So, you hired someone, who you thought would be great for your company. You went through the hiring process; they showed promise, you had a few doubts about whether they would be the perfect fit for your team but you thought it would be worth taking a chance, as they were the best candidate so far. You spent time training them and ensuring they understood your systems and processes. However, when they started, things didn’t seem quite right; they were rubbing people up the wrong way, not bringing the right attitude for your company and generally not holding themselves to the standard everyone expects. Now, other members in the team are losing morale because they’re having to pick up the slack, and you’re beginning to wonder if your hire is the right person for your company and their role. You could be back to square one.

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Up to this point, your obvious costs might have included the following:

  • Interview expenses (travel/food/accommodation/interviewers’ time).
  • Recruitment Agency fees.
  • The relocation costs if your employee needed to be transferred from one place to another.
  • The hire’s monthly, or even yearly, salary.
  • Any training the employee undertook.

But what about those costs that are a little harder to quantify?

  • Not meeting KPIs means that you’ve potentially lost customers and sales for the month. Mixed with a poor attitude this could mean losing customers forever – people don’t forget bad service. They may never use your service again and spread to their own network that you’re a company to avoid.
  • Lower employee morale can cause lower productivity, so less output for your investment into your employees. Studies have shown that 39% of businesses report a decrease in productivity due to a bad hire.
  • The time you and your colleagues spent pre-hire on formulating a job specification, interviewing several candidates and choosing the one.
  • The time you or your colleagues spent training and appraising the employee.
  • If this bad hire ruffles feathers and disrupts your current star employees, they could begin to look elsewhere and further dismantle your team.

And all this before you decide on the inevitable dismissal of the employee, which brings with it its own costs:

  • Termination costs, such as their salary during gardening leave, pro-rata holiday pay, etc.
  • Potential legal expenses should the candidate decide to sue you for wrongful dismissal.
  • Time and money spent restarting the entire hiring process to replace the wrong hire.
  • Disruption to the current team, as they begin to wonder why the employee was let go and how their performance is evaluated.
  • Increased workload for the current team members who pick up the work left behind. After all, the work still needs to happen!

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As you can see, a bad hire brings more risks than those that are purely financial. In numerous studies, these costs have been argued to exceed the actual tangible cost of recruiting and replacing the person, as the lost productivity, low morale and potential lost business from a bad hire can have a long-term negative effect on your bottom line.

Not only this, the Harvard Business Review points out that as much as 80% of employee turnover is due to bad hiring decisions. If you have to hire for each role twice, you are effectively paying double for 80% of your workforce. In fact, it has been stated that even if you rectify a poor hire within 6 months, the replacement cost is 2.5 times that of the former employee’s salary.

At Farrell Associates, we are obsessed with finding the best fit for the role, screening heavily on personality, culture, and key behaviour drivers as much as on core skills to ensure that the one or two candidates sent over will be a good match for your company. We pride ourselves on the fact that our candidates stay at our clients for the long term because the match is ideal on both sides. We’re saving companies time and money through every step of the hiring process, because we understand how debilitating it is for you to make a bad hire. Can you afford to make a mis-hire?

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Toby Swann, Associate – IT and Software Engineering