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The cost of hiring the wrong talent is often a big hit on the company, and the impact can be devastating on your team’s productivity, morale, and future growth.
There are many reasons why hiring managers should take time to seek the right talent, but one of the main reasons is the high cost of a bad hire. While there is no guarantee to know who will be a good fit or not, there are certain qualities you can look for to narrow down your choices.
Before expanding on the cost, statistics, impact, and how you can avoid hiring a bad hire, first, it would be best to understand who a bad hire is.
The cost of a bad hire: Who is a bad hire?
Bad hires can range from less productivity to a lack of integrity. A bad hire is when a company hires a person to fulfill a job, but the person fails to do what the company expects. Bad hires can be the enemy of your company’s growth as they show next to zero commitment for work.
Here are 10 red flags that someone might be a bad hire:
- Passiveness, lack of enthusiasm, and lack of commitment to the company and the assigned task
- Staying unproductive during work hours
- Having negative attitudes towards other employees and the organization
- They love conflict and can’t accept authority
- They cooperate with high management but fail to take direction from the middle management
- They sabotage their coworkers
- They fail to meet the minimum work requirements that are expected from their role
- They fail to apply the skills that they displayed in their resumes
- They are slow with accepting training, making mistakes, and not learning from them
- They don’t give constructive reasons on why they failed and how they will change that in the future
- They don’t have the attitude and personality that aligns with the role
- They constantly receive poor feedback from customers or vendors
- They refuse to take accountability for their actions
This article will help you understand the impact of a bad hire on a company, how you can avoid bad hiring, and give you an insider’s grasp on how you can enhance the hiring process to find the right talent for your company.
The cost of a bad hire: How a Wrong Person Impacts Your Team?
Hiring the wrong candidate can cause job-related stress and a domino effect of more problems than you ever expect. Hiring the wrong person:
- Affects the team’s dynamic and atmosphere
- Affects your image and reputation as an entrepreneur
- Destroys the client-vendor relationship
- Is time-consuming and wastes resources through training
“As a business owner or manager, you know that hiring the wrong person is the most costly mistake you can make.”
Important Statistics
The actual cost of a bad hire depends entirely on the industry. Still, the cost of a bad hire to any business is astronomical. According to Leadership IQ, 46% of new hires fail within the first 18 months, while only 19% achieve the clear-cut goal of success.
Here are more findings from Leadership IQ that our experts find helpful:
- 89% of hiring failures are prompted by attitude, while technical skills account for only 11%
- 82% of hiring managers picked up on signs that their new hire will not succeed
- Only 15% of organizations have defined the qualities and attitudes that showcase the company’s culture
- 56% of HR executives admit that half or less of their workforce has the right attitude
- Only 39% of organizations say their employment brand depends on their recruiting process
- 26% of companies gather feedback frequently from new hires about the recruitment process.
NOTE: To achieve the above statistics, Leadership IQ closely studied 20,000 new hires and 1,400 HR professionals.
According to a recent survey by CareerBuilder, nearly three out of four companies are affected by a bad hire. The research also states that regardless of the industry, the average cost of one bad hire is $15,000, while the average cost of losing a good hire is double the cost($30,000).
These estimates include:
- Time spent interviewing the candidate and checking their references
- The revenue lost from the vacant position
- The salary of the new hire
- The wages of the hiring team
- Costs associated with medical exams and background checks
- Expenses related to advertising a job vacancy
- Training days for a new employee
CareerBuilder also found that two in three workers accepted a job but later changed their minds about the position. Half of this population quit their positions within six months of their employment. When asked about loyalty, 75% of workers admit that they are loyal to their current employer, whereas only 54% feel that their employer is devoted to their services.
With these statistics in place, it is evident that one of the reasons new and experienced entrepreneurs fail to hire the right talent is that they don’t define the company’s culture correctly. Lack of clear values leads to a mismatch of roles as new hires misunderstand what they are looking for.
Moreover, more findings link many companies to a focus on the technical side and skills rather than the value of soft skills and attitude. Not defining the role well increases your chances of getting a bad hire, as the descriptions might mention fewer expectations than what is actually required – this causes a loss of interest along a new hire’s career journey.
The cost of a bad hire: 7 essential tips on how to avoid bad hiring
Many entrepreneurs are afraid of hiring the wrong person for their team, as it can be a contentious and painful process. However, some good strategies can help you avoid bad hires. With a few key tactics, you can streamline the hiring process and have happier employees from the start. Here are 7 ways to avoid a bad hire:
Look at your previous hiring processes
Making mistakes is a typical experience for every entrepreneur, but the best part is that mistakes help you learn and get better at whatever you want to achieve. For this reason, you must take a look at your previous hiring process and acknowledge what you did wrong, then change it for the better.
Conduct thorough due diligence
When talking to a potential candidate, you must conduct a thorough background check on their profile and find out how they work. These checks could include an action such as:
- Asking them to provide a criminal record check
- Calling or emailing their references
- Calling or emailing their previous employer – if they have one
Bad hires are a big reason for poor company culture – stay updated.
Don’t feel the need to fill a position right away
The need to fill a position right away is a normal reflex. When you have a role to fill, you must take a back seat and think through every decision. Making snap decisions is risky as there is a high chance to miss on the red flags of a bad hire.
Spot the red flags early in the screening stage
When a candidate is rushing to answer all the questions and leave, that might be a big red flag that they will be a bad hire. Pay attention to such cues throughout the entire hiring process.
Test for job skills
Some candidates exaggerate their qualifications. For this reason, you must create some tests to see if the candidates are what they sell you in their resumes. Using companies such as BalkanHire to find the right talent pays off as our experts ensure all candidates undertake several tests to prove their credibility.
Ensure that more eyes are watching for potential hires
It helps to have several people on your hiring team, as this factor allows you to stay confident throughout the hiring process. What you miss can be noticed by another team member, reducing the chances of hiring the wrong candidate.
Take advantage of the probationary period
Sometimes it is hard to notice a bad hire through the hiring process. You must take advantage of the probationary period before welcoming a new hire fully aboard. Ensure that you include your team and other coworkers in the process.
Inclusion helps you see how the new hire interacts with other team members, how they work in a team environment, and how they handle specific tasks.
Conclusion: How To Improve Your Hiring Process To Avoid Bad Hiring
Improving hiring at your company will require you to be more comprehensive in the process and seek out more information about a candidate. There’s no reason you should rely solely on resumes. Remember that most applicants will embellish their work history, so it won’t always match what they say.
The point is to get as much information as possible from as many different sources as possible. The best way to achieve this is by using experts such as Balkan Hire, who will source and shortlist candidates before they hire the right talent for your company.
This will provide you with the most peace of mind and an objective view of the candidate, allowing you to make a better decision about whether or not you want to hire them for the position.
