Category: Human Resource

If you run a business, you may find that you make a bad hire from time to time. The term “bad hire” can be defined as an employee who is hired because they either misrepresented themselves on their resume or in an interview. At times, though, a bad hire can also be due to candidates literally lying in order to get a job, as well.

The costs associated with a bad hire aren’t simply a few hours of your time or a paycheck or two to the unqualified employee. In many cases, the costs are high and have far-reaching effects.

Counting the Costs

One of the most obvious costs that a bad hire creates is the expense of replacing them. Time, effort, and resources must be poured into the job of finding new candidates, vetting them, and then choosing a successor. Some estimates put the cost of replacing an employee at 20% of their salary. For a position that pays $60,000 per year, that would be $12,000. But the figure doesn’t stop there.

A new hire will also need to be trained, which can take up significant time, both for them and other employees or managers. 

Then, there are the costs associated with the bad hire themselves while they are on the job. A bad hire can cause discontent that leads to greater turnover, negatively impacts morale, and significantly affects both teamwork and productivity within the workplace.

In addition, they can damage the reputation of a company through poor work or disparagement after being terminated. In some cases, they can even possess valuable confidential internal information that they could take with them to a competitor. 

When all of the possible damage is added up, the potential costs of a hire going south have been estimated to be nearly a quarter of a million dollars.

If poor hiring plagues a company, this can add up quickly. The CEO of Zappos, Tony Hsieh, estimated that bad hires had cost the company a whopping $100 million. 

Needless to say, the consequences of hiring the wrong people can be astronomical, and companies should take every precaution to create a hiring process that is well-informed of its goals and equipped to find the best candidates possible.

Hiring the Right People

There are many different ways to go about hiring a team, but there are a few essential elements that should always be considered. If your business has grown to the point where you’re ready to make a new hire, you’re going to want to keep these things in mind as you go about building a hiring team, creating job descriptions, and running interviews.

Post Your Jobs in the Right Places

If you’re looking for specific qualifications, make sure that you create job postings on boards that will attract the right kinds of candidates. 

If, for instance, a company is looking for a freelance writer, they should consider posting on a site like ProBlogger where there are limited job postings, all of which are geared towards serious, experienced writers. If they simply pop an ad up on a larger freelancing site like Upwork or, even worse, Craigslist, the quality of the candidates could vary dramatically and make the hiring process more difficult.

Consider Soft Skills

While it’s tempting to prioritize hard skills, soft skills should also be seriously considered. Hiring a talented software engineer, for example, who communicates through passive-aggressive behavior can create multiple headaches if they’re expected to work with a team.

As you create a picture of the ideal candidate, make sure to include intangibles like:

• Communication.
• Work ethic.
• Creativity.
• Problem-solving skills.
• Teamwork.
• Time management.
• Interpersonal skills.

These are crucial soft skills that can often be the deciding factor in how well a candidate will function within your company.

Look for Past Employees or Passive Candidates

Talent is a hot commodity these days. Sometimes the best way to find the right person for a job isn’t to find an entirely new candidate, but rather a previously existing one. Once you have your job description, consider taking some time to reach out to past employees who may be open to returning to your company. 

Another option is to look for passive candidates. These are current employees of another company who are interested in and open to changing jobs if the right offer comes along. Often passive candidates can provide a level of experience and a proven track record that can be trusted — at least more than an unbacked claim made on a resume or during an interview.

Provide Incentives to Increase Retention

Finally, along with creating a solid plan to help with hiring the right people, make sure to include perks and incentives that will help in retaining them as well. Some common incentives are:

• The ability to work remotely.
• Generous PTO.
• Providing a conducive work environment.
• Purchasing quality company equipment for them to use.
• Company-wide recognition for exceptional work.

Hiring the Right Person

Even if you just take the cost of hiring into consideration, you’re looking at over $4,000 per hire. Add onto that the potential for a bad hire to cause a quarter of a million dollars in damages, and the importance of hiring the right personnel becomes abundantly clear.

As you go about preparing to hire the best candidate for your company, keep the weight of what you’re doing in mind. Post your jobs in the right places to attract quality content, consider passive candidates with the skillsets you’re looking for, and make sure to provide good incentives to keep them happily employed for the long haul.

Quality decisions improve organizational health, full stop. Decisions have the power to make or break a business’s bottom line, either gradually or in one fell swoop. How your company makes decisions also affects invested employees feel in their roles, making it an important part of overall culture.

Many organizations know they’re falling short of optimizing decision-making but aren’t sure exactly how to change that. Start by giving employees everything they need—including trust and tools—to make good decisions. 

What Hinders Decision-Making at Work?

Part of empowering employees to make good decisions is removing the hurdles standing in their way. What hurdles? Well, company culture and policies may “make decision-making a multi-layer process that requires forms, documentation and numerous signatures.” This reduces the number of decisions employees are able to make and makes them cumbersome even when they do go through.

