All recruiters and HR managers strive to recruit the best candidates. A great hire can improve productivity, boost office morale, and positively impact the company’s bottom line.
But what is a bad hire? And how does it happen? Consider: Some candidates may misrepresent things in their resumes and applications. This can range from exaggerating educational or work experience to blatantly lying.
No matter how well you think you know someone, talking to the people he’s worked for in the past yields new insights and clarifies existing ones. References are invaluable free resources that prevent costly mistakes.
Costs of a Bad Hire
- Dampened Morale — Employee morale correlates with increased productivity, organization loyalty, and higher profitability. The wrong employees kill workplace morale.
- Increased Turnover — Every organization needs great employees. But there’s one thing which good employees can’t stand – that is having bad employees as their colleagues or managers. They’ll quit.
- Decreased Teamwork — Teamwork is critical to organizational success. Bad hires don’t work well with fellow employees.
- Decreased Productivity — Workplace morale and teamwork are critical factors for boosting productivity.
- Reputational Damage — A bad hire has a negative impact on employee morale and increased turnover will soil an organization’s reputation. When a company gains a reputation for hiring the wrong individuals, it will start having problems attracting top talent. A bad hire interacting with customers can damage an organization’s image to its customers.
- The Confidence Factor — When you hire and keep the wrong people, your team questions your ability to make smart decisions. No one is more affected by this than top performers.
Significant Financial Costs
Financial costs can vary widely depending on the position for which the hire was made. Estimates range from $7000 to $10,000 as the average cost of hiring the wrong individual for an entry or mid-level position. The cost of wrongfully hiring a manager can be in excess of $40,000.
While the financial impact is quantifiable, chief financial officers actually rank a bad hire’s morale and productivity impacts ahead of monetary losses.
Have you ever calculated your direct costs of replacing someone who shouldn’t have been hired in the first place? They include:
• Hiring (advertising, interviewing by human resources and management)
• Onboarding (training, management, and oversight)
• Lost productivity, engagement, opportunities and customers
• Hiring externally
It doesn’t matter if you are hiring an entry-level minimum wage employee or senior executive. The cost of a bad hire is significant and can bring down a team, a manager, or the entire organization.
While there are no guarantees, taking the time to cast a wide net and
doing your due diligence in selecting employees is well worth the effort and will minimize the chances of a bad hire.
“The toughest decisions are people decisions: hiring, firing, and promoting people. They receive the least attention and are the hardest to ‘unmake.” — Peter Drucker
