Recruitment 101: The True Cost of Hiring the Wrong Person for the Job
The induction of a new employee is usually met with some interest and excitement. Beyond being just a new face, a new hire is ultimately viewed as a new asset bringing their own brand of expertise, skills, and experience into the team. Expectations are usually high, depending on the job level of the new hire.
A great hire can make a real difference, not only on the company’s bottom line but also in boosting employee morale and productivity. The flipside, of course, isn’t hard to imagine.
If a new recruit is unable to deliver to expectations or performs below par, they don’t just fail themselves and the company. And it’s not just about poor performance, too. A bad apple, so to speak, can be a source of negativity, and really spoil the whole bunch.
Financial Costs
People assume that dealing with a poor hire is simply a matter of firing the concerned person, and then hiring a replacement. The financial costs of recruiting an ill-qualified candidate, however, can be quite substantial, especially if the person was hired to fill an executive-level position.
Studies have shown that the financial consequences (accounting for time and money) of a poor recruitment decision can cost more than 50 per cent of the bad hire’s salary. One study revealed that it could even amount up to 2.5 times the employee’s salary.
The costs of recruiting the wrong person for a job include the time spent on recruitment activities, job posting and advertising fees, induction, orientation and training, salaries, finding a replacement, and possible legal costs during termination.
Impact on Team Culture and Morale
Getting an ill-qualified candidate to join a team can substantially affect teamwork and staff morale. Having a poor performer on the team implies the rest of the team members have to work extra to make up for the slack. This can lead to negativity and divisiveness, as well as overall job dissatisfaction.
The negative consequences of a bad hire on a company can also be compounded if the person in question occupies a team leader, managerial or executive-level post. Having a lousy leader can cause a company to lose its valuable team members. In fact, studies reveal that 80 per cent of employee decisions to leave their jobs are directly attributable to their co-employees, and that half of those who leave do so because of their managers.
With a bad hire, you do not only stand to lose financially; you can lose old, loyal employees as well.
Decreased Productivity
Teamwork and positive staff morale are essential elements of job satisfaction, and happy, satisfied employees are productive. However, with one person not doing their job, the rest of the team members have no choice but to exert more effort to achieve set goals or KPIs.
Working more and putting in 10-hour-plus days can add to employee stress, ultimately leading to burnout and low productivity. Poor performers also ‘infect’ other employees with their inefficiency and bad habits, and ultimately lower the bar for other staff.
Moreover, bad hires who occupy client-facing roles can also lead to a loss of customers. Any unprofessional behaviour or signs of incompetence can drive customers away. Again, this means business loss and reputational damage to a certain extent.
How to Avoid the Proverbial Bad Apple
So how can recruitment avoid making the mistake of hiring someone ill-equipped to do a job?
There’s no hard and fast formula, and success is never guaranteed.
However, carefully vetting each prospective employee’s background can significantly help.
Even if you are urgently hiring for a key position, never make the mistake of rushing through the recruitment process. Make sure you check references, set clear-cut goals for the candidate, involve an experienced outsider (not a member of the recruiting team) to give a more objective perspective, conduct structured and panel interviews, and test prospective hires using sample tasks of what they will be doing on-the-job.
In sum, treating the recruitment process with the attention it deserves should help you avoid the nightmare of hiring someone unqualified for the job.