Businesses that adhere to an overly hierarchical chain of command may also find employees are hesitant to make decisions, believing them to be the jurisdiction of someone higher up. This points to an underlying culture issue—one companies must evaluate and work on if they want to change how employees approach decision-making as a practice. When employees feel micromanaged, they tend to opt out of making decisions or questioning authority, meaning companies lose vital and diverse perspective at every level. 

Connect Employees to Analytics Tools

What do good decisions look like? Well, they have positive business outcomes—like improving internal operations, reducing inefficiencies, raising revenue, delivering results for clients, etc. And to make these good decisions, employees need access to the latest information available. This is where data analytics and business intelligence tools enter the picture to connect employees with data insights they can then factor into their decisions. Next-gen analytics from ThoughtSpot, for instance, give non-technical employees access to data insights two different ways: through search- and through artificial intelligence-driven analytics.

Search-driven analytics allow employees to enter specific queries in straightforward language, like a merchandiser at a retail organization looking up sales growth by product category over the last year. This ability to ask ad hoc questions and receive answers in seconds empowers employees to make informed decisions much faster than static reports do, plus users can continue to ask questions beyond the initial query to get the full picture.

What about insights that would be helpful in decision-making that employees haven’t even had a chance to ask, though? AI-driven analytics uncovers potentially useful insights using algorithms; all employees have to do is click.

Employees can make confident, data-driven decisions when they’re empowered with the full range of information they need. This is precisely why so many enterprises are ramping up their data analytics strategy to include self-service tools; data has immense value when it finds its way into the hands of the people making decisions on a daily basis in a format they can understand.

Set Expectations, Build Trust

People feel comfortable making decisions at work only when they know they have the authority to do so. When employees feel decisions are outside their domain or “above their pay grade,” they’ll hesitate—or pass off the decision to someone else. It’s like calling the ball in volleyball: If nobody calls it and steps up to hit the ball, it’ll just fall to the floor between teammates as they stare at each other, each thinking the other person would handle it.

Creating an organizational chart is a good way to set clear expectations. One CEO recommends this strategy because it “provides an at-a-glance answer when employees are confused about whether they should make a decision or not.” Based on the decision at hand, employees can choose to handle it themselves or escalate it to a superior when needed. This helps ensure the person most qualified to make the decision actually does it, improving organizational outcomes.

Using these tactics to empower employees to make quality decisions will help your organization avoid missed opportunities for improvement.

Even if you’ve never owned a business and you’ve never managed a team of people before, you should have at least a rough idea of the value of setting proper expectations. For example, if you walk into an account management role expecting to only manage client relationships, but you end up having to tackle tons of administrative responsibilities too, you might end up disappointed. Alternatively, you could focus only on what you were expecting to accomplish, but your boss will end up disappointed.

Expectations are a form of communication that remove ambiguities from language, clear up any misconceptions in advance, and help all parties walk into a relationship with clear understandings of the values, significance, and direction of that relationship. Clear communication of expectations, well in advance, is critical for a healthy employer-employee relationship.

That being said, some expectations can go without saying. So how do you know which expectations you have to set for your employees?

These five are a good start:

1. Individual Responsibilities. If you think most jobs are self-explanatory, think again. If you hire someone to join your team as a social media marketer, what expectations do you have for her responsibilities? Is she only responsible for managing the company’s current social profiles, or is she supposed to find others to sign up for? Is she also in charge of developing content for your company’s blog? Does she have the authority to create her own promotions, or must she work with someone else in marketing to do so? You may not have answers to all these questions immediately, but they’re something you need to hash out as early as possible. Chances are, your prospective employee will have her own expectations for the job—so be sure to ask what those are and negotiate if necessary. It is especially helpful to have job description documents prepared for every position in your organization—that way all expectations are set in clear writing, so either party can go back in check if in doubt.
2. Company Culture. The value and significance of company culture should not be underrated. It is the underlying structure and attitude that permeates each individual position and the organization as a whole. Making these cultural values clear early is essential to helping your candidate settle in properly (or withdraw from consideration if they don’t feel it’s a good match). As a few examples, what is the dress code in your office? How flexible are your working hours, and is working from home ever acceptable? What are your policies on breaks and office chatter? Do you emphasize teamwork or individual efforts? Are you more casual or formal? Are you implementing any of these employee engagement activities? A quick tour of the office could clear most of these up, but never assume that your candidate knows what’s expected of him from a cultural perspective.
3. Performance Metrics. Different companies measure performance in different ways. All companies want their employees to work as hard as possible to improve their respective departments and make the company more profitable, but how are you going to measure that performance at the end of the year? Will you use one of the many employee productivity tracking software tools on the market? And will you be measuring his performance based on whether or not he hit a range of specific goals, or is it more about how he performs on a daily basis and the effort he puts in?
4. Feedback Formats. Performance evaluation generally comes at the end of a relationship period, whether it’s at the end of the week or the end of the year. Feedback occurs throughout the process, and you need to establish how that feedback will be handled. Will you be giving your candidate minimal feedback in a hands-off approach, or constant feedback as you tailor her to the role? If she has feedback for her supervisors or teammates, in what format should she give it?
5. Future Growth. Last but not least, you’ll need to set some expectations for the future, both for your candidate and for the company as a whole. What are your long-term goals as an organization? How will the company develop over the next few years? Will your candidate have opportunities to increase her salary or get promotions? If so, how and in what timeframe?

