Hiring is an essential part of running a successful business, but it’s tough.

According to the U.S. Department of Labor, the average cost of a bad hire is at least 30% of the employee’s first-year potential earnings. To make matters worse, a study of 20,000 new hires indicated that 46% failed within 18 months.

Those are excellent reasons to work hard to ensure you hire the right person for every position.

But, what these studies neglect is the opportunity costs. Some roles need to help transform the company, and if you underinvest (or hire poorly), you risk millions of dollars in opportunity cost.

But when you hire right, it changes everything.

How do you avoid making costly hiring mistakes?

You start with creating an Ideal Candidate Profile (ICP).

Before you start hiring, you must know who the perfect person is for the role. The ICP is a snapshot of your ideal candidate. It’s a document that describes the type of person you want to hire and defines why they would be a great addition to your company in terms of skills and qualities.

Most hiring managers are great at creating a job description that outlines the job and key requirements but rarely articulates the type of person.

So how do you create an ICP?

When creating a new sales management role for my company, it took roughly one hundred and twenty minutes to brainstorm and finalize my ICP.

But the time investment pays dividends once you make the right hire.

A simple tip, if you have related roles, be sure to observe who has or is succeeding in those roles to help you develop your current ICP. Also, look who has failed so you can take note of the traits, skills, and poor qualities of who to avoid hiring.

Ask yourself:

What would this person need to be in order to be highly successful in this role?

List out three to five characteristics for each of the following sections.

Skills:

What skills do they need to thrive in the role? For my Account Executive Sales Manager, they needed leadership and sales skills.

Experiences:

What level of experience does the ideal candidate need? For my sales manager, it was someone who has managed a successful technical sales team before and who has worked with an international sales pipeline.

Qualities:

What type of personal qualities does the ideal candidate need to possess? For me, it was kind but firm, and someone who is process-driven with immense self-accountability.

Other Criteria:

Finally, list out anything you may have missed in the other sections.

You’re now going to get a chance to refine your list to what’s truly the most important.

Considering all you’ve laid out, what are the 3–5 “Must-Haves” that are essential and non-negotiable in your chosen candidate?

This exercise forces you to get clear on what’s most important.

Go through and identify the 3–5 must-haves that would ensure someone thrives in the role. Once you’ve finalized your list, you’ll now use this as criteria to recruit and hire from.

Your must-haves will be added to the job descriptions and be used as the basis of how you rate candidates throughout the interview process.

When you hire right, everything becomes easier for you and the candidate.