The costs of a bad hire are staggering. A recent survey by Career Builder reports more than two-thirds of employers were affected by a bad hire last year, according to AOL Jobs. Of nearly 2,700 employers surveyed, 41 percent estimate a single bad hire cost them $25,000; a quarter estimate a bad choice cost $50,000 or more, not to mention the demoralizing effect of the issue on other employees and on the new hire. Losing a job is one of the most stressful events a human can experience.
To avoid that, when we make hires, we screen candidates using a list of personal characteristics we call the non-negotiables. First there were four. Ultimately, we've expanded the list to seven. These are the characteristics that have become the primary criteria for hiring decisions — things we value even more than skills and background. When we add people to our nearly 100-person company, these criteria are non-negotiable.
The seven non-negotiables are respect, belief, loyalty, commitment, trust, courage and gratitude.
Ideal hires bring traditional and job-specific capabilities and high proficiencies in these seven core traits. However, in many cases, the non-negotiables have led us to make what others would consider "unusual hires." The result, for our company, has been near-zero turnover — and many employees express the desire and willingness to stay with us for life.
It took us a few years before we fully embraced the concept of the non-negotiables as an explicit hiring goal. We always sought individuals with high character strengths and strong work ethics. In human resource parlance, we looked for "athletes," and we talked about assessing the right fit through a strong "gut feeling." Since January 2011, we've gone further: We've now articulated these traits as full and formal requirements for the people we hire.
Granted, it is more difficult to identify and assess character traits than concrete skills — however, the strategy we are using thus far seems to be meeting success. We ask potential candidates to tell us about situations where they have exemplified each of the non-negotiable traits. Because each candidate is interviewed by multiple leaders, we compare assessments on each of the traits. Later on, we may also move to an actual scoring system as well.
We also ask the same questions of the individual's references — not the references they list on their resume, but of their former co-workers, associates and bosses that we identify independently, and who are in a position to speak openly and candidly about the candidate's strengths (or weaknesses) in exhibiting these traits. Clearly, it's not an exact science — but we are finding the ways to become more precise as we grow.
At times focusing on this non-traditional hiring criteria leads us to hire people with unusual backgrounds. When Kevin Batchelor — now one of our two VP's of engineering — came to work here, he was not a programmer at all; his degrees were in theater and anthropology. Now, eight years later, his software designs are winning awards. John David King — now our EVP of sales and marketing — had no prior background in leading a sales organization. He had heart, spirit and character, coupled with a law degree and a bachelor's degree in communications.
We've filled our developer ranks largely through a partnership with Utah Valley University. We started by looking for interns — the right people with the right characteristics who wanted to learn how to code. One of them was a firefighter, one an electrician and one was in the culinary program. Some were programmers by training but only interested (or so they thought) in programming Internet games.
We have a strong community focus — of our near 100 employees, 40 are or have been interns working on flexible schedules to allow them to finish their degrees.
Our approach is contradictory to most conventional management wisdom, which suggests that hiring managers should focus on relevant skills and experience. But it is working for us. Our company has no shortage of talent because we've trained the people we bring in with care. Our employees are respectful of each other, and as a company we strive to be respectful of others as well. In a competitive $1 billion software market we are collegial — we list our competitors' offerings along with our own products on our Facebook page, and we applaud their successes along with our own.
Our hiring strategy has built a loyal base of employees during a time when the typical career path is to "keep the options open" and to be at least periodically shopping around. Our strategy will continue to be the right one for us. Perhaps it could work for other organizations as well. We look forward to your opinions and thoughts.
David K. Williams is the CEO of Fishbowl, which created inventory software. He is also a columnist for Harvard Business Review online and Forbes.