The High Cost of Making a Bad Hire
No matter the company or type of role—as a hiring manager, you have big shoes to fill. At the end of the hiring process, you will ultimately extend an offer to someone who will have a significant impact on your organization. A great hire will add value to your company culture, meet or exceed their goals, and ultimately contribute to the success of the business. A bad hire, however, can lead to decreased employee morale, missed opportunities, and unmet business expectations.
According to Harvard Business Review, as much as 80% of employee turnover is due to bad hiring decisions, and these decisions can cost companies at least 30% of the bad hire’s first-year expected earnings. However, there’s much more at stake than financial resources. While it’s challenging to truly realize the full cost of making a bad hire—these are the common repercussions organizations could experience from a hiring mistake:
Low employee morale
One bad employee can kill the morale of many good ones. Someone who is considered a bad hire will likely be falling behind on their responsibilities—and it will be up to other colleagues to pick up their slack in order to meet company objectives. This may lead to an environment of frustration and resentment—especially if other team members are not getting compensated for the extra time and work they’re putting in. A situation like this can impact overall employee satisfaction and the likeliness of long-term employee loyalty.
Aside from turnover being an issue, the output your company can produce is going to be significantly lower with a bad hire in place. Your productivity can take a hit, especially if your other employees are experiencing burnout from overcompensating.
Interviewing, evaluating, and onboarding an employee can cost a considerable amount of time and money. If your hire isn’t working out, you’ll find yourself in a situation where you not only have to incur termination expenses, but you’ll have to start the hiring and onboarding process all over again.
A bad hire can have negative effects on your company culture and customer experience. If the bad hire is not upholding company values or quality standards, their actions can negatively affect how those you work with—including your clients—view your company.
What to do if you’ve made a bad hire
If you come to realize that you have made a hiring mistake, know that this is a common challenge for managers. What’s most important is that you address the situation as soon as possible to avoid any additional damage. Evaluate the situation and communicate with the employee directly. Ensure clear expectations have been set, and training has been provided. If the employee is unable or unwilling to improve, you may have to consider taking steps towards termination.
Tips to avoid making bad hires
While sometimes it’s tough to truly measure the quality of a hire before they begin, there are steps you can take to mitigate your chances of finding the wrong fit.
- Write accurate job descriptions: Ambiguous job descriptions have been listed as common reason for both bad hires and employee turnover. When crafting a description for the role, it’s important to avoid being vague and to set clear expectations. Identify the necessary or ‘must-have’ skills required to perform the job, and also identify skills that are desired but not mandatory. It could be helpful to also list information about the company or culture that is important for a candidate to know.
- Ask the right questions: A resume will help you get familiar with a candidate’s qualifications, but the interview is your chance to get to dive deeper. Ensure you’re asking your candidates the right questions in your interviews to really understand their experience and how they can apply it to your specific role. Also ask questions that will help you understand how they’ll integrate themselves into your company, such as how they handle workplace conflicts or tough decisions, and what their management style is.
- Don’t just hire based on skills: While hiring someone who has the skills to perform the role is critical, you should also consider if this hire will be a great add to your company culture. Think about your company values and the organization you want to foster when considering someone for your role. Will this person add value?
- Don’t rush the process: If you have limited resources, the pressure to fill a role quickly can lead to an oversight in the hiring process. Hiring the right fit can take time, and it’s critical to be thorough throughout your search. Overall, if you do not have the in-house resources to strategically manage your hiring process, you can partner with a staffing or consulting company that is skilled at identifying and screening talent and can offer expertise and industry guidance.
With offices nationwide and a pipeline of candidates across the country—Tandym Group can find you the right fit for your organization. Contact us to learn how we can work together.