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.