The Real Cost of a Bad Hire on Your Remote Team

In today’s episode, you’re going to discover that the cost of hiring the wrong person, even at a low hourly rate, costs you way more than just the payroll that goes out the door. Plus, I’m going to unpack your best insurance policy to avoid the costly leadership decision. Now, by the way, when I say the best insurance policy, I’m not actually talking about insurance here. I’m going to talk about an approach, a mindset, and a system.

Welcome to the Remote Team Leadership Podcast, a show designed to help you lead better, to live better, because your leadership capacity is the capacity your business will never outgrow.

Now, when I was thinking about this episode and was looking at some of the questions that have been coming in, I’ve been getting a lot of questions about hiring, and when to hire, and how much to pay, and all of these things. But I also started noticing a lot of people sharing their concerns and fears about hiring. These come down to, you know, how do I know when is the right time? How do I know when I can afford it? How do I find the right person? What if they mess up? And those are all very legitimate concerns.

Now, the other thing I started to notice was people saying, I’ve tried hiring in the past. It didn’t work. It’s hard to find good people out there. Or I got somebody, I hired them, and you know what? It just ended up being easier to do it myself. And that’s because there’s a real cost at hiring too soon and hiring the wrong person. Now there’s also a cost in waiting too long, and I’ll talk about that in another episode. But today I want to focus on the cost of hiring the wrong person.

Now let’s say, for example, you are overwhelmed, you’re tired, you’ve got some projects. In fact, you’ve got more projects than time to get them done. And you’re not having enough time to go out and be doing more sales and recruiting. And you know that when this season of busy work ends, there’s going to be a lull. You’re kind of on this feast and famine. And so you decide, right now you’ve got some extra cash because you’ve got these projects. So you’re going to hire. And you rush out and hire.

Now the thing is, that’s where most people make the mistake. They rush. And I’m going to talk very quickly in a couple of minutes about how do you not do that? What do you do instead? What’s the alternative that can protect you? But before we do that, let’s talk about why it’s important to get the first hire right. Because the cost can really get out of hand.

Now, let’s say you hire somebody for three dollars an hour. Now, before you hit me on LinkedIn or email me with hate email, I’ve been getting a lot of people on my LinkedIn lately that assume the worst things about me, because I’m talking about hiring remote, and people think I’m just trying to take advantage of people. One guy the other day thought it was ridiculous that I was only hiring one person for two hours a week. How is somebody supposed to make a living at two hours a week? Well, before you get on your high horse and come out and attack me, I want to challenge you to realize this truth. Not everyone that wants a job needs a job for the same reason you need a job. Your filter is not the filter everybody else is looking at the world through.

You probably couldn’t survive with a job at only two hours a week. But you know how many people out there want just that little bit? They’re looking for just the little side hustle. They’re looking for just that little extra income. Maybe it’s a college student. Maybe it’s somebody just looking to learn something or try something. Maybe it’s somebody whose life demands only allow for that, and they’re just looking for a little something extra. There are millions of people out there like that.

Now, also three dollars an hour. A lot of people are like, that’s ridiculous, people can’t survive on three dollars an hour. You’re absolutely right. People in the United States, Australia, England, Spain, Canada, they can’t survive at three dollars an hour. But there are definitely places in the world where three dollars an hour is a middle class income. I don’t pay anybody that low. I like to start around six, maybe ten, maybe fifteen dollars an hour, some as high as twenty five. But here’s the thing. I’ve lived in some of these countries. I’ve lived in Costa Rica and been in the communities. And honestly, five dollars an hour to them would mean they could have a car and a house. That’s middle class. Give seven or eight dollars an hour and now they can have two cars, insurance, private schools. It’s just crazy how that works in other economies.

So don’t look down your nose at your community. Your city may need fifty-five, sixty, sixty-five dollars an hour to have an upper middle class lifestyle. Other people in the world don’t need that. Educate yourself on this. Don’t look to take advantage of people. Don’t be that kind of person. If you’re just trying to figure out how to get the cheapest labor possible, don’t even listen to my podcast anymore. I believe in treating people well and taking care of people. And honestly, I can do that a whole lot better with a remote team than I can hiring only locally, where my business is right now.

