The Cost Of A Bad Hire: Avoid Making These Mistakes
Missed deadlines, customer complaints, and late deliverables – does this sound familiar to you? Depending on the industry, a bad hire can cost you triple times as an employee’s annual salary.
Aside from the decrease in productivity and the possible loss of business from unhappy customers, making bad decisions in the hiring process can cost you unnecessary spending in recruitment, onboarding, and training. Consider all that for a person who won’t add value to your company. Talk about a bad investment.
Avoid bad hires and their ugly consequences by reading this article. Here, you’ll learn the cost of wrong hiring decisions, how to recognize a bad hire, and how to deal with the problem should you have to face one.
How To Calculate The Cost Of A Bad Hire
The 2017 CareerBuilder Survey says 74% of employers hired the wrong person for the job. To calculate the cost of bad hiring decisions, the US Department of Labor suggests estimating at least 30% of the employee’s salary during the first year.
Therefore, if you hire the wrong person for the job and give them $60,000 in their first year, you’re already losing $18,000 right off the bat. However, there are other ways by which a bad hiring decision can end up costing you in the long run.
What Variables Play A Role In Calculating The Cost Of A Bad Hire?
Other variables that will affect your calculation of the cost of a bad hire include:
- Length and cost of the recruitment process. This includes reviewing CVs and interviewing promising candidates.
- Recruitment marketing expenses and advertising fees
- Time and expenses you spent on onboarding and training
- The toll on your managers when handling employees with bad performance
- Decreased productivity due to unnecessary downtimes and badly handled projects
- Effect on the team morale
- Possible loss of business due to bad customer relations
- Possible legal fees should the bad (and/or toxic) hire file for unlawful termination and discrimination claims
What Are The Consequences Of A Bad Hire
A bad hire costs money, time, and energy. Here’s how an incompetent hire can affect your business.
Decline Of Productivity
Hiring a person not fit the job description will be the anchor that can halt your team’s productivity. Due to the lack of commitment to the job, this hire might be unproductive, lazy, and always complaining. As such, they may finish their tasks late and will pass on the extra load to the rest of the team, risking your business to angry customers and an otherwise competent team with low morale.
Losing Clients
Unsatisfied customers are a tough thing to bear, and it’s not worth losing clients due to a bad employee. A bad hire will submit even subpar work late. Don’t risk losing clients and business opportunities.
Damaged Reputation With Clients And Partners
News travels fast when it comes to bad client relations. Everyone is connected nowadays and bad reviews from previous clients can damage your reputation and sour the interest of new ones. What’s worse, when one client leaves due to unsatisfied performance on your part, the rest may follow.
Losing Time By Supervising A Bad Hire
A bad hire’s performance may take a toll on their team and of course, their immediate supervisors. They are the ones dealing with problems within the team. Trying to solve every mishap caused by an unfit employee may affect their enthusiasm at work and morale. The time they waste on the bad hires could have been used to nurture the more promising members of the team.
Recruitment And Training Costs
Time is money in business, and conducting interviews, reviewing resumes, and screening candidates consume so much time. The employee turnover left in the wake of the bad hire will cost effort and time for your hiring managers. What’s more, think about the stress they’ll face just to find a replacement quickly.
Possible Legal Fees
When someone is disrupting your business’s progress and bringing down the team’s morale, you may have no choice but to fire that person, but not everyone goes down easily. Some bad hired file for unwarranted discrimination claims or unlawful termination that will quickly add up on your legal fees.
Damaged Brand Image
Every employee is a brand ambassador for your business. Poor performance and unpleasant business deals not only reflect badly on them but also on your company. Make sure every hire reflects your company’s vision and values to avoid the ugly consequences of a bad hiring decision.
If the employee is a bad fit for your business, the whole organization will suffer. Think twice before adding someone to your team.
Reasons Why Bad Hires Happen
Despite the careful evaluation of your company, and knowing the possible implications of a bad hire, they still happen. Here are some of the things that your hiring team might be overlooking.
Insufficient Hiring Experience
Reviewing resumes is only one part of the job. Inexperienced people in human resources may only be looking at candidates at face value while excellent hiring teams dig deep into the person’s character, motivations, and drive. This takes years of experience, a critical eye, and the ability to pick up on subtle cues during interviews.
Skimping On The Cost Of Hiring
Hiring managers sometimes accept candidates with the lowest salary expectations. However, the more competent ones are usually aware of the value they add to the company and are, therefore, more confident in asking for a fairer wage. The quality of a candidate always beats the cost of hiring upfront. In the long run, the better candidates will do their jobs better, satisfy customers, and therefore, make up for the money you invested in them.
Misjudging A Candidate’s Character
Being nice and amiable in interviews doesn’t say much about the person’s fit or the ability to thrive in your company. Ensure that the new hire shares your values, work style, and motives as an organization.
Desperation
Desperation always leads to bad hiring decisions. You’re investing a lot in new employees in the company. Just because you found a seemingly good candidate and you’re afraid another company will sway them, or you’re desperate for a replacement doesn’t mean it’s a good idea to make snap decisions.
Can A Bad Hire Be Avoided?
Save yourself from the cost and damages of a wrong hire. The person you choose will affect your ongoing projects, opportunities for business, and team dynamics. Here are some tips on how to avoid a bad hire.
Designing Clear Hiring Strategies
Have a step-by-step guide on how to find the right person for the position. Clarify your objectives for the next year or the next quarter, determine the positions that need filling, and create the plan before starting with the hiring process.
Implement Data-Driven Recruitment
Actionable data will guide you to make better hiring decisions. Get an in-depth evaluation of the strength and weaknesses of each applicant, and their performance against the other candidates, and map that against the skills, personality, and competence needed based on the job description.
