Improve Your Recruiting Process

By: Mainsail Partners  |  March 1, 2014

Improve Your Recruiting Process to Avoid the High Costs of Bad Hires

The costs associated with researching, recruiting and retaining talent can be daunting for a growing company. In fact, in Mainsail’s annual survey of bootstrapped entrepreneurs and executives, “Finding good people to hire” was by far the most commonly cited challenge entrepreneurs expected to face in 2014. Many entrepreneurs and growing companies don’t have access to the vast network their larger and better resourced competitors have to source top talent. And yet, finding the right people at the right time, and doing it in a cost-effective way, is crucial for these companies.

Hiring top talent will always be costly, but the danger of hiring the wrong candidate raises the stakes considerably. Enduring the arduous process of training and subsequently terminating a recent hire can drain precious time and resources, rob momentum and severely impact morale. It also means restarting the clock on the recruiting process.

Needless to say, it pays to get it right the first time. By taking the time to do your research and carefully defining the role you seek to fill, you can reduce hiring costs before you consider approaching a recruiter. Recruiting should be viewed as an investment, not an expense. The more closely you pay attention to the details from the outset, the greater your ROI.


As with most complex processes, understanding what you do not want can be nearly as important as understanding what you do want in a candidate. With this in mind, do as much research as possible and ensure that the needs of all stakeholders are aligned before starting the recruiting process. A laundry list of skills, duties and attributes won’t cut it. Members of the hiring team should prioritize their “must have” and “nice to have” items. This may entail internal negotiation and tension–and that’s all for the best. The last thing your organization needs is to enter into the hiring process with differing goals and requirements for the position.

An ideal place to begin defining the role is to identify other companies and organizations that have recently filled similar positions. Whose work do you admire? What companies do you and your team view as industry leaders? What can you glean from their processes? Check out the bios of individuals at other companies that hold similar roles and begin crafting the profile of your ideal candidate.


Once you have alignment on the skills that are most important, build a scorecard to use as a guide in your recruiting and interviewing process. The scorecard will increase efficiency in weeding out unqualified candidates, as well as keep interviewers on track. Interviewers can be charmed by candidates they personally like. The scorecard will help interviewers focus on the must-haves and remind them that, while it’s important that the candidate is a cultural fit, they need to fill the professional role, not just the role of potential-future-mountain-biking-partner.

Another strategy to ensure alignment, improve efficiency and scale your recruiting process is the use of Applicant Tracking Systems (ATS) or CRMs designed specifically for recruiting. These tools allow you to efficiently collaborate with all stakeholders in the process to track, share feedback internally, and even communicate with candidates. In addition to increasing efficiency in the recruiting process, this level of tracking can help companies develop pattern recognition to identify future candidates who are most likely to be successful in a given role. Examples of these platforms include LinkedIn Recruiter, Avature, SmashFly and Hireology. Some recruiting software solutions are specifically created for recruiting firms or larger organizations, so be sure to find the software that’s right for your company and pace of hiring.

The recruiting process is one of the most intensive learning processes an organization can undertake. In defining a candidate, many organizations are compelled to define (or redefine) themselves. Once candidate interviews begin, carve out time in the process to assess the candidates you’ve identified and met, calibrate on the specification, and refine the scorecard to ensure the process is effective.


1. Get Personal. Too often hiring teams are drawn in by the claims of broad-based job listings sites with promises of massive pools of candidates and huge reach. We have found that such sites rarely justify the cost and hassle of wading through pools of unqualified candidates that shoot off a resume and boilerplate cover letter.

In our experience, the most overlooked and cost-effective hiring strategy is found on your front doorstep: your own company’s network. Leveraging the personal networks of your employees through sites such as LinkedIn is the best place to start when seeking talent. Each candidate identified through this process will come with the tacit recommendation of someone you trust. In addition, studies show higher retention for candidates found by mining the company’s collective network. Identify your top employees and focus on sourcing talent through their networks. If you’ve devoted a significant amount of resources to hiring and retaining high quality talent, those bright employees tend to attract like-minded friends and acquaintances. We’ve seen this principle in action time and again—one of the most successful companies in our portfolio recruited their entire inside sales team through employee referrals.

2. Don’t Overlook PR as a Recruiting Tool. It’s not the first objective most companies think about when they are trying to get press coverage, but positive media coverage can be one of the most cost-effective tools in your arsenal for finding high quality talent. In fact the right story can result in high quality talent finding you.

One of our portfolio companies, Zen Planner, was recently named as the #2 best place to work by Outside Magazine. Zen Planner is in growth mode and found itself in an increasingly tightening job market as the company was looking to hire in sales, marketing and technical positions. According to the head of HR for the company, the volume and quality of inbound applicants increased exponentially following the publication of the list by Outside Magazine. The coverage helped Zen Planner double its employee base in the last 12 months while maintaining the company’s extremely high quality standards.

Some companies view these types of awards and lists as vanity programs and don’t invest the necessary time and effort to be included, but in our experience the true value of these programs should not be overlooked. For fast-growing companies under pressure to hire quickly, getting a look at a greater number of higher quality candidates can greatly improve your chances of hiring the right person the first time.

3. Paying for Talent Can Pay Off. We’re not referring to the compensation package of your new hire – that’s for another article. We’re referring to the idea of hiring a recruiter to increase the speed and effectiveness of your hiring process. Paying commission to a recruiter may seem anathema to a company that has thrived on financial prudence. On the other hand, investing $30,000-$40,000 to land a rock star VP of Marketing who can help drive growth that takes you from being a $15MM to a $50MM company could be the best investment you can make.

For bootstrapped companies, a well-chosen recruiter can offer many of the advantages enjoyed by venture-backed startups without the equity dilution. You have to be prepared to pay for talent. While being thrifty can be a virtue for bootstrapped companies, it can also be a liability. Significant opportunity costs impact the health and growth of a business when the right talent is not in place.

When should you engage an outside recruiter? There are several factors to consider: Is it a senior role? Does it require a specialized skill set and/or one in high demand? How quickly do you need to fill the position? While this list is by no means complete, it gives a general idea of the kinds of questions that companies need to ask. It’s also important to determine which kind of recruiter best suits your needs.


First it was $100. Then $500. Then $1000. Zappo’s now offers new employees $2,000 to quit after their first week. While this example might seem radical, it highlights the lengths to which some companies will go to keep the good and keep out the bad when it comes to hiring. Why? Ultimately, $2,000 is a bargain compared to having the wrong person in the job. In a 2010 interview with Business Insider, Tony Hsieh, CEO of Zappo’s, estimated that bad hires cost his company over $100MM. The Department of Labor estimates the cost of a bad hire to be 30% of their first year’s potential earnings for low-level hires and skyrockets for executive-level positions. The costs of making the wrong hire are staggering not only for the bottom line, but by all measures: morale, productivity, lost opportunities—the list goes on.


Certain hires have greater influence than others. The cost of hiring the wrong person, regardless of role, has a significant economic and interpersonal ripple effect. The smaller the company, the more outsized impact individual hires can have. Numbers like those above only underscore the critical nature of doing your due diligence and making the investment to find, hire and retain the right person the first time. In the final analysis, you are who you hire.

More by Mainsail Partners