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What Does Making a Bad Hire Really Cost?

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Bad hires are expensive based on an interesting survey performed by CareerBuilder revealing that 41 percent of companies estimate that a bad hire costs more than $25,000; 25 percent of companies said a bad hire costs more than $50,000. And the higher the position, the higher those numbers become. Besides such costs, which are extraordinarily high — and which can be avoided — there are other contributing elements: ones measured not in dollars but in lost productivity, impact on team morale, and total time wasted in recruiting, onboarding, and training the new employee. Certainly there are several other negative factors as well. Many would agree that an improved hiring process could minimize if not eliminate altogether such avoidable expenses.

So, where does the problem lie?

There are two troubling and basic issues that lead to such a bad outcome. The first is the fact that companies don’t attract qualified and very successful employees because the company’s job descriptions are off-kilter; the descriptions are simply not spot-on descriptions. Some job descriptions are so oversimplified and empty that an employed and successful person is not attracted to them because such a person certainly isn’t going to change from a good job to an unknown, spottily described one. Other descriptions sound so demanding, complex, intricate, elaborate, detailed, and wordy (like this sentence!) that again, happy and successful employees are not going to venture a change, because they know they are not God-like, that they wouldn’t fit, that they don’t have all the extensively laid-out required qualifications, and that therefore they wouldn’t be able to do the job. Now, what are left among those who apply are people who might be in transition and have nothing to lose by applying. Let me hasten to add that I’m not implying that people in transition are lesser.

The second issue is with the hiring process.

What’s broken here is not enough preparation done up front, even before the interviewing takes place. The process is typically shoddy, superficial, and like puzzle pieces that do not fit; but still, it gets forced together fast because the replacement was needed yesterday.

The solution is easy: A team of people who are going to interact with the new hire ought to get together and decide on what type of employee they’re looking for. They must be clear about the traits and skills that are important for the hired candidate to have in order to be successful on the job. Once an agreement is reached on those issues, the interviewing process can start. Once all of the chosen candidates have been interviewed, the hiring team needs to get together again and thoroughly discuss each candidate. It is anticipated that if the hiring team performs its job in earnest, the best candidate will be selected. I submit that 90 days after hire, the team should get together a third time — this time to evaluate the performance of the newly hired person versus what was expected after their consensus meeting on the candidate they wanted for hire. The consensus meeting and the 90-day evaluation meeting put the team in a position to learn more about its own process and make improvements if necessary. Short of that, bad hiring practices will perpetuate, and the cost of hire will remain high.

Bad hire costs Photo via Shutterstock

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Personal Branding Blog


Personal Branding Blog The Personal Branding Blog is part of the Small Business Trends Publisher Channel, offering branding and career advice from Dan Schawbel and his team of experts. The blog helps professionals build a powerful brand to remain competitive in the job market.

3 Reactions

  1. The “cost” imposed on team morale can be incredibly large. Work doubly hard to filter out poor fits in the hiring process and you’ll be rewarded.

  2. Great article! I think it’s also important for the hiring team to tease out skills they can teach a new hire vs. traits that are important to company culture. You can easily teach someone excel and any other new technology that comes along if they have an open mind, tenacity, and curiosity.

  3. Aira Bongco

    I think that it is not just a matter of hiring talented people. Sometimes, talented people have big dreams and they are not willing to stay working for a small business. So it is important to strike that balance between talent and loyalty.

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