What Does a Bad Hire Cost Your Business?
In this tight labor market companies are under pressure to snap up promising candidates before they get away, which inevitably leads them to rush the hiring process. Far too often, hiring managers are so eager to fill an open position that they skip over candidates' shortcomings and end up hiring someone who really doesn't meet the job requirements.
What is the cost of hiring someone who is not a good fit?
Photo by Tima Miroshnichenko
The cost of recruiting, hiring, and onboarding a new employee can be as much as $240,000, according to 2021 research from the U.S. Department of Labor. For small businesses, a five-figure investment in a mis-hire is a threat to survival. With so much at stake, getting it right the first time is critical.
While we can quantify the financial impact of a bad hire, equally (if not more) important is the impact on morale and productivity in your workplace. Negativity is contagious. Poor performance and disengagement can spread like wildfire through a company, adversely affecting company culture in a way that lives on beyond the bad hire’s tenure.
Most companies will have experienced the headache of a bad hire and will be keen to avoid repeating the mistake. Next time you’re hiring, follow the steps below to ensure you don’t waste time and resources on the wrong person.
Determine the necessary skill sets. Benchmark the job and create key accountabilities for the position. Evaluate the process you use for screening applicants; are you selecting the best candidates?
Implement a standardized interview process. It’s surprising how many businesses lack a standardized interview process, but it’s an important step in minimizing bad hires. Provide hiring managers with good interview questions – those that ascertain whether an applicant is a good fit for the role and for the organization – and the tools to properly evaluate candidates. The process should be consistent for all applicants - the same interviewers, questions, and assessments. Train your managers in how to interview, and the red flags to look out for.
Figure out what went wrong. If you’ve had a bad hire in the past, learn from the experience. Mistakes you made with that employee can be used to inform your current hiring process.
Always Check References. Take the time to learn about the candidate’s past. Irrespective of how much you like the candidate, talking to people they’ve worked with will offer you invaluable insights and information.
Set clear expectations. Build discussions on the role and its’ responsibilities into your onboarding process, and set clear, actionable goals and objectives from the outset. Then, if expectations aren’t met, there are no surprises on either side when you fire fast…and you should fire fast.
Offer mentorship. If you can, pair new hires with experienced employees to provide mentorship on the job.
Need help? Check out our guide on creating the ultimate hiring roadmap for your company or get in touch and we’ll guide you through the process.