So let’s get back to the math. Nobody is going to hit me with hate mail. I’m not taking advantage of people. Nobody has to say yes to work for me, and I’m not taking advantage of people. We pay people a very fair local salary for where they live. For some jobs, that’s going to be three dollars an hour.

Now, if you pay somebody three dollars an hour for six months, that’s three thousand one hundred dollars. Where do I get six months? According to the U.S. Department of Labor statistics, that’s how long most employers take before letting go of a bad hire. You take a few weeks for onboarding, then you start to think, well, maybe just some retraining, and they’re going to get it. Other things become a priority. And especially if it’s a low hourly wage, it’s just not as important. You’re still hanging on to hope. But eventually you look up and it’s been six months. So I’m not surprised that’s the average.

So let’s say you hire someone for three dollars an hour. You’re at three thousand one hundred dollars after six months. But you also have more than that. You have the cost of training. You have the cost of possibly some tools. And some of the hidden costs, you can’t even put a price on them. Projects slow down. Energy drops. Your top performers feel the drag because they’re having to pick up the load. You possibly upset or frustrated some clients. Maybe there’s a ding to your brand. There are all of these costs you can’t put a number on, but then there are plenty of costs you can put a number on. Payroll, tools, your time, all of these things. A three dollar an hour employee after six months can easily be a five thousand dollar mistake.

Now, let’s say you’re thinking, I would never pay somebody three dollars an hour. Good for you. I wouldn’t either. I just wanted to show you the math. Let’s say you hired somebody at six dollars an hour. You double it. Now you’re at a ten thousand dollar mistake. At ten dollars an hour, this becomes a sixteen thousand dollar mistake. Fifteen dollars an hour? Twenty-five thousand dollar mistake. You hire someone for twenty-five dollars an hour, and after six months, that’s a forty thousand dollar mistake. We can’t afford to get this wrong. Even at three to ten dollars an hour, this is going to cost you five to sixteen thousand dollars. So we have to get this right.

So what do we do? Well, here’s the principle. When urgency hits, hire help, not headcount.

What do I mean by that? When urgency hits, bring on a freelancer, a contractor, or even another agency, while you’re busy searching for the next long-term team member that will be part of your headcount. Don’t rush into hiring a team member. Bring somebody in for the short term. This is where I see people make this mistake over and over. They go out and they think they’re ready to hire. So they go ahead and hire, and they either hire quick so they hire the wrong person because they haven’t vetted them properly, or worse, they hire somebody for way more hours than they actually need. Take your time. Hire slow to hire right.

Now I’ve got a couple more things I want to share on this. But when it comes to hiring your first hire, if this is something that’s new to you or you’ve tried it in the past and it hasn’t worked out, I want to encourage you to head over to EricDingler.com/firsthire, and you’re going to get a full guide on exactly how you can hire your first hire so it’s done at the right time, at the right pace, and is going to turn into something that makes you money and doesn’t cost you money.

Now let’s get back to hiring the right person. You’re going to take the pressure off by bringing in a freelancer, a contractor, maybe even another agency or white label provider. It’s not a long-term fix, but it works for a season. I always use a fulfillment partner as we’re launching a new service. We’re launching two new services right now at In Transit Studios, my digital marketing agency. And we’re not hiring anybody for either of them. We’re using a freelancer for one and another agency for the other. I’ve built the cost into our product offering in a way that will eventually become salary when we have enough consistency to hire someone. But I don’t go out and hire people when I haven’t built up the consistency yet. I use this principle all the time. When urgency hits, I hire help, not headcount.

So you can do the exact same thing. But then we’ve got to hire the right person. Well, this is where it comes down to your system. Because here’s the thing in leadership. It’s always a systems problem, never a people problem.

I saw somebody complaining on LinkedIn just today that there are no good candidates out there. And I thought, no offense, complete stranger, but you’re wrong. The world is full of amazing candidates that are slowly getting picked up by people who have the right systems. Your process is scaring away the right people, the right fit. If your system is broken, fix your system. Don’t jump to complaining about people. That’s a leader with a fixed mindset, not a growth mindset. They look at an obstacle and think, that’s it, we’re done here. That’s not true at all. A leader with a growth mindset looks at it and says, this isn’t working. Let’s make some adjustments so it does work. And what do they fix? They fix their system.

