The costs of a bad hire

Hiring managers know all too well that who you see in an interview is not always who you get once the person has been hired.

Results from Robert Half’s Small and Midsize Business Hiring report bear that out. According to the staffing firm’s survey, 81% of respondents said their companies have made a bad hire, 65% cited problems with their hiring process, and 49% said most hiring managers underestimate the complexity of the hiring process.

Those aren’t good numbers in a marketplace where the competition for qualified candidates is fierce.

Several factors complicate hiring in smaller organizations, according to Paul McDonald, senior executive director at Robert Half. “Some firms lack dedicated recruiting staff or a human resources function altogether,” he says. “Multiple demands on a business owner’s time also can pull attention away from recruiting and cause it to fall to the last priority.”

The costs of making a bad hire aren’t insignificant. On average, respondents to the survey estimated 45 hours were wasted on hiring and onboarding people who ultimately did not work out. More than half (53%) reported increased stress on the team that worked with the bad hire, and 20% cited decreased confidence in the managers’ ability to make good hiring decisions.

So how can a small business owner or hiring manager identify the best candidate for an open position?

“The wisest hiring advice is to put in the time and effort on the front end to make sure you have the best available pool of applicants for every job opening,” explains Kyle Kraus, director of permanent placement services for Robert Half Finance & Accounting in Madison.

Fixing your mistake

The above advice is great in principle, but bad hires still happen.

Right now, competition is extremely intense for top talent and the hiring pace is faster than ever, notes Kraus. Combine the two and you have the potential for bigger, costlier mistakes.

“Businesses are often pressed for time and may rush through a hiring decision quickly, skipping important steps and overlooking crucial details,” Krause says. “For instance, many organizations are too focused on how a candidate’s résumé matches up with the job description, foregoing attention to things like soft skills, day-to-day job demands, performance expectations, and corporate culture fit.”

Kraus acknowledges the most common issues with bad hires are poor corporate culture fit and failure to meet work expectations and day-to-day responsibilities. Additional qualities are low work ethic or interest in the work/job, minimal soft skills, and a lack of emotional intelligence.

Some of those things are easier to correct than others, and if an investment has already been made in training the new hire it’s probably worth trying to salvage the situation with a person you saw enough in to hire in the first place.

Kraus recommends having a conversation with the new hire if things start to go awry. “Clarify expectations and clear up any misconceptions or misunderstandings — make corrections to get on the same page.”

However, if it’s clear this person is not the right fit, move quickly to make changes. That sounds like it should go without saying. Unfortunately, managers report that while a bad hire can be identified rather quickly, correcting the mistake often takes longer.

Fifty-eight percent of small business owners responding the Robert Half survey said it took less than a month to realize they made a bad hiring decision; however, it took more than twice that time on average (8.8 weeks) to let the person go. In addition, nearly five more weeks passed before a replacement started working, with 68% of businesses putting the workload on existing staff during this time.

“Everyone pays the price for a bad hire,” says Kraus. “Organizations lose more than time, money, and effort by recruiting, hiring, and training people who perhaps shouldn’t have been brought on in the first place. They must also deal with the havoc that the ‘wrong’ employee can create — the business you may lose when that individual interacts with customers, the cost you incur when you have to repeat procedures that were handled ineptly, and the pressures on other employees who must pick up the slack.

“Additionally, consider the expense and hassle that you face when you have to cut your losses and dismiss this ‘wrong’ hire,” Kraus adds. “In the long run, it’s more difficult for the manager and team to accommodate a poor performer than it is to invest in recruiting quality candidates.”

Once you’ve let a bad hire go, Kraus suggests bringing a temporary or project employee on board in the interim to keep workload moving and keep the burden off existing staff. He also advises small business owners and managers to look at the hiring process and all the steps used to bring the person on board. “What was missed? What could have been done differently? Taking an honest assessment and shifting your process can help prevent another bad hire.”



Regarding references

Most employers ask applicants for professional references, but how those references are used can make or break the hiring process.

Rushing through the process of checking references — or bypassing it altogether — in order to make a quick hire may be tempting to small businesses, especially those in danger of losing candidates to another firm, Kraus notes. Even so, getting reliable information from a former supervisor is an important step to take before bringing someone on board. A thorough interview and reference checking process is important to dig into the person’s soft skills and career motivations.

“It should go without saying that if a reference doesn’t provide a glowing assessment of a candidate you should consider that a red flag,” Kraus explains. “But don’t stop there. Ask probing questions to discover why. You may come to suspect, for example, that a former colleague or boss is giving a bad reference that isn’t really deserved, perhaps due to past personal conflict. In that type of situation your best bet is to conduct several more reference checks with different contacts to confirm or refute the feedback.”

The other thing hiring managers can do up front to mitigate the risk of making a bad hire is creating a job description that matches the skills and duties necessary for the job, while also introducing the corporate culture of the company.

“The job description is the foundation of your job posting, the first contact you make with potential new employees,” Kraus notes. “With a top-notch job description, you can create job ads that help candidates understand the expectations of the position and how their abilities line up with your needs. If it’s successful, the job description will both attract the most qualified candidates and deter those who don’t have the right experience from applying.

“Tell job seekers about your company. To attract the best candidates, you’ll want to pique their interest in the organization, if not excite them over the prospect of working with you. Promote the company’s strengths, give its mission, and paint a picture of the workplace culture and what it’s truly like to work there.”

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