The cost of a bad hire is much higher than you think
Hiring decisions can be daunting, can’t they? You advertise the opening, read lots of resumes, conduct interviews, and check references. But how do you really know who is the best fit for your team? And how do you avoid the cost of a bad hire?
No doubt about it, hiring the wrong person costs a business dearly. In a 2016 article published in Forbes, writer Falon Fatemi quotes Tony Hsieh, the CEO of Zappos, as estimating that bad hires had cost his company “well over $100 million.”
The same article states that “according to the U.S. Department of Labor, the cost of a bad hire is at least 30 percent of the employee’s first-year earnings.”
Why is the cost of a bad hire so much?
The cost of a bad hire goes beyond the actual dollars, although other types of damage inevitably affect the bottom line. Here are four likely hits your business will take from a mismatch:
Broken relationships and reputation. Put simply, bad hires are going to turn off customers, clients, and colleagues. Think of the resulting loss of sales, strategic partnerships, and good will in the community. Your reputation is literally on the line.
Contagious morale damage. Dysfunction rarely stays isolated. For instance, when one team member doesn’t carry out assignments reliably and others have to pick up the slack, they tend to get grumpy. If someone is always difficult, the discontent spreads. Management gets more complex and less efficient. Other employees may decide they’ve had enough and leave for a calmer, more positive work environment.
Potential legal issues. Assuring compliance takes time, expertise, and therefore money. We don’t even want to think about the expense of not complying.
Hiring and training expenses. This is the most obvious. From listing the opening to onboarding the new employee, significant resources are required. No way around that except to do it less often.
The role a recruiting partner can play
When you know you need to grow your team, how do you plan to recruit the best fit for your opening (and avoid the cost of a bad hire)?
- Craft a killer job description. Convey the performance expectations for the person who will fill the position. Include personal qualities – the soft skills – that will contribute to success in your corporate culture. Present the job as a growth opportunity and tell how that is supported.
- Market the opening to the right people. Yes, it’s marketing. Your ideal candidates might be hard at work for someone else. How will you get your career opening in front of them in a way that engages their interest?
- Engage an experienced recruiting partner. For instance, here at Bradsby Group we consult with our clients to create job descriptions that appeal to top-quality candidates. Our recruiters reach into their extensive industry networks to find individuals who may have only begun to consider a career change. And then we review the list and present you with only the ones with the best potential for success on your team. Your best interests remain our priority throughout the process.
Avoid the cost of a bad hire
Have you experienced the difference between a bad hire and a good one? When you need to add team members, we invite you to reach out to one of ours. Find out how we can help you recruit the best. Talk to Bradsby Group