Well, what about their system? They start asking in the right places. Don’t just throw up a listing on Glassdoor, Indeed, or LinkedIn as your only move. Ask the people you know. Hey, do you know anybody looking right now? My favorite place to find global talent is Upwork. And the first thing I do is ask my team, hey, who do you know that could do this? We often find our best help right there.

When I’ve exhausted my network for headcount, then I go to Upwork and I have a specific type of job post that I create. I tell people, here’s the job, read the job description, and then get back to me. I attach the job description. And in that job description, we’ve written it in a way where there are some things the person has to do that AI doesn’t pick up on. So when people apply, we can immediately cut out the ones who say they’ve read it and didn’t. The very first sentence has to say a very specific thing, and we don’t even open somebody’s application or cover letter if the first sentence doesn’t say that.

I posted a job not too long ago and within twenty-four hours I had thirty-six applications. Most of them, the first sentence didn’t include the key statement, so I just immediately clicked thumbs down. They may be amazing people, I’m sure they are. But they didn’t read the job description, which is what I told them to do in the post. So if they’re not going to listen to me on how to get the job, what are the chances they’re going to follow your instructions to do the job? That’s your first indication right there.

And then later in the description, it tells them the hours. They have to eventually share their favorite candy bar. And if we don’t see that, they don’t get an interview. Because again, either they’re not understanding or they’re not being truthful. Either way, I don’t have time for that on my team.

From there, we start scheduling interviews. We do more than one. We do a character interview, where we figure out, do they have the character we’re looking for? Are they a quality person? Then we do a chemistry interview. Are they going to get along with their supervisor? Are they going to mesh? And then we do a competency interview. That’s the final one. Character, chemistry, competency. That’s the order we hire.

And if all of those things align, then we’re going to have them do a test project. Now, this isn’t new or even unique to us. We were babysitting today, here at the house, a two-year-old friend of ours. He’s got a single mom, and today she started her new job. She got the job offer on Wednesday and they asked her if she could start today. On Wednesday, she went in to do a four-hour trial. They weren’t even paying for it. It was: if you want the job, you’ve got to come in and do this trial. And she went in. It’s a job making phone calls, appointment setting for a solar panel company. She went in for four hours on Wednesday and did such a bang-up job that they said, can you start Friday? Because in those four hours they got to know her. They got to see her character, her chemistry with the team, and her doing the actual job.

This idea of testing people happens all over the place. So it should happen for you and your company. Hiring a remote or online person, we always pay for the test project. But we always have them do one. And if that test project goes well, then they get an official job offer.

I know what you might be thinking. Why would I work for a company that asks me to jump through all those hoops? Well, good. I’m not going to hire you, and that’s okay. But I’ve got a full team. And I’ll tell you, every single day, I am not exaggerating, people are pitching me to work for us on LinkedIn. Now, there are plenty of people out there looking for work, and my team is full of phenomenally capable people who went through every one of those steps. It’s our process. It’s our system. And I have never hired somebody this way and had it not work out.

What our system does is weed people out. It weeds out lazy people. It weeds out people who are going to bump into things here they’re not going to want to do. We’re looking for people who are not afraid to do some work, not afraid to do what it takes to go through the system. And the world is full of them.

If that’s not for you, fine. Then maybe you’ve got five thousand, ten thousand, sixteen thousand dollars to waste over the next six months. If you’ve got that, more power to you. But if you don’t, isn’t it worth it to hire people the right way using the right system?

Now, you don’t have to copy my practice. A practice is something somebody does in a specific context. What you should do as a leader is always evaluate and discover the principle behind the practice, because there are other practices that achieve the same outcome. But what are the principles?

The principles are these:

When urgency hits, hire help, not headcount.

Hire slow. Fire fast.

Hire for character first, then chemistry, then competency. You can’t train somebody to be a decent human being. That’s called parenting. And you’re not hiring people to be your kids. You’re not going to be able to train somebody at this point in their life to be a decent human being. So we don’t hire people who need that. There are ways for them to get help and to learn, but it’s not through a job with my company.

