Hiring & Recruiting

New Survey Reveals the Cost of a Bad Hire

Building a successful business depends largely on hiring the right people. But as small and midsize firms expand, how strong is their hiring process? A new survey from global staffing firm Robert Half aimed to find out. Among the results:hiring

  • Nearly half (49%) said most hiring managers underestimate the complexity of the hiring process.
  • 56% cited problems with their hiring process.
  • A strong majority (81%) said their companies have made a bad hire.

Robert Half’s Small and Midsize Business Hiring survey explores perspectives of business owners and managers related to a variety of hiring issues. More than 1,000 business owners and Human Resources managers of United States firms ranging from one to 499 employees were surveyed by an independent research firm to gather relevant data.

Several factors complicate hiring in smaller organizations, according to Paul McDonald, senior executive director at Robert Half. “Some firms lack dedicated recruiting staff or a Human Resources function altogether,” he said, in a press release of the findings. “Multiple demands on a business owner’s time also can pull attention away from recruiting and cause it to fall to the last priority.”

Numerous Costs of a Bad Hire

Business owners noted many negative impacts of making the wrong hire:

  • On average, respondents estimated 45 hours were wasted on hiring and onboarding people who ultimately did not work out.
  • More than half (53%) reported increased stress on the team that worked with the bad hire.
  • One in five (20%) cited decreased confidence in the managers’ ability to make good hiring decisions.

Delays to Correct Mistakes

The research also found that while a bad hire could be identified rather quickly, correcting the mistake took longer.

  • 58% of small business owners said it took less than a month to realize they made a bad hiring decision; however, it took more than twice that time on average (8 weeks) to let the person go.
  • Nearly 5 more weeks passed before a replacement started working, with 68% of businesses putting the workload on existing staff during this time.

Minimizing the Risks and Costs of a Bad Hire

The survey results indicate several ways businesses can address deficiencies with their hiring process and minimize risks of making a bad hire.

  • Branch out: 58% of respondents said the best new hires come from referrals, including employees, friends, recruiters, and others in their network. Go beyond posting job openings and hoping the right person will apply. Among the respondents who use recruiters, 76% said a recruiter was able to find a candidate they wouldn’t have found on their own.
  • Delegate: 45% of owners noted that the most challenging hiring step is evaluating candidates based on their skills and potential fit; 26% admit it takes them too long to fill open roles. Delegating these duties to an outside resource can cut hiring timelines and save money: 43% said working with a recruiter saved the firm time because the recruiter did most of the work; 36% also said they saved money by finding someone more quickly.
  • Get a guarantee: 32% of businesses working with recruiters said they do so for the service guarantee. Ask recruiters about their placement success rates and what they offer if a new hire doesn’t stick.
  • Bridge the gap: Only 18% of respondents said they brought in temporary professionals to assist with heavy workloads while replacing bad hires. The right person can lift the burden from existing staff, keep projects moving, and may be evaluated on the job for a potential full-time role.