The Cost of Making a Bad Hire
Think you know the true costs of a bad hire?
A good hire is an employee who provides an excellent ROI once hired. In the corporate world, these ‘superstar employees’ are estimated to be four times as productive as average workers, and research has shown that they can generate as much as 80% of a business’s profits and attract other equally high performing employees. On the other hand, research from HBSrevealed that these talented and productive people can also engage in toxic behaviour that can be detrimental to an organisation and its performance.
For those falling into this ‘superstar’ category, their behaviour and personality traits have been defined as: overconfident, self-centred, rule-following but productive. Statistics from a Harvard article also tell us that:
- For workers who said that rules must always be followed, there was a 25% greater chance they would be terminated for actually breaking the rules.
- There is a 46% chance of people being fired for the same reason when they are exposed to other toxic workers on their teams.
A bad hire can cost more than peace of mind…
A bad apple will spoil the bunch. Whilst it’s not the end of the world in your fruit bowl, it can be an exceptionally high price to pay when it comes to your employees. In many ways, a bad hire’s effect on company culture echoes beyond the employee’s immediate tenure. For example: even if you fire a bad manager, those who operated under them are more than likely to have emulated his/her behaviours; behaviours that will require time and resources to reset.
Jack Dorsey, the CEO and Founder of both Twitter and Square, learned this lesson the hard way.
“One of the things I learnt early, early on in Twitter is sometimes you have these people who are just superstars – they have all the right answers, they have all the skills and they’re amazing. If they are too negative in their attitude however, they won’t fit in with the company culture,” he added. “If they can’t provide a positive influence on others, it won’t work out.”
Commenting on how toxic employees can affect the bottom line, Dorsey added: “No matter how good this person is, if they can’t bring a positive and optimistic attitude to their work you’re probably going to be slowed down.”
Costing your business even more…
According to a 2017 survey by CV- Library, 76.2 per cent of recruiters keep potential candidates ‘on the bench’ just in case a new hire doesn’t work out. It further revealed that the impact of poor hiring decisions can generate up to £15,000 in losses for UK businesses. The survey, which explored the attitudes of 200 in-house and agency recruiters across the UK, also found that 19.5 percent of recruitment professionals have lost out on between £15,000 and £30,000 of income for their business, whilst 14.4 per cent admit to losses of over £30,000.
Lee Biggins, from CV-Library, said: “To see in black and white just how much money bad recruitment is costing businesses is quite concerning. Today’s labour market is candidate led, and increased competition can often mean that businesses are rushing to snap up new hires, often missing out key stages of the vetting process in a bid to stay ahead of the competition.”
And those key stages are…?
55.3% of recruiters felt that it was necessary to thoroughly research candidates before inviting them for an interview. Whilst 21.3% said keeping recruitment costs down by using tools such as job boards and social media was a strong approach, 17.7% think building a stronger employer brand would be helpful.
About 37.5% of recruiters measure the success of their placement following the manager’s/team’s satisfaction review. 31.9% will base it on the employee’s contribution to the business and 16.7% of them will measure success on the length of time a candidate stays with the company.
Investing for the future
Interestingly, 80% of recruiters are most likely to invest in job boards to find talent. 60% of them voted for employer branding and, surprisingly, only 40% plan to invest in technological advances.
The reality is that bad hiring can extend well beyond budgetary concerns. To help keep your staff turnover levels healthy, ensure you:
- Revisit your current recruitment process
- Ensure your vetting process is up to scratch
- Keep up-to-date with the latest recruitment methods
- Invest in the right tools to aid your recruitment strategy
For more advice about effective recruitment, contact us. At Talent Spa, we’ll ensure that you’re spending money in the right place, to find the right people, quickly and efficiently.