So how do you hire slow and make sure you get the right person? Multiple interviews. Now here’s the thing. This can happen over two or three days. That’s not long. And I understand that there are people who are like, I need a paycheck, life hit us unexpectedly. Okay. I can interview somebody on Monday and have them start on Thursday or Friday. They can start working through the onboarding process and training themselves to do the job, and then the team and I will start reaching out and building relationship with them, helping them become part of the team and part of the culture.

You don’t have to drag this out for a month. A lot of times we do because the candidates aren’t in a hurry. But the principle is this: you have to make sure you are doing your due diligence to hire the right person. If you hire somebody just because they can do the job, that doesn’t mean they’re going to stick around. It doesn’t mean you’re going to like them. It doesn’t mean they’re going to treat your clients well. If you want to build a team, this is the right approach.

So how do you get help with this? Head over to EricDingler.com/firsthire. But I’ll also tell you right now, I’ve got a ninety-day accelerator called Team Engine. And this is what we do in Team Engine. We build a recruiting system that’s tailored to you. I teach you the principle and then you contextualize it and develop your own practice. In those ninety days, you build a recruiting system, an onboarding system, a delegation system, and a system to train and develop your team ongoing. We call it RODD: Recruit, Onboard, Delegate, Develop.

And here’s the thing. A lot of people are like, oh man, I’ve got to have a whole system ready for people and SOPs and all this stuff on their first day. No, you don’t. We often hire people and just tell them, hey, right now we’re hiring you for something that is a total chaotic mess. The first thing you’re going to spend your first couple of weeks doing is helping us get it organized, developing the systems, creating checklists. That’s just where we’re at with this. Does that sound good to you? And if they say yes, great. If they say no, you move on to the next person. Because you’re going to hire the right person because you’re going to go slow.

Remember, if it’s urgent, hire help, not headcount. Hire that freelancer, contractor, or agency that already knows how to do it. Turn it over to them and they’ll get it done. Then slowly work your way up. Ninety days. That’s it. That’s pretty quick to build an entire team engine together. And the cost of Team Engine is less than the mistake of hiring somebody at three dollars an hour and having them stick around for six months. That’s some insurance right there.

And after the ninety days, if you’re not confident you’re ready, I’ll walk through the first hiring with you. I’ll help you with the interviews. I’ll help make sure you get the right person. So if this sounds like something that’s right for you right now, head over to EricDingler.com/engine. You’re going to see exactly what’s in the program, how it works, and you can schedule what I call a fit check. Because I don’t let everybody sign up who wants this. In that first fifteen minutes, we’re going to find out: are you even ready for this? Because the first question you always have to answer is, are you ready to be the leader that the team you want to hire wants to follow? Are you ready to actually let go and delegate? Some people aren’t ready for that yet.

And then after the ninety days, you get lifetime access to my Thursday group, where you can pop in on a Zoom call for an hour, ask follow-up questions, get help. I give a little leadership message at the beginning of every one of those sessions and a handout you can save and then start to use with your own team. Development trainings you can turn around and use to help develop people on your own team. Lifetime, forever access to that, after just going through one ninety-day accelerator.

Because I want you to be successful. Why? I’ll just be honest. I can’t hire everybody that needs to be hired. There are phenomenal people out there who need people like you and me willing to hire them in remote jobs in places around the world, at a high middle class salary. For you and me it’s nothing. For them, it’s life-changing. It’s wealth-building. It’s generational. They’re now able to have discretionary money to spend in their local markets. They don’t have to move away from their community. And they get to hire the handyman and the mason and the cleaning lady. They’re able to make a real difference in their own community. I’ve seen it play out in communities we’ve been in around the world. I can’t hire them all. But I can set more people up who are able and ready to do this.

So that’s why I do Team Engine. Because I want to set you up to make a difference in your life and in the life of your team.

Head on over to EricDingler.com/engine.

Now, the big takeaway from today. Remember this: when urgency hits, hire help, not headcount. Until next time, pick one thing to take action on to help you lead better, to live better. And if you haven’t grabbed my first hire checklist, head over to EricDingler.com/firsthire. Pick it up for yourself. I’ll see you in the very next episode.