The pressure to hire top talent for companies is now bigger than ever, trying to find potential candidates and fill positions quickly can lead to a bad hire and in turn to a series of negative repercussions for the company. It has become well known that there is always an element of risk when hiring a new member of staff.
Despite the lengthy interview process & numerous reference checks, you can still never be too sure if the candidate will fit the role perfectly until they actually start. Therefore making a hiring decision involves careful planning and a lot of consideration. Hiring the wrong person can not only play havoc with a team but it can also have severe financial implications.
The financial cost
- The average cost of a bad hire is 30% of the employee’s first-year earnings.
- 10% of sales opportunities are lost.
- 27% of UK companies said that bad hires cost them more than £50,000 (€69,000)
The effect on productivity
- Hiring the wrong person can cause a 36% drop in productivity.
- Hiring a replacement is time-consuming, causing almost 40% lost time, recruiting and training the new person.
The cultural damage
- It can disrupt the team dynamics and has potential to cause a 32% drop in employee morale.
- It can also be damaging to client relationships, I’ve noticed this a lot over the years of working for a few recruiting firms and seeing almost 200 new employees. Client’s are more likely to stay with those recruiters that have longevity in their careers.
How to avoid a bad hire
- Thorough precise preparation: Writing a thorough & detailed job description helps so that candidates know exactly what the role entails. Be prepared to dedicate time to make the right hiring decision whether you engage recruitment agencies or you stick to finding talent in-house. If you are new to hiring make sure you have a support team as hiring is a 24/7 job that needs a dedicated team.
- Effective interviews: Assess the candidate against specific criteria that is essential for the role you’re hiring for. Make sure you know the essential questions needed and stick to a structure if there are multiple people who are part of the interview process make sure everyone is singing from the same hymn sheet. Finally, judge each candidate not only their skills and experience but also whether they’re a good cultural fit for the company.
- Psychometric tests: Something becoming a lot more frequent is the application of Psychometric tests. In the UK 18% of companies currently do psychometric tests and this could be the answer to finding well-suited candidates.
All in all, bad hires have a seriously negative effect on productivity and profitability. To avoid a bad hire, make sure you write a tight job description, highlighting the must-haves. Keep in mind your company’s culture when interviewing a candidate and ask the questions you want to know the answers to, not the ones you feel you have to ask.