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A Mis-Hire Costs You 13X That Person’s Salary: Why You Must Topgrade

It can cost you 13-times a person’s annual salary if you hire the wrong person, according to Brad Smart.

Brad is the main man behind a couple of books, Topgrading and Topgrading for Sales, which I highly recommend to anyone involved in hiring.

A dozen of my colleagues and I were lucky enough to spend two days with Brad in Chicago in October 2005 when we took his Topgrading training program (which I also recommend).

The 13X cost of a mishire was a stunner!

For example, if you hire the wrong person for a position at $80,000 per year, that’s a $1 million mistake! (due to the salary you pay them, the severance, the mistakes they make, missed opportunities, etc.).

Here are some highlights from the books and the training course.

Virtual Bench
Build a “virtual bench” of people who you’d like to work with and be talking to them regularly about your business (even if you can’t/won’t hire them immediately)…they may not even be perfect for the position you envision.

This way, you’ve got people you think highly of who already know about your business.

Topgrading Interview (go to Topgrading for the full Topgrading Interview Guide)

Here are some snippets on how you topgrade someone:

Ask the applicant about their entire school and professional life in chronological order (Starting with School, then first job, then second job, etc.) (I think of these as Chapters of their life).

Ask these Topgrading questions about each “Chapter” of their life; here are some of my favorites:

  • What were you responsible for in the job?
  • Who was your greatest influence?
  • What did you enjoy the most?
  • What was your biggest challenge?

Each “Chapter” of their life should take 15 minutes or so.

So, the interview may take 3 to 4 hours — trust me, it’s worth every minute of it.

And it helps to have a colleague do it with you so that one of you can ask questions and the other can take notes.

References (go to Topgrading for this and other Topgrading Forms)

Ask the applicant if it’s ok to contact their past managers and, if the interview has gone well, ask them for the contact information for as many as you can get).

When you call the references, cover the same types of questions as you did with the applicant (so you can cross-reference): Responsibilities, Pluses and minuses, etc.

Then, describe the role you envision for the applicant and ask them what’s a good fit and what’s a bad fit.

Brad and his Topgrading team also have a free email newsletter and other neat Topgrading solutions at Topgrading.

Thank you, Brad and team!

Postscript: I subsequently summarized Brad Smart’s son’s book called Who: The A-Method for Hiring in a post called The 10 Steps to Hiring an A-Player.

5 Comments

  • http://robdkelly.com/hiring-firing/how-to-fire-someone/ A Step by Step Process for Firing Someone | Rob Kelly

    [...] And if  you want to minimize the number of people you fire, please read You Must Topgrade. [...]

  • http://robdkelly.com/personal-development/best-business-books-of-all-time/ The Best Business Books Of All Time | Rob Kelly

    [...] It inspired the piece I wrote about how A Mis-Hire Costs You 13 Times That Person’s Salary. [...]

  • http://robdkelly.com/hiring-firing/how-to-hire-warren-buffett-tips/ How To Hire Employees By Warren Buffett | Rob Kelly

    [...] the most important decision a business leader can make (you may recall how I previously wrote about a mishire costing you a cool $1 million).This article was inspired by Quote #47 from The Tao Of Warren Buffett I like formulas & [...]

  • http://robdkelly.com/blog/hiring-firing/how-to-hire-warren-buffett-tips/ The 3 Key Criteria Of How To Hire Employees By Warren Buffett | Rob Kelly

    [...] the most important decision a business leader can make (you may recall how I previously wrote about a mishire costing you a cool $1 million).This article was inspired by Quote #47 from The Tao Of Warren Buffett I like formulas & [...]

  • http://www.robdkelly.com/ Rob Kelly

    I found a few more details on Brad Smart of Topgrading’s estimate of the cost of a mishire. He gives a range with a few examples: 

    “the average cost of a mis-hire can be six times base salary for a sales rep, 15 times base salary for a manager, and as much as 27 times base salary for an executive” 

    source: http://vitalgrowthllc.com/2010/05/the-cost-of-mis-hires/