As an entrepreneur you work extremely hard and make significant sacrifices to get your business off the ground and to get investors to commit to your vision; to decant your dreams into reality.
You know that you need to demonstrate that you are a leader with a clear vision, and that you have to surround yourself with a team who share your vision and can help you make it a reality.
After working so hard to convince investors, businesses, family, friends, and everyone else you meet to have faith in your vision and your ability to succeed, it would be foolhardy to risk throwing it all away by making toxic hires that can poison your business and quite possibly even destroy it.
You are a Leader and Visionary
As a leader and visionary you will want to show investors and others that you can make the right decisions; that also includes hiring the right employees and getting the right partners on board. You will want to show investors that you make the right judgment calls and that you are worthy of their investment and support.
Around 81% of hires will fail (Leadership IQ’s Global Talent Management Survey). The key reasons for the failure of new hires are coach-ability, emotional intelligence, motivation, and temperament. Importantly, lack of technical skills is not one of the top reasons for things going wrong. But in the interview and selection process organisations still tend to focus on the technical skills of the person they are considering hiring and fail to assess important characteristics and traits; characteristics and traits that if present tend to be the cause of most problems in the first place. Just to be clear, every potential hire must be assessed as to their technical skills, but not in isolation or at the expense of over-looking important key traits and attributes; traits and attributes which are often responsible for the majority of problems in the business place.
Making the Wrong Hire Is Expensive
When a business relationship breaks down it is an expensive and time-consuming distraction. According to the Oxford Economics Report the cost of hiring an employee is £30,614. Other studies from around the world show a similar figure. Hiring the wrong person is an expensive mistake for any business, but as a startup with a small team and tight budget (possibly with investors overseeing every move you make) that mistake can have an even greater impact on what you are doing.
It is critical for any business, but in many ways even more so for Startups, that they hire the right people and enter business with the right partners (especially if offering equity) in order to avoid the negative consequences of making a toxic hire. It is also important to ensure that your team has the appropriate skills-sets and traits as your company grows so that it can adapt to the new challenges ahead. This means being honest and bold enough to accept when people have to be replaced, and providing appropriate support and training to team members to help them bring your vision to reality. As part of that process we provide support and training to startups and established businesses on a range of areas including Presentations, Public Speaking, Leadership, Teamwork, Confidence, Motivation, Negotiation, Stress Management and Selective Psychometric Testing.
Investors will be looking very closely at what you are doing and whether or not the vision you have pitched to them is viable; whether you have the right team and plan in place to execute that vision and to decant it into reality. Investors will look at whether your team have the necessary traits and skills-sets to achieve success? You will want to demonstrate to investors that you have done all you can to ensure that you have the right people with the right traits and skills-sets to help you fulfil your vision.
You will need to convince investors that you have the right team in place to make them a lot of money. If you have doubts about whether someone is suited for their role, or question whether they can help you deliver your vision as promised, then you must take swift and effective action.
You can’t risk taking a casino-like approach and gamble away your dream when so much is at stake. You must be certain that you have done everything you can to ensure success – and that means making sure you have the right team around you; a team that will support you, who shares your vision, and is capable of making it a reality; a team who can persuade angels and VC’s to invest in you.
The Consequences of making a Toxic Hire
If you hire the wrong team members or go into business with the wrong partners it can result in serious damage to your brand, your reputation, and your profits. It could even result in costly, highly-publicised, and time-consuming legal claims; it might even end up destroying your business.
If you hire the wrong person then you risk suffering the following consequences:
Investors won’t invest or will discontinue investment;
Reduction in profits and increase in overheads;
Damage to brand and reputation;
Lack of respect for and faith in the leadership within your organisation;
Demoralised and de-motivated team;
Stress and sickness;
Loss of team to other competitors;
Increased recruitment and HR costs;
Loss of clients to other competitors;
Loss of contracts; and
Significant legal costs.
How can you avoid the adverse consequences of a toxic hire?
As well as helping clients with public speaking, presentations skills and the other services outlined above, we also offer clients, including Startups, Selective Psychometric Tests and In-depth profiling tool to help ensure they hire the right people, as well as train the right people in the right way.
Selective Psychometric Tests are not the only solution to help protect you, but they are an essential part of your efforts to protect your business and ensure it’s long-term future.
Selective Psychometric Tests can provide you with important information about the capability of an individual to perform a particular role or deliver on a project. Our expertly designed psychometric tests will assess candidates ability and behaviour, identifying their critical characteristics and abilities, in order to ensure that you select the best candidate for the role. Many companies offer psychometric testing; however, it is essential that you entrust a company with the expertise and experience to devise, deliver and, more importantly, accurately interpret the results.
Your goal is clear: to ensure that you demonstrate to investors and others that you have a team in place that is worthy of funding and support; a team that will decant your vision into reality and make investors a lot of money along the way.
We collaborate and partner with angels and VC’s to help identify Startups who are worthy of their investment. As part of that process we assess Startups to ensure that they have the right people in place with the right attributes and traits in order to ensure they attract investment from our partner angels and VC’s. We also help Startups to make sure they put the right team in place before pitching for investment so that they increase their chances for success.
If you have appointed toxic employees or partners, with all the negative consequences that may flow from that, you may lose out on much needed investment in an increasingly competitive and unforgiving environment; an environment where you must do everything you can to give you the edge against your competitors in the fight for funding and for your very survival. With 50% of Startups closing within 5 years of launching, and only 30% making it to the 10 year point, you have to do everything you can to ensure that your sacrifice and effort pays off.
When you show that you have chosen the right team, you demonstrate to investors that you can make sound business decisions; that you know how to effectively plan for growth, longevity, and success. In making sure you have the right team on board with the right skills and traits you show that you and your team are authentic, credible, and valuable; in short that you are worthy of investment.
Author: Lee Phanurat-Bennett, MD, Accordant Co.,Ltd