As we work with small businesses, we often hear hiring horror stories. The owner made a bad hire and is now trying to recover from the mistake. The root cause is often related to a lack of alignment around core values.
The Core Value Conversation Goes Something Like This
Business Owner: “I don’t know what happened. John seemed like a good fit, but he’s just not working out….”
Me: “What do you mean “not working out”. Give me an example.”
Business Owner: “For example, they….Insert some behavior that the business owner doesn’t like or that they feel does harm to their business…”
Me: “What core value does that behavior violate?”
Business Owner: “What do you mean?”
Me: “You’ve defined the core values of the business right?”
Business Owner: “Yes. We share them with the employees during their onboarding and they are on our website.”
Me: “So, clearly they are violating core value “X”. How did you make sure you were hiring someone who agreed with your core values?”
Business Owner: “We really don’t have a good process to do that. I interview them and then Carol interviews them, but that’s about it.”
Often, the business owner has no process to vet out behaviors that are antithetical to their core values. As a result, they miss red flags during the hiring process. This is mostly driven by their desire to get the seat filled quickly.
So how can clearly defining and communicating your core values save your business $100K over five years?
Let’s do the math.
- Let’s assume you’re able to avoid one bad hiring decision each year based weeding out a poor core values fit.
- Let’s assume the average salary for that employee is $50K.
- Studies have shown that the cost to recruit, hire and train a new employee is anywhere from 16%-200% of that employee’s annual salary.
- Let’s assume it’s 40% or $20K.
- Over 5 years that’s $100K.
How do you save $100K…..Next Steps:
Ensure Your Core Values Are Clearly Defined
Chances are you’ve already developed a list of core values, but if you haven’t Jim Collins, author of Good to Great, has a resource on his website to help determine your core values.
You can also purchase core value cards which allow you to do some brainstorming to determine the core values of your business.
Think about the last few hires that have gone wrong and what core value(s) they validated. If you can’t point to a specific core value, it could be that you have a core value you haven’t communicated to the team. For example, if a lack a teachability really bothers you, it should be a core value.
Develop Interview Questions That Allow You To Vet Out Candidates
Once you have clarity on your core values (including those behaviors that really bother you), develop a list of questions that allow you to vet each candidate.
Here are some examples to determine how teachable a candidate is…
- Tell me about what you enjoy reading or learning about etc.
- What areas do you feel you need to grow most in?
- If we were to hire you, where do you think you would be most challenged?
- How would you deal with those challenges?
- Tell me about a time how you handled criticism or a constructive critique from your boss?
- Tell me about a time how you handled criticism or a constructive critique from your peers?
- What did you learn from this?
- What did you do about this?
Communicate Your Core Values With Your Employees At Least Monthly
Once you’ve developed core value clarity, it’s important to communicate these to your employees. They will not know what’s important unless you tell them.
Your core values will become the basis of your culture and even protect your business from making poor hires in the future. Your employees will internalize your core values. They will begin to make comments like, “that candidate just don’t fit our core values”.
Think about the last three hires that you had to let go. Why do you let them go? What was the root cause? Could it have been prevented? What core value did they violate? What questions could you ask so you don’t make that mistake again?