Editor’s note: Bruce Edwards is CEO and founder of Durham- based Bruce Edwards and Associates, a 19-year-old executive search firm that specializes in assisting early stage, entrepreneurial businesses in theUS. This column is the latest in a series for LTW from membership of the Council for Entrepreneurial Development.The proper recruitment, selection and hiring of key employees are always activities that require significant time, effort and financial resources.

For entrepreneurs, where key early hires are often critical to the short and long term success of the business, this activity takes on even more meaning. Large, established businesses can easily absorb bad hires–no such luxury exists for early stage, high growth — potential companies.

A bad hire by an entrepreneur can have a devastating effect. Not only does the function of the individual suffer, a void in the organization is created and there is often “damage control” to manage due to actions taken by the incumbent that led to his/her dismissal. Then, there is the daunting task for re-starting the recruitment process which requires significant time, effort, and more limited financial resources.

Factors to keep in mind

What can entrepreneurs do to minimize the risk in recruitment and hiring key employees? While nothing is ever 100%, here are a few thoughts to consider:

  • Be certain that the position you recruit for is well defined, that it is crucial to the success of the business when filled, and that there is a clear understanding of the daily tasks involved, reporting relationships, key milestones, and objectives.

  • Determine the profile and specifications of ideal candidates. Consider and agree on a candidate’s work history including his/her industry, types of accomplishments and industry contacts that would be of value to you, education, years and depth of experience and ask yourself “where is the ideal candidate today; his/her company, the industry etc.?” Thinking all of this through and targeting specific candidates who have proven, relevant experience is time consuming but very effective once the recruiting process begins. Set a goal to put yourself in a position to select the best candidate from a final slate of three to five qualified candidates. Do not settle for the first one to come along.

  • Face up to the issue of compensation. Consider that you are in competition with others for the best candidates. Be prepared to put together a package that is competitive in the marketplace. Such a package should be top-heavy with performance incentives (individual and company); stock options and a base salary that the new hire can live with. Those potential candidates who do not understand this approach of performance-based incentives do not understand the nature of an early stage company. There is risk, of course, in a young company but the individual you hire will help reduce that risk through performance.

  • The easy way to hire, if you are an entrepreneur, is to bring in an acquaintance, a friend, or someone you have known in the past or had referred to you. This seems to make sense and initially saves lots of time and money. This, however, is generally a high risk move that can come back and haunt you. Perhaps your company’s culture is different this time around. There might be a tendency to bypass the due diligence process. Experienced entrepreneurs will include candidate referrals in the process, but will include them only as potential candidates along with the others being identified. At the end of the day the friend or referral may or may not survive the final cut. In any case, executing the total selection process properly will help produce the winning candidate.
  • There is always a lot of talent in the marketplace. By employing a solid recruitment and selection process, entrepreneurs put themselves in the position of identifying, interviewing and selecting the very best person for the job. It does take time, effort and resources but it will pay dividends down the road.

    Bruce Edwards Associates: www.bruceedwardsassociates.com