The Impact of Bad Hires and How to Prevent Them

While finding the right person to join an organization is certainly the goal, every business has made a bad hire, and even the best recruiters can unintentionally bring a less-than-desirable employee into the organization. While unsuccessful recruiting decisions can be commonplace, what it costs the organization, from actual dollars to workplace culture, quickly adds up.

To put the monetary value in perspective, the U.S. Department of Labor reports a bad hire can cost up to 30% of the employee’s wage. With the average American wage of $60,000, one bad hire can cost a business $18,000. Additionally, once a business considers the soft costs of managers and leadership investing their time in the hiring and training process, the price continues to skyrocket.

Who Is a Bad Hire?

Obviously, a bad hire does not mean the person is bad, but rather the person is not the best fit for the role or the organization. These hires may not meet the organization’s standards or expectations as it relates to the quality of performance. However, there is poor behavior that constitutes a bad hire. If a new hire lied about their skills or knowledge during the recruitment process, they are not engaged or they have a negative attitude, these are indicators of  a bad hire.

If someone is a bad hire, it often quickly becomes apparent. Hiring the best people for the job should be every recruiter’s goal, not how fast they can fill the position. Since the recruitment process is mission critical, it is important to know what makes a bad hire for an organization, the red flags, and the impact they can have on the company.

What Are the Costs of a Bad Hire?

Recruiting and training time: The recruiting process takes four to six weeks on average. During this period, time is spent writing the job description, obtaining approvals, posting ads, screening resumes, contacting candidates, conducting interviews and negotiating offers. Furthermore, the process does not end when an offer is accepted. New employees, no matter what their experience, need time to learn about the company, its processes and the job’s duties. If a bad hire is made, that time extends, as the recruitment process continues.

Low productivity: When a new employee has overstated their qualifications, they may begin to struggle to keep up with the position and their manager’s expectations. The slow or error-filled work can cost the company money, but it also costs the managers time in oversight and addressing performance issues.

Poor morale and decreased teamwork: An employee who lacks the skills to do their work properly forces others on their team to cover their work. When they are allowed to continue employment for too long without improvement or meeting expectations, it has a negative impact on employee morale. Additionally, if the issues are not addressed, it communicates to current employees that less-than-optimal work is acceptable. The same goes for new hires who exhibit a negative attitude or become too confrontational. The new dynamic adds unneeded stress to the team, becomes a distraction, and reduces overall engagement. A bad hire can also result in some loss of leadership’s credibility to the team since the hiring decision is a highly visible and impactful event.

Lost clients: Relationships are at the core of many businesses. When client relationships are damaged due to poor performance or lack of professionalism of an employee, it can result in a loss of business. An unsatisfactory interaction or fractured relationship can have lasting implications for the reputation of the business, as well. This holds true not only for potential lost clients, but also for key business partnerships.

Weakened employer brand: A company’s reputation is based on several factors, but one major component is the employees who represent the organization. When an employee does not embody the company’s mission or values outside of work, it can negatively impact future sales, vendor relationships and recruitment efforts. An employee’s action in person or online heavily influences what people think about the company that employs them.

Litigation: Bad hires can make companies more vulnerable to litigation, depending on their position. Not knowing or having the skills to properly do their job opens the company up to egregious mistakes in the eyes of the law.

How To Prevent a Bad Hire

The most seasoned recruiters can make a bad hire, but there are a few things to consider during the recruiting process.

• Take your time. There may be pressure to fill the role, but not hiring the right person from the start creates more problems, including monetary and non-monetary costs.
• Fine-tune the job description. A clear, concise job description can help recruiters and hiring managers identify people with the skills necessary to fill the role. This also helps candidates have a better idea of the expectations and requirements of the position.
• Standardize the interview process: Recruiters and hiring managers should have set questions to ask each candidate, facilitating a consistent and fair hiring process. Involving team members for behavioral and peer-to-peer interviews can help determine if the candidate is a good culture fit.
• Check references: References are a very helpful tool that some tend to skip. Checking references allows recruiters to validate a candidate’s honesty, especially regarding knowledge and skills. References also provide insight into a candidate’s attitude toward work and their work ethic.

The Bottom Line

Bad hires happen, but it is important for recruiters to know how it impacts the company. Providing recruiters with the proper tools and training to identify red flags is a helpful first step. Once recruiters know how to prevent a bad hire, they should be better prepared to attract the best talent for the company.

Authors

Karen Leal

Karen Leal is a performance specialist with Insperity, a leading provider of human resources offering the most comprehensive suite of scalable HR solutions available in the marketplace.