Hiring the wrong person has more impact than you might think, and can have huge impacts on morale, productivity, and profits. Let’s look at some of the hidden effects of making the wrong hire.
What is a Bad Hire?
While many employees may develop performance challenges or interpersonal conflicts over time, that doesn’t make them a bad hire. Instead, a bad hire is often identified early in their tenure, because they display one or more of these characteristics within a short time:
- They do not have the skills they claimed during the hiring process
- They are unable to get along with the team or have a negative outlook
- They have behavioural or attendance problems
Unfortunately, bad hires are all too common, with nearly 74% of HR professionals admitting that they had made a mistake in a hiring decision. In fact, according to Leadership IQ, 46% of new hires fail within 18 months.
The Costs of Making a Bad Hire
Some of the costly effects of making a bad hiring decision include:
- Wasted resources. One of the reasons companies are reluctant to let go of a bad hire is because the process of hiring, onboarding, and training a new hire is time consuming and expensive. Employees throughout the company, from HR and benefits, IT and security, and training and coaching team members have all invested in the success of the new hire, and it can be discouraging to start over with a new person.
- Employee disengagement. Employee disengagement is contagious. A bad hire can spread disengagement and lower the standards for everyone in their team. When a new hire has performance or attendance problems, other employees can take that as permission to engage in similar behaviors.
- Burnout and turnover. On the other hand, other employees can feel the pressure of filling in for a bad hire’s lower productivity, correcting their errors, repeating information, and compensating for their weaknesses. A highly-placed bad hire can even lead valued employees to leave a company.
- Lost productivity. It is difficult to measure the costs of lost productivity of a bad hire. Naturally, it depends on their role and responsibilities, and it also depends on whether the work is not done on time, or not done at all. Productivity can also be lost when other team members have to switch tasks and do, or re-do, someone else’s work. Finally, lost productivity has a huge overhead costs: as managers and supervisors request the status of work, remind about deadlines, answer unnecessary questions, schedule unproductive meetings, etc.
- Damaged brand reputation. In some roles, a bad hire can do damage to a company’s reputation or customer relationships. But today, a bad hire in any role can also create negative reviews and online feedback, and inspire other negative comments and conversations, which can reflect poorly on a company.
- Litigation. In rare cases, a disgruntled employee can become litigious, which adds a new level of risk and cost to making bad hires.
Overall, the US Department of Labor estimates that replacing a bad hire can cost about 30% of that employee’s first-year earnings. Many HR professionals, when accounting for lost productivity, poor morale, and wasted time and resources, estimate that a bad hire can cost $240,000 or more.
How to Avoid a Bad Hire
While the occasional bad hire is inevitable, here are some best practices to avoid making the wrong hiring decision:
- Take your time. Most bad hires are made when companies are desperate for someone to fill a role, so they lower their standards. While this is understandable, it is also avoidable. Instead of lowering your standards and making a bad hire, use an agency or website to hire a temporary, freelance, or contract worker so you can focus on making the right hire.
- Focus on soft skills. The second most common cause of bad hires is that hiring managers are focused on hard skills and credentials on a resume, and not paying enough attention to soft skills. In fact, studies show that the most successful new hires are based on personality factors like agreeability, motivation, and coachability. Remember that a good team member is a whole person, and that who they are matters as much (or more) as what they can do.
- Go with your gut. If your candidate is a weak “maybe”, that candidate is probably a “no.”
At grapefrute, great matches are our specialty. Working with our expert recruiters helps you make the right hiring decisions, saving you time and money. If you’re ready to leave bad hires behind you, give us a call.