How Investing a couple of hours can save you 100k

Okay, it might take more than a couple of hours if you haven’t thought about this topic yet, but hang in there with me.

The Costly Mistake of skipping the specs

When you realize you need to hire, the urge is to whip up a quick list of skills, copy-paste some jargon from the internet to sound like a great employer, and post a job ad. This is often the most costly mistake you can make in hiring. Some prompt their job ads using ChatGPT, which might make your ad sound better, but the results fall flat if you haven't given much thought translating your business plans into hiring goals.

Where Does the 100k Cost Come From?

Without proper specsing and with a lukewarm job ad, you either fail to attract the candidates you want or end up drowning in applications. The first scenario typically happens when you’re trying to snag talent that everyone else is after—the so-called hard-to-get talent. The latter applies when you're hiring for a role with more available talent than open positions.

If you can’t capture the attention of your ideal candidates, you risk losing business and missing out on growth opportunities. You could fall behind in product development, struggle to close deals, or be unable to onboard new customers. The cost of this could easily exceed 100k—or even reach millions—if you miss out on significant deals due to a lack of talent. 

The Frustration of Generic Applications

With a generic job ad, you get generic applications. If you’re flooded with unqualified applicants, you’ll waste time sifting through them and may find yourself meeting numerous candidates to discover a good fit. It’s like searching for a needle in a haystack—time wasted and frustration at an all-time high. This lost time could be better spent on other critical responsibilities as a founder or hiring manager, leading to alternative costs.

The True Cost of Wrong Hires

Now, let’s say you manage to identify a candidate who somewhat matches the skills listed in your ad. You’ve gone through a couple of interviews, maybe even more, and finally made a job offer. Yay! Problem solved, right?

After a month, though, you start to feel some friction. Your expectations aren’t being met, and both you and your team start to feel anxious. After two months of better onboarding and feedback discussions, you see some parts improving, but something still feels off. Three months in, you realize the person has all the skills listed in the job ad but still struggles to meet expectations.

At this point, the new hire might have expectations that you can’t meet, or they need more support than you’re willing to give. Maybe they’re overly confident with too little knowledge, making moves that cause more harm than good. And when feedback doesn’t seem to sink in, it becomes clear that something’s not right.

Clear expectations, a fast and open feedback loop, and thorough onboarding are usually a good start to help your new hire feel excited and productive. But if there’s too big a gap between expectations and abilities, or if the work culture clashes with the new hire's natural style, you can’t just fix it with clear goals and feedback. This often leads to either ending the employment or facing underperformance, frustration in the team, and a decline in overall performance. In the worst-case scenario, the ones who leave are often the ones you wanted to keep.

And the cost of wrong hire can easily reach 100k when you count the time and costs of hiring, onboarding, friction, and replacement hires.

How to Avoid All This Pain in Just 2 Hours

So, how can you save yourself and your team from this pain by investing just a couple of hours before drafting a job ad?

The answer is simple but requires some thought, research, and self-reflection:

1. Translate your business goals into skills and traits needed now and in the future.
2. Know Yourself as an Employer.
3. Identify Your Ideal Candidates.
4. Design the Role and the Hiring Process Accordingly.

Questions to Get You Started

Here’s a list of questions to kick off your thinking. This isn’t a complete list, but it’s a good place to begin:

Defining the Skills Needed

• What needs to be done to reach our short- and long-term goals? Reverse-engineer the business roadmap and milestones.
• What skills do we already have to help us get there?
• Are there team members who’d like to take on future challenges? If so, what would be their dream job, and what tasks would go unaddressed if that role were arranged?
• Are the tasks essential enough to keep on your payroll? Could you save money and get better quality by outsourcing or hiring freelancers?
• How many roles do you need to fill? What tasks can be combined into one role?
• What are the top five must-have skills? Keep it to just five.
• What are the nice-to-have skills? They’re beneficial but not critical without the must-haves.
• How do we envision this person growing with us?

With these answers, you can craft a job description and establish KPIs to measure success in the role.

Defining Traits and Expertise Levels

Next up, let’s think about the traits and level of expertise you need for a good fit:

• What traits would complement your current team? Do you need more structure, drive, visionaries, detail-oriented people, or customer-focused talent?
• What do current team members value in their colleagues? What would make them reject newcomers?
• What kind of people can you lead? Are you a micromanager, or do you expect team members to take ownership of their work after sharing the mission and goals? Be honest, you need people who are enough of a match to make collaboration work.
• How much time and interest do you have for mentoring, providing feedback, and coaching?
• If the role involves customer or partner collaboration, what do your customers/partners expect from this person?
• Do your potential customers have expectations for supplier diversity that you don’t currently meet?

Now you have an idea of the job and the level of expertise needed both now and in the future, along with some insight into the work persona of your ideal talent. Remember, this description isn’t static; you’ll need to adjust it as your team evolves and your company grows.

Do Some Research

Now, it’s time to do a little research. Is this talent a unicorn that everyone else wants to hire too? Or is there plenty of talent available? Who are you competing with for this talent? What are your traits as an employer in this target group? Is your salary level realistic? Should you hire locally, relocate talent, or consider remote options? These questions will help you determine the fastest and most cost-effective approach to attract and hire the right talent.

If you haven’t pondered these questions much before, it might take more than two hours to do the groundwork. But even if it takes you a full day or more to reflect on these aspects and conduct some research, it’s worth it. By understanding yourself and your ideal talent, you’ll increase your chances of finding the people who will drive your business forward while avoiding the costly mistakes of wrong hires and ineffective hiring processes.

This is the first Tips and Tricks blog post for founders and hiring managers who wish to build a high-performing startup team.

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