How to Find the Best Employees

Employees are the lifeblood of a company, and a few bad hires can make or break a small business.  Hiring is a hard problem.  Even Google admits that they haven’t found a single best predictor for hiring the right person.   The normal approach companies take to deal with the problem is to try to attract the highest quality applicants in the first place so they have a higher probability of finding a good employee.  For this reason, companies have been showering their employees with perks: Cisco Systems offers free physical therapy and acupuncture, Southwest Airlines provides free flights for all employees and their families, and Yahoo gives discounts to ski resorts and amusement parks for their employees.

But what makes hiring such a difficult problem in the first place?  Neither parties on either side of the interview table have perfect, or even good information!  Hiring managers find it difficult to isolate qualities that tell them a candidate would be a great employee.  Applicants find it difficult to know whether or not they would be a good fit at and enjoy working for the company they’re applying to.  As Paul Oyer and Scott Schaefer put it in “Personnel Economics,” “the fundamental economic problem in hiring is one of matching with costly search and bilateral asymmetric information.”  Basically, the process is expensive and uncertain.

The goal for hiring becomes where can you find good employees as well as how to identify metrics that accurately predict the success of an employee.

Using Personal Networks

Networking, especially for startups and small companies, is often the most effective way to find qualified candidates for open job positions.  Networking presupposes a familiarity with the candidate in question, giving the interviewer more insight on them.  Implementing an employee referral program, where employees are rewarded for bringing successful job candidates to the company, is a fantastic way to improve the quality of your hiring practices.  Studies have shown that referred candidates outperform normal candidates at every stage of the hiring process and experience better cultural fits at companies once hired, setting the stage for future success at the company.  In fact, referrals now result in more than a quarter of all hires at large companies, a startling number when you consider that referrals compose only 6% of nationwide job applicants, according to the Federal Reserve Bank of New York and MIT

Turning to Online Resources

Once a company’s personal networks have been combed through for applicants, it may be necessary to find other sources of applicants.  One of the most common solutions is to turn to a job board, such as or, to expand your company’s outreach.  Job boards can advertise your company to a lot of different candidates at once.  More sophisticated ones help you implement screening questions that will automatically filter unqualified candidates from your posting.  There is also less of a chance for discrimination when compared to networking; job boards are available worldwide 24 hours a day whereas personal networks have a tendency to attract similarly thinking people to certain companies and reduce diversity.  However, job boards flood a company with potential candidates, and if you don’t have a recruitment department or enough time and resources to evaluate all the candidates the process quickly becomes unmanageable.

Is this a “job”?

Finally, think critically about the job position you are looking to fill.  Is this an integral part of the companies mission?  Would this position fit well into the company’s structure and culture?  Building a department or new team can be expensive and difficult.  Before you choose to hire an employee, determine whether or not it may be better to outsource the work.  Lots of roles can be easily outsourced: marketing, manufacturing, digital marketing, advertising, and more.  Although there is risk associated with the lack of control, outsourcing can be a quick and cheap option for accomplishing a company’s tasks.  

Who is a good candidate?

Although it’s difficult to isolate specific qualities that indicate who is and is not qualified, remember that good employees exhibit several key traits.  The first is a strong work ethic.  You want employees that take pride in their work and perform at a high level, putting forth their best effort.  Also look for a positive attitude and exceptional communication skills.  Work is a collaborative environment where all employees work together to serve their market.  Employees that can interact easily and positively magnify their efficiency and create a more satisfying work environment.  Additionally, previous experience and a demonstrated expertise in the skillset you need is often the most valuable characteristic of a qualified candidate.  Experience is very valuable as it saves your company money during training and increases the value a candidate can bring to their department.  Finally, loyal and reliable candidates often become the best employees.  They are consistent, stable, and show an interest in developing a long-term career with your company.

Hiring practices are often the most important processes at a company.  Who you hire affects your company culture and the productivity of your departments.   It sets the future course of the business and can often be the difference between success and failure.  For this reason its important to have a robust process in place that effectively screens candidates and makes sure you have the right people walking in the door.

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