This explains why the current owners will also meet £9m worth of liabilities as part of the sale.

However, the key is that it shows how long term liabilities can sink a business. How on earth did the independent get it self into this state? Probably by negotiating cheap print deals in return for long term commitments? And, of course, staff redundancy costs and office leases…. Time for a new way of doing business – contractors and freelancers and short term contracts, anyone?

Hire Me and There is a 15% Chance I'll be Right

We have a recruitment interview Breakdown – 86% of interviews fail to pick the right person for the job.

According to a Michigan State University study on predictors of performance,

Some 90 per cent of hiring decisions are made as the result of the interview, but interviewing is only 14 per cent accurate

During an interview candidates are naturally on their best behaviour, acting to impress. However, it’s their true behavioural patterns you should focus on.

Studies of the recruitment interviews show that the typical outcomes are:

• 15% pick the right person
• 30% pick someone who can do the job
• 45% pick someone who fails

Okay, as an entrepreneur you need to make a choice. Either your new enterprise wants the best people and is committed to excellence in all that you do, in which case getting the right person into the right job is an absolute must or you are willing to get anyone so long as they can ‘start right away’.

Clearly, if you are committed to excellence, then you will accept that the traditional way of recruitment isn’t working, but most business don’t accept this. Why is it that intelligent and able managers are reluctant to accept this finding?

Well, at one level, they just need to get on with the job (that is saying, get me anyone who can do it, forget about excellence) and at another level they may say, well, there isn’t a better way.

Well, in truth, there is a better way. Two ways in fact.

Firstly, you can stick with the traditional recruitment process but improve your success rate with testing tools such as McQuaig. Now McQuaig, for instance, claim that using their testing will significantly increase your recruitment success rate to:

• 65% Right person (up from 15%)
• 20% Will do job
• 15% Fail

If your business is focused on excellence, you will want to embrace this or a similar methodology. However, even those of us who know we should use these tools, we often don’t. Why? Because we are in a hurry.

That same desire to ‘get the job done’  is getting in the way of you hiring the best talent.

Now, let’s be clear here, we are not talking about the ‘best talent’ in the way that you might wish to hire the highest scoring striker in Football’s UK Premier League or a top Quarterback for American Football, but we are talking about someone who is right for the job – and can do it with excellence.

To say that there is more than one person who can do a job with excellence is is not a compromise on excellence. All businesses need to rely on the fact that staff are replaceable – otherwise you don’t have a business but a talent agency or football team!

Therefore, for us to remain true to our business objective of excellence, we need to get the right person in the right job.

Now, 85% failure rate isn’t good enough, so we must use other recruitment tools, right?

Yes, and… there are ways to increase your recruitment success – or at least to reduce the costs of your recruitment failures.

Not only is recruitment expensive in terms of time, but it also costs 15 to 20% of annual salary which goes to the recruitment agency, 1 or 2 months of training or below par performance to allow the new member to get their feet under the table, management time and support during this period too.

In my experience, you can quickly identify those people who simply can’t do the job, but it takes much longer to know that you’ve got the right person in the right job.

Hence, even though you can remove the obvious people who don’t fit, you still face up to 30% of the total or two thirds of your remaining team who aren’t going to work out longer term.

And yes, you can reduce this by metrics, but you want to make the problem go away as much as possible because it is the biggest threat to your organisations ability to deliver excellence.

Therefore, one way to improve this metric is to hire people on contract and, the more people that you know, the greater ability you will have to draw from your existing and widening base of freelancers or contractors.

If you combine some form of interview and metrics with a fixed contract or freelance structure, then you have a much higher chance of hiring excellence.

And, as we discussed before, allowing those freelancers to move onto other projects is a good idea, as it allows them to come back to your future projects refreshed emotionally and with new ideas.

Will Hiring Freelancers Lead to Success or Failure?

…that you have to hire the best. … and hiring the best means you have to offer the full time employment – the best package – a full time employment contract and for CEO’s golden handshakes to welcome them and golden parachutes should they fail, share options if they don’t etc.

And therefore, you might think, if I don’t offer a full employment contract why would they ever leave their current employment to join my organisation?

Let me be blunt about this. This is rubbish. People will join your organisation mainly for the opportunity and excitement you offer – much less for the terms of a contract.

Here are six reasons why freelancers are better than employees;

Firstly, freelancing and contracting is more fun and the freelancer earns more money. The freelancer gains by being treated as an equal – they are in business too – albeit for themselves and the relationship between you and the freelancer is a much more grown up one. No longer do freelancers expect you to provide for them – as a parent might to a child – instead, it is a relationship of equals. This benefits the person hiring the freelancer just as it benefits the freelancer him or herself.

Second, freelancing and contracting allows your team to work on projects in natural bursts. It is more like going to college, you work hard or very hard for 10 or 12 weeks to reach a goal or set objectives in that term or timester. Then you take a break. I haven’t seen any studies, but I believe you could argue that it is more natural for us to work like this than to be expected to work week in and week out. Thinking about this a bit more, our ancestors used to work according to the seasons and this required short bursts of activity – sowing and harvesting being the busiest times.

Thirdly, in the UK and European countries the first 6 months of a new job are pretty tenuous anyway as they just offer 1 weeks notice. When taking on a contractor you can offer 1 month notice for the first 6 months. This is a great deal for the contractor as they actually have far greater certainty (ie a month) than if they have a full time employment contract. The point about the contractual structure is that you don’t offer one month notice for ever and you don’t allow it be silently become two months or three months or six months as they spend more time in your organisation. This will make a considerable difference if some relocation is required.

Fourthly, freelancers who leave your organisation can and do come back – if they enjoyed their work with you – and often come back more motivated and with a fresh set of ideas. This is great for both the freelancer and for your business.

Fifthly, not all brilliant candidates will fit your company culture. Think of football. How many times does a great manager turn down the offer of a great player because the great player wouldn’t fit into the team? It happens all the time. You are looking to fill roles in your company, that doesn’t mean you want the best player, you want the best fit.

Sixthly, men (or women) are as their times are. This is a line from Shakespear when a young soldier complains when he is told to carry out a contract killing. His Sargent replies that he should go and do it for  ’men are as their times are’. Often your ‘good’ people in a high growth company will become your ‘bad’ people in a sudden slow down. This isn’t because they have changed, only your company circumstances have changed and their motivations within the company and those circumstances may have changed out of all recognition.

A freelance or contractual structure allows you to let them go quickly and without fuss. The cleanness of the parting of the waves is actually a lot less controversial than you might think and allows you to rebuild the relationship with them later on, should conditions improve.

At the end of the day, you are looking for the best fit for the role you have now.  If you markets and products change, the role may well change. If you switch from high growth to low growth or a sharp decline, most of your people won’t fit any more no matter how good they were in the first place.

Lastly, if you have decided on an entrepreneurial structure then you need the best fit with that – enterprising people. And I can guarantee you they will not be standard employees looking for the apparent security of a standard employment contact, as that is the last thing either you or they want.