With the recent upward trend of the economy and new lows in unemployment, employers have fewer applicants for their job openings than they are comfortable with. What happens when they settle for a less-than-great employee?
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A bad hire can cause direct and indirect problems that can plague the organization for months or years if the issues are not addressed.
A bad hire can manifest itself in any number of ways. For example, the wrong employee may not be able to produce the standard of work required for the job. He or she may bring a negative attitude to the company and bring down employee morale. Or, this new hire may be unable to work productively with other employees or may be unable to meet obligations to the customers. Or, it may be as simple as bringing someone on board who turns out to be unreliable—showing up late, missing deadlines, and not getting the work done. Any of these problems can spell trouble.
High Costs Associated with Bad Hires
Clearly, hiring the wrong person is something to avoid. It’s frustrating and extremely costly, too. Here are some of the costs associated with hiring the wrong person:
- Wasted hiring costs, including money spent on advertisements and/or recruiters—all of which will need to be spent again if the person is to be replaced quickly;
- Loss of productivity if the new hire never gets up to speed;
- Labor costs for everyone involved in the hiring process, all of which may have to be repeated if problems cannot be remedied;
- Training and onboarding costs;
- All miscellaneous costs associated with bringing the new employee on board, such as relocation costs, hiring bonuses, purchase of new equipment, and any other costs needed before the employee begins work;
- Compensation and benefits costs paid directly to the employee, including wages, insurance, retirement contributions, and any other benefits;
- Indirect costs associated with every employee, such as unemployment insurance and workers’ compensation insurance costs;
- Potential loss of business if an employee alienates customers;
- Wasted time of management spent dealing with problems that occur;
- Extra time to productivity, factoring in the need to restart the hiring process after letting a bad hire go; and
- Possible severance or other costs associated with letting an employee go.
There are also indirect costs, such as decreasing employee morale and loss of productivity from frustrated coworkers. And last but certainly not least, there is an increased risk of a wrongful termination lawsuit or other lawsuit related to the bad hire.
How to Avoid Bad Hires
The costs and frustrations all add up quickly when there’s a bad hire. Let’s take a look at a few ways to hopefully avoid this scenario.
Some ways to reduce the risk of hiring the wrong person are:
- Ensure job descriptions are accurate for the job, and confirm them before making the job posting. Job descriptions should list not only the required employee qualifications and experience but also the working conditions of the job. When applicable, include things like “a requirement to work well in group settings” or “a need to have a personable demeanor with customers.”
- During the interview process, it’s important to look for a good fit with the company culture, which is a distinct and separate issue from employee qualifications.
- Don’t hire in a rush; take the time to get to know the candidates to adequately assess them.
This list is just the beginning. Stay tuned tomorrow, where we’ll cover some additional ways to minimize the risk of having a bad hire.