A Career Builder survey that was carried out in December indicated that 41 percent of the employers suffered $25,000 extra costs as a result of a bad hire. 25 percent employers reported incurring more than $50,000 in costs as a result of a bad hire. For this reason, many employers have become mindful of whom they hire. The survey indicates that the problem faced by many employers is that they often need to hire very quickly. Inasmuch as issues arise which necessitate a company to hire quickly, 38 percent of the businesses that were surveyed reported that this was purely the reason behind their bad hires. If a company has a staff of 250 employees along with a turnover rate of 35 percent then they risk losing more than $2.1 million per annum because of bad hiring decisions. This is based on the assumption that the employees coming in are at the entry level positions such as administrative or customer service positions. If turnover is reduced by 50 percent, this cost will also decrease to $1,093,750.
It is important to note that these calculations have not taken into account some unseen problems and other expenses that could be directly or indirectly associated with bad hires. The employers who were surveyed by Career Builder also reported a host of other additional problems from bad hires including lower sales, legal issues, lost time in training, low worker productivity, negative impact on the attitude of clients as well as lower employee morale. Just try to imagine the impact that a bad hire may have on your customers’ perception of the business and the sales revenues.
If possible, most managers are more than willing to avoid making a bad hire. However, this process begins with understanding what makes a hire a bad one. One may easily say that a bad hire is a person who is incompetent, lazy or bad. However, this often ends in a blame game that doesn’t solve core issues being faced by an organization. The real issue is to address the responsibility of an organization in acquiring and retaining top talent. In the survey, several key examples of the characteristics of a bad hire include negative attitudes, failure to produce the required standard of work quality, the principal subject of most customer complaints, attendance problems and failure to meet the set deadlines. A bad hire may even constitute more than this because they don’t have to be lazy, ineffective in an assigned role or incompetent. We should give the hiring manager the benefit of doubt that he/she should be able to spot someone who will be negative, lazy or generally undesirable for the company.
More often than not, the person and the culture of the organization may not match, the support or necessary training could be minimal or totally nonexistent or even the habit in the lower ranks of the organization may not clearly line up the C-Level vision of the company. Other factors which determine whether a hire is suitable for the company include the role in particular, the organizational culture and the manager in charge. The human resource professionals should clearly understand the company’s vision, strategic plan and culture of the organization as they make a hire.
A quicker and more effective way of spotting and preventing a bad hire would be to create an environment in which all candidates can be compared objectively. This should start with the hiring manager, the hiring process and how to implement it. Hiring is not just an action but a skill that should be learned, trained and eventually systematized in order to ensure that quality control procedures are considered. The hiring process needs to be audited in order to ensure that all candidates are properly screened. All hiring managers should be taught how to spot the negative and positive personality traits of candidates, the red flags, how to create and initiate a hiring process that is proactive and how to create systems which are more organized for the purpose of taking all the candidates through a fair hiring process. The management and C-Level executives in the company should be able to understand the new hiring process hence support its rollout and implementation. Even when the CEO may not need to do anything to do with this process, his/her understanding of its metrics and key performance indicators that are associated with the hiring strategy will help the organization to track and optimize the hiring process quarterly.
Do you think that your benefit could in any way benefit from a cost reduction of $250,000? What if you create a new plan that will only bring in the topmost performers and then retain them? In your assessment, is company turnover affecting your customer perception and sales? Don’t worry because we are here to help you. In order to complete a hiring assessment, just contact us to take a survey with one of expert team members. After the survey is completed, one member of our Senior Strategists Team will review the hiring strategies of your business within an hour and then discuss with you the results.