Hiring employees is difficult nowadays for a number of reasons. With unemployment rates at historic lows, employers have to compete for the best candidates. The changing workforce is also a factor as there are not enough young people to take the older generation’s place. Hence, companies have to look for workers in other countries or hire workers who are not ideally suited for the job. Technology has also changed the way we work. With so many jobs now being done remotely, employers have to trust that the candidates they hire can do the job from anywhere in the world. They also need to be sure that the candidates they hire will be a good fit for the company culture.
The difficulty of finding good employees today has led to an increase in bad hires. When companies are desperate to fill a position, they may not take the time to screen candidates properly, which can lead to disastrous consequences. A bad hire can be costly for a company in many ways, from decreased productivity and wasted time and money to ruined relationships and decreased morale. This article will discuss some of the hidden costs of employing bad hires and how you can avoid making them.
Financial Cost
According to Northwestern University, the USA’s Department of Labor estimates that the average cost of one bad hire is 30% of that person’s first-year earnings. So if you’re hiring someone who will make $50,000 per year, a bad hire could end up costing your company $15,000. This cost includes the wasted time and resources spent on training the bad hire, as well as the lost productivity while that person is employed.
In some cases, the financial cost of a bad hire can be even higher. If the bad hire is in a position of authority, they may make decisions that end up costing the company even more money. For example, they may approve projects that are over budget or make deals with suppliers who are not in the company’s best interest.
Lost Productivity
Bad hires can also result in a decrease in productivity for a company in a number of ways. First, when someone is not a good fit for a position, it can take them longer to complete tasks and projects. This can lead to backlogs and delays that impact other employees and departments. Additionally, poor performers are often less engaged and motivated, which can lead to even more mistakes and errors.
Effect on the Company Culture and Morale
But the financial cost and loss of productivity are just the tip of the iceberg. Bad hires also have a ripple effect on your company culture and morale. When someone isn’t a good fit for their role, it can create tension and conflict within your team. This can lead to higher turnover rates as good employees leave your company in search of a better work environment.
Bad hires can also damage your company’s reputation—both with your customers and with other businesses. If a bad hire is interacting with customers on behalf of your company, they may give those customers a negative impression of your business. And if you have to let a bad hire go, there’s always the risk that they could damage your company’s reputation by sharing confidential information or trashing your business to other potential employers.
How To Avoid Bad Hires
Luckily, there are ways for companies to avoid bad hires. Here are three major tips you can follow:
Screen candidates extensively.
One of the most important things you can do is to take the time to screen candidates thoroughly. This means doing more than just looking at resumes and conducting a few interviews. It means using pre-hire testing to assess a candidate’s skills and aptitude for the job. It also means conducting thorough background checks to ensure that the candidate doesn’t have any red flags in the past.
Define the job description clearly.
Writing a thorough job description can also help you avoid making a bad hire. This document should outline the essential skills and qualifications that a candidate needs to possess in order to be successful in the role. By taking the time to clearly define what you’re looking for, you’ll be able to weed out candidates who are not a good fit early on in the hiring process.
Perform multiple interviews.
Conducting multiple rounds of interviews with different people can also help you avoid making a bad hire. This gives you the opportunity to get to know the candidate from multiple perspectives and to ask them more in-depth questions about their skills and experience.
When you take the time to screen candidates properly, you can avoid making a costly mistake that could have a negative impact on your business.
The hidden costs of having bad hires are numerous—and they can have significant consequences for your business. To avoid making a bad hire, take the time to do your homework upfront. This includes writing a thorough job description, conducting multiple rounds of interviews, and doing reference checks. By taking these steps, you can help ensure that you find the right candidate for the job—and avoid the pitfalls associated with hiring someone who isn’t a good fit for your company. So while the hidden cost of bad hires may be high, the cost of avoiding them is well worth it.
