One of the key elements of a successful business is hiring the right people. But what if we hire the wrong person? A bad hire does more than pay an employer in wages. It can reduce productivity, lower morale among team members, and even harm brand reputation. Understanding the real cost of a bad hire and how to prevent it will save businesses time and thousands of dollars.
Here’s what’s actually on the line:
1. Financial Losses
Studies put the cost of a poor hire at up to 30% of the employee’s annual salary. These are the expenses incurred:
-Advertising, recruiter fee, and background check costs
-Onboarding and training costs
-Severance pay (in case of termination)
-Pay for lost productivity due to time spent fixing mistakes
2. Effect on Team Productivity & Morale
A poor hire can decrease the team’s productivity and morale. When a new employee underperforms or generates a negative work culture, other employees demotivate. This can result in:
-Increased team stress and frustration
-Increased workload for other employees to cover for the poor hire
-Loss of key team members due to dissatisfaction
3. Bad Company Reputation
An ill-fated employee in a customer-facing position could hurt the company’s image. A lack of communication, poor delivery, or poor customer service can result in negative feedback and lost business.
How to Avoid Costly Hiring Mistakes
There is no foolproof hiring process, but the following can minimize the risk of a bad hire:
1. Tighten Up Your Screening Process
Spur-of-the-moment hiring is likely to result in mistakes. Take time to:
Use systematic interviewing to determine cultural fit and skill
Develop tests of skills or pilot initiatives
Use behavior interviews to uncover historical work performance
2. Bypass the Resume
Experience can be likened to adaptability and attitude. Therefore, we suggest factoring in interpersonal skill, problem-solving skill, and the potential for the candidate to develop within the company.
3. Bolster Reference and Background Checks
Don’t leave this out! Reference checks with previous employers can provide valuable insight into work habits, and dependability.
4. Define Job Expectations Clearly
No definitive job description means mismatched hires. Define responsibilities, expectations, and company culture in the job posting.
5. Use a Recruitment Partner
A recruitment partner can help source quality candidates, streamline the recruitment process, and prevent expensive hiring mistakes.
A bad hire can have more than just a financial impact: it affects productivity, morale, and long-term business success. That’s why it’s important to make the right decisions to build a stronger, more efficient team by streamlining your hiring process and leveraging expert recruiting services.
Need help finding the right talent? Contact Axcess today and let’s build your ideal team together!