Business – Competence And How To Recognise It

Most people would agree that Liz Truss was the worst Prime Minister that the UK has ever had and thank God that she has gone. The question that remains, however, is how someone so unsuitable could have been selected for such an important job? The Negotiator magazine is not the right forum to investigate this but I see similar mistakes made by my clients on a regular basis. Time after time manifestly incompetent people are recruited to fill key positions and the consequences for their employers can be catastrophic. So, why does this happen and what steps can be taken to prevent it?

The first issue is that there is currently a severe shortage of suitably qualified staff. At the beginning of the pandemic, many staff in the property sector were made redundant, left the industry or retired and the housing market boom that followed meant that there was a huge spike in demand for qualified staff. As a consequence, many people who are looking for new jobs know that they are in high demand so they register with the recruitment agencies who will sell their services to the highest bidder rather than applying for job vacancies directly. Many employers resent paying recruitment agency fees but during a labour shortage there is often no choice and paying a recruitment fee would be much cheaper than recruiting the wrong person or leaving your vacancy unfilled.

The second issue is that too many employers have too narrow a view of the people who will fit into their organisations. They therefore discount good applicants on the grounds of age or other random factors. As a result, they miss out on many good candidates.

The third issue is that the interview process in many firms is very primitive. Many of the larger firms use sophisticated methods to screen out unsuitable candidates but too many employers are still hiring people on the basis of a sixty-minute interview, much of which is spent talking about general things that have nothing to do with assessing the candidate’s suitability for the role. A good book on interviewing techniques could be a wonderful investment or, better still, attend one of the many training courses that are available in this area.

The fourth issue is referencing. Due to privacy laws, this is much more difficult than it used to be. Many references are so bland that they are almost entirely useless and some employers will no longer provide a reference at all. If you hit a brick wall, it is worth trying to telephone some of the candidate’s former employers as they will sometimes be less guarded than they should be. At the very least, you need to verify the candidate’s employment history and find an explanation for any unexplained gaps.

The consequences of making a recruitment mistake can be enormous. Let’s take the example of recruiting a valuer who is not up to the job. A first-class valuer might achieve results like this:

A poor valuer might only achieve the following:

In this example, employing the wrong valuer is costing the company £315,000 per year.

It could easily take six months to discover that your valuer is not up to the job, work through the dismissal process and find a better replacement. During this time, your business could lose £315,000 of revenue plus the wasted salary costs plus the wasted recruitment costs. This will have a catastrophic impact on your profitability.

Recruiting the wrong manager can have even worse consequences as the calibre of the manager is the single most important factor in the success of an estate agency business.

I see the consequences of these decisions on a regular basis in my work as a Business Sales Broker. It is very common for an owner to decide to put a manager in to run their business during their retirement rather than selling it. This solution rarely works in the long-term because a salaried manager will seldom have the same drive as a business owner and even if the manager is capable, they often become resentful that they are doing all the work and someone else is getting most of the profit. As a consequence, they become lazy and the profits drop off, or they become greedy and start asking for a larger and larger share of the profits. Worst of all, they can become dishonest and start doing cash deals with the clients, stealing rental payments or taking money from the maintenance account.

When the business owner realises what is happening, we are often asked to sell the business but a business with a pattern of reducing trade will nearly always sell for less than a stable business so the owner suffers another hit to their retirement fund in addition to the lost profit.

Many of the most successful business owners in the country have said that the value of their business is all in their staff and this is not a cliché. The issue though is that recruiting and retaining exceptional staff is not something that happens by accident, and you owe it to your business to ensure that you have all the skills necessary to recruit and retain the right people.

Adam Walker is a management consultant and business transfer agent who has specialised in the property sector for more than forty years.