Oh, the Horror! The Cost of a Bad Hire
Congratulations! Your business is doing well, production is up and you’re looking to hire new staff to meet demand. Or maybe that’s not your story—perhaps you need to replace staff who are moving away or just moving on. Hiring is part of the cost of doing business. Even if you are brilliant with digital office systems, you can’t be everywhere at once. Even Superman needed to bring on help to cover the office. You’ve got to have help to prosper; after all, these are the people who help you bring in the money. Whatever your need, hiring can be risky. Sure, you need the help, but hiring the wrong person for the job can be one of the most expensive blunders a business can make.
Hiring is costly to begin with. We don’t tend to think of the cumulative cost of a new hire because it’s incremental; it sneaks up on you in nickels and dimes. But there’s time and effort involved in writing and placing a job ads, screening candidates, making phone calls, sending emails, arranging and conducting interviews, checking references and so forth. You may also be paying for extra costs such as resume scanning or background checks. With all that time, effort and money spent, you want to be sure that you get it right the first time.
Picking the wrong person for the job isn’t just one decision; it’s many decisions. A single bad employee can trigger an avalanche of time-consuming counter-productive corrections, administrative errors and client dissatisfaction. Unfortunately, many companies make bad hires. In the U.S. alone, some 66 percent of employers report being affected by a bad hiring decision at some point.
Tony Hsieh
, CEO of Zappos,
illustrates
the disruption and expense of a bad hire: that one bad apple has the ability to cost company millions. In fact, his own bad hires have cost the company an estimated 100 million dollars.
Matt Ferguson, CEO of CareerBuilder, states that “making a wrong decision regarding a hire can have several adverse consequences across an organization”. Ferguson adds, “When you add up missed sales opportunities, strained client and employee relations, potential legal issues and resources to hire and train candidates, the cost can be considerable. Employers are taking longer to extend offers post-recession as they assess whether a candidate really is the best fit for the job and their company culture.”
Never mind the money. The real cost of a bad hire is brought to light in other ways. An unmotivated, incompetent or intransigent employee can act as an anchor to the entire team, impacting productivity and team morale. Training the subpar employee needlessly consumes valuable resources. Taking up slack by correcting incomplete or incorrect work can destroy workflow and throw an entire department into disarray. There’s no win in this situation; the bad employee isn’t going to get any better and devoted team members end up frustrated and dissatisfied.
If your bad apple is in a management position, the downhill trend may not be isolated to a single team. Depending on their level of responsibility, the effects of a bad hire can spread through their own hiring decisions. Poor performers tend to hire poor performers, not because they want to bankrupt you but because their own standards are low. Weak managers tend to hire employees who seem easy to manage; incompetent bosses hire nominally competent teams. Productivity plunges and costs soar.
So what’s one tried and true way of avoiding the dead weight of a bad hire? The simplest, most effective answer: partnering with a staffing firm to “try before you buy”. Temporary and contract employees may not come to you with a money-back guarantee, but it will feel just as rewarding when you calculate the costs and expenses saved from a potential bad hire. Since contingent staffing allows you to bring new talent on the job without making that long-lasting hiring commitment, your management team can make sure that this candidate is both a skill and culture fit before added to your full-time payroll… and the savings only begin there.
Want to learn more about the benefits of temporary staffing firm services? Click below!