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What does a bad hire really cost your business?


Bad hires cost your business more than just money.

Bad hires cost your business more than just money.

If you’ve been a part of the work force, you are familiar with it by now. Your company has gone through a lengthy hiring process, interviewing handfuls of candidates to finally offer a position to one who decision makers have deemed a perfect match. But after another three months have gone by, your company is going through the same process for the same position. The last hire didn’t fit in with the company, and he or she just wasn’t working out within your organization’s culture.

Hiring the wrong employees can negatively affect your company in a variety of ways. With bad hires, a company has wasted time and money. In fact, the turnover costs associated with an entry-level, non-skilled position total roughly 30 to 50 percent of an annual salary, according to G&A Partners. For supervisors, that percentage jumps to 100 to 150 percent. From top to bottom, hiring the wrong individual can be a costly decision. Here are potential losses associated with other roles within your organization (in terms of annual salary):

What exactly does all of this mean for your business? With bad hires, you not only waste time, you waste a considerable amount of money. It means that you are at risk for losing out on thousands from your company budget as a result of suffering a loss that’s more than monetary. A bad hire can affect other areas of your business. Researchers found that roughly 41 percent of companies reported that they lost worker productivity after a bad hire, according to Harris Interactive. Moreover, 40 percent of companies surveyed reported lost time due to recruitment and training of the new worker. Survey results showed that about 36 percent of companies experienced a blow in their overall office morale.

Take your time when making a hiring decision so that you don't regret it!Take your time when making a hiring decision so that you don’t regret it!

Addressing the causes of bad hire decisions
If the losses are so substantial, then why do so many bad hiring decisions keep happening? While there is no single solution to the entire problem, there are plenty of people who think they know the reasons behind the issues. In a survey conducted by Harris Interactive, 35 percent of respondents attributed bad hiring decisions to a rush to fill a vacant position quickly. People said they thought the lack of time forced a rushed hiring decision that would have probably not been made otherwise. Additionally, a little more than 20 percent of those surveyed thought bad hiring decisions were a result of poor research into skill levels. These respondents noted that they failed to see any tests performed by the company on those individuals applying for the job and the result was an individual who was under-qualified for the position. About 11 percent of the survey’s participants even thought that there was a failure by decision makers to actually check the references of job candidates.

If you are in a position to help make decisions regarding hiring new employees, make sure you go on information you’ve obtained somewhere other than a curriculum vitae. Remember, CVs are written in a positive light, but checking on references for yourself can help give you a better indication as to the entire picture. Depending on the line of work you are in, you may be looking for someone who functions well as a part of a team in addition to having the right background. Make sure one of the references you ask for is an old employer. It’s important to know a little bit about a potential new hire’s demeanor on a day-to-day basis. Don’t be afraid to make a little extra effort when vetting potential hires. It could save you loads of time and energy in the future.

Tips for reducing employee turnover
Although there is no way to guarantee that every new hire will work out in the long run, there are ways you can reduce the number of times you hire the wrong guy or gal for the job. It helps to understand the reasons that bad hires are made and then look for certain qualities during the hiring process. Remember to consider what qualities you are looking for from employees before you begin interviewing, so that you can know what to look for in interviewees. Don’t just hire somebody for the sake of hiring someone new. If none of the candidates whom you interview fit the bill for what you are looking for, don’t settle for the most qualified of the bunch. Schedule another round of interviews! Here are a few other things to keep in mind when you are going through the hiring process:

Don’t rush to any decisions
As long as you have the time, hiring someone should be a decision that is not rushed. Rushed decisions often mean that you miss details or have not gotten all of the details for all of the information you were given. If you don’t have an immediate need to fill the position, take your time. Sit down with as many candidates as possible and get other levels of management involved. Make the hiring decision a team one, so that everyone in the organization is on board with the hire.

Don't rush to any hiring decisions - take your time.Don’t rush to any hiring decisions – take your time.

Decide what your company really needs
Your search for the right candidate should begin by deciding what the correct candidate should look like. Leaders – from all departments and sections of the company – should sit down and discuss what needs should be met by the new employee. Are there skill sets that need to be a part of the candidate’s background? Are you looking for experience or a fresh perspective? Whatever the questions you and your team decide on, the answers will help you weed through the applications to find the best possible options.

Utilize resources to eliminate candidates right off the bat
There are plenty of fairly simple ways that you can eliminate candidates who are not qualified for the position for which they are applying. If the position requires someone who is computer-savvy, administer a computer skills assessment as part of the interview process. Microsoft office tests are perfect pre-employment tests for positions that utilize that software often.

Keep these things in mind and you will be able to identify the best candidate for the job out of a sea of applicants as quickly as possible. Contact EmployTest today to learn more!