These five expectations should be set with every employee well in advance of the working relationship, ideally during the interview phase. However, you’ll also need to evaluate the individual responsibilities and expectations you have for each specific role—you may find that you have other expectations that exceed these five basic ones, depending on the position at hand. The clearer and more thorough you are at the beginning of a relationship, the better that relationship will be as it develops.

When you’re running a business of any size, but in particular a small or medium firm, you can reach something of a plateau or impasse within the first 3-5 years.

Sales are good, they’ve grown and revenues are stable. You’ve increased your number of staff accordingly and a small profit is starting to trickle in on a monthly basis.

But without major investment in the recruitment of more staff or developing new operating systems or product ranges, you know it’s going to be difficult to hit that next level – without mass investment.

This is a critical period in a businesses development where decisions made will either make the company or break it.

Another impasse that business owners may come across is the motivation levels of their staff, especially those that have been there from the start. It takes a special level of candidate to work in and help drive a start-up forward – someone who’s passionate to the cause and company mission. Someone who sees the potential for personal growth and achieving career goals by working hard, often staying late, striving to over-deliver and ultimately, sharing your own passion as leader in the business.

But what happens after that initial 3-5 years of rapid growth and wearing all the hats at once? Motivation can start to fade away. That ‘challenger’ mentally can wear off.

So whilst gaining extra investment would be one option to move your business beyond the current plateaux that many start-ups experience once they’re established, there is another option.

Re-engaging those team members that have been with you from the start and motivating them to become even more productive will help create that extra working capacity to deliver more projects and improve profit margins as a result.

And that alternative is called social employee recognition.

What is social employee recognition?

Social employee recognition is a people management strategy that focuses on recognising individuals and teams for their performance and achievements.

Whilst many SMEs will be aware of traditional employee recognition strategies, which often revolve around the giving of rewards for top performers, social recognition goes deeper and taps into what employees really want in their job – to feel appreciated and that their efforts are recognised.

There has been plenty of wide-ranging studies that highlight how employees value this level of recognition over the majority of other job factors, including bonuses and other monetary schemes, especially amongst younger workforces.

And a recent report by Gartner uncovered how employee engagement comes out top in terms of positive business impact when it comes to people management, above policy compliance and performance incentives.

But just how would running a social employee recognition program boost your business and help beat that SME plateau?

It’s all a question of engagement.

Increased employee engagement = better business outcomes

Employee engagement is the desired end result of any staff perks or recognition strategy. It’s the long-term business benefit that drives employee performance and supports exceptional work.

It’s the first step to creating real work passion within staff, from the top of the managerial pyramid right down to the core workforce.

More engaged staff are highly motivated, they inspire other team members and they’re highly driven. They have more company loyalty too which will have long-term benefits for your recruitment costs.

And engagement has been shown to help support staff who are prone to feeling stress, meaning less employee burnout and long-term absences.

But with all business advice articles, the proof really is in the pudding. So, here are some stats to showcase exactly why creating a highly engaged workforce through a program of social recognition will benefit your business:

1. Engaged employees are nearly three times less likely to be searching for new employment (Gallup)
2. Companies with high levels of employee engagement outperform those with low levels of engagement by over 200% (Business2Community)
3. Businesses with highly engaged workers have a 6% higher net profit margin (SHRM)
4. Disengaged employees cost businesses around $500bn each year (The Engagement Institute)
5. Staff engagement strategies can boost profitability per employee by $2,400 a year (Workplace Research Foundation)

And one you might not expect…

6. Businesses with highly engaged employees can see 26% greater annual revenue and over 230% higher customer loyalty (Aberdeen)

Conclusion

Moving your business forward doesn’t just rely on how much investment you can get in. Ensuring employees are well recognised, appreciated and as such fully engaged will help deliver positive benefits across your business and could be one of the missing links your company needs to make the next step forward.

About the author 

Sinead Healy is the Founder and Managing Director of Fanclub Recognition – a company that helps businesses boost their employee engagement through recognition tools, training, communications and insight.