Utilize The Best Hiring Tools And Methods For Your Company
Make your job easier by using hiring tools and methods. These tools can process and generate more data faster, saving you time and energy in the hiring process.
Some of the hiring tools available are pre-employment tests like programming and language tests, cognitive ability tests, and situational judgment tests. There are structured interviews with targeted questions to allow you to choose the best candidate for a specific duty or responsibility in the company.
Analyze The Responsibilities And Duties Of Each Specific Job Opening
What characteristics and skills do you require from the candidate to do the job well? The clearer you are in your job description, the easier it will be for you to find the right man for the job. Be clear on the position’s must-have skills and requirements and the things you can compromise on.
Don’t Prioritize Speed Over Quality
Hiring teams may lose patience when going through hundreds of applications. When you need an immediate employee replacement, it can be tempting to hire someone for the sake of just filling in the position. Don’t fall into this pit. Shortlist the best applicants, assess their performance potential, and take your time in making this crucial decision.
Don’t Pity Hire
A lot of people get laid off left and right in businesses. That doesn’t mean your company has to take the brunt of this by hiring someone out of pity. Hiring someone for a lesser job because they were second best in the recruitment process, was going through a horrible situation during an interview, or got laid off in their previous job may feel good at the start. Pity hiring is charity work, but that doesn’t mean it will bode well for your business in the long run.
Recognize A Bad Candidate From The Start
They Make Excuses Early On In The Hiring Process
The right person for the job has a growth mentality and will be willing to work on their shortcomings to live up to the role. If the applicant is making excuses early in the hiring process, chances are, they won’t thrive well when the going gets rough in the job.
It Takes Them Too Long To Get Back To You When Setting Up Interviews
Emergencies sometimes happen, but they shouldn’t get in the way of someone’s professionalism. Truly interested candidates will be active in updating you about their interest in the company, and if something comes up, they’ll be professional enough to update you.
They Show Up Late
How they perform in interviews will show you the person’s overall accountability. If they’re comfortable being late when they should have been working to make a good impression on prospective employers, it will give you an idea of the kind of employee they might be.
They Cancel The Interview At The Last Minute And Ask To Reschedule
Canceling at the last-minute means they don’t prioritize the interview. Unless it’s an emergency, applicants should give you the courtesy of calling ahead of time.
They Know Little About The Job They Are Applying For
Are they too vague in their answers? Do they ask meaningful questions after the interview? These are some things you can observe to know if they really researched or read about the position they’re applying for.
Recognizing A Bad Hire
Below are some steps to recognizing a bad hire as seen with:
They Make the Same Mistakes Multiple Times
Everyone makes mistakes, but the right hire will learn from them. If the new hire makes the same mistakes over and over again, it may be because they don’t care much about the job or your company to make the effort and improve.
Low-Quality Work Compared To Other Employees
It takes quite some time to settle down in a role. You may have to wait a while for a new hire to flourish in the new role, but if they’re submitting low-quality work given the training and the help from their team, it may be a sign that they have a general lack of understanding about their job.
They Arrive Late Frequently Or Don’t Show Up At All
Making a habit of being late means they may have poor time management skills or they’re not enjoying their job. Either way, this is a sign that you didn’t hire the right person for the job.
The Skills They Claimed To Have Don’t Show In Their Work
Based on the skills they claimed to have in the interview, you may already have an idea of the quality of work a person can offer. If they’re falling short, you might want to ask yourself if it’s because of newness in the role or maybe they lied to you during the hiring process.
While it’s acceptable to strive for a good first impression on the interview, it’s wrong to present yourself in a false light, especially if those actions will affect the business.
They Are Disrespectful To Coworkers And/Or Management
While choosing a person for the job, consider if they will be a good fit in the team as well. Someone with a superiority complex and an arrogant approach to collaboration may cause problems within the team. Overstepping in other people’s work shows disrespect to the other members of the company and will not bode well should they stay long enough to be given a leadership position.
They Receive Multiple Customer Complaints
Listen to the client reviews to get a better understanding of the new hire’s work ethic. Are they delivering quality work on time? In the end, the client’s view of your team matters most. They are what makes your business. Touch base with your clients on a regular basis to make sure they’re content with the services you provide for them.
How Do You Deal With A Bad Hire?
The ultimate solution to a bad hire is to keep them away from your company at all costs. Be more careful in your hiring decisions. Who you employ should represent the best that your company has to offer.
Set clear expectations during the hiring process and those who don’t live up to the standards you set will weed themselves out.
If the new hire seems to have a bad work ethic or isn’t delivering, act on it right away by talking to them or their immediate leaders. If their work isn’t at par with the company’s expectations but they are willing to improve, do your best to give them the training that they need or reassign them to a position where they can flourish. However, if they don’t care about the company’s values and brand, terminate the employee sooner than later.
Stay on top of your employees as bad hires can backfire quickly.
Are You Making the Right Hiring Decisions? Let Opusuna Help!
Protect your company’s morale and interest by being more selective in the hiring process. Make sure you lay down your expectations clearly to new hires and don’t settle for someone who doesn’t fit the role. Learn how to spot a bad hire right off the bad to avoid the trouble they will inevitably cause.
To improve your hiring process, why not check out the Opusuna assessment. For all levels of teams, functions, and industries, there is no modern-day assessment with an integrated team-building strategy that compares to Opusuna. Using Opusuna, companies can identify peak team players and build high-performance teams.
Get started on our behavioral assessment to understand a candidate’s behavior, collaboration, and personality traits, and Schedule A Demo today!
