The Financial Impact of a Bad Hire – And How to Prevent It
Hiring mistakes are expensive. Recent research shows that the average cost of a bad hire is the equivalent of 30 percent of an employee’s first-year earnings. More than a quarter of U.S. employers have reported that a single bad hire cost them at least $50,000. And according to the National Business Research Institute (NBRI), this dollar amount could range from $25,000 to $300,000.
What can you do to avoid being part of this scenario?
The NBRI study showed that the number-one reason companies made bad hiring decisions was because they needed to fill jobs quickly. Totally understandable, but with a few simple steps, you can balance the need to hire quickly with the need to hire well:
- Involve the right people, early on. Assemble a strategy session of everyone with skin in the game when it comes to the new hire. Set plans, expectations and a timetable. Hold yourself and the team accountable.
- Develop a clear job analysis and description.
- Execute a prescreening questionnaire or interview process. These are objective tools to identify basic differences between candidates, so you can efficiently narrow the field.
- Conduct reference checks. This includes checking previous employment, education and other credentials. One in three resumes omits essential information and up to 40 percent of resume data may be false or misleading.
Create an Effective Interview Process
- Adopt a uniform list of questions. They must be consistent from candidate to candidate. This will ensure objectivity and make your final decision easier and clearer cut.
- Include behavior-based questions. These will assist in identifying not only the technological and “hard” skill set required for the position, but also the optimum mix of communication, interpersonal and related abilities necessary for success.
It’s easy to assume that the perfect candidate will show up at your door, based on certain assumptions. For instance, you may think you’ll find someone who precisely mirrors the traits of your current superstar employees.
Toss those preconceived notions out the window. Instead:
- Divide desired traits into two categories: “must haves” and “desirables.” Must haves are not negotiable. You can immediately eliminate candidates who fail to meet these standards. Desirables, by contrast, are those qualities you’d really like to see, but realistically could live without. Maybe you can develop them later on. For the time being, determine whether or not they are game changers, and then move on.
- Never rule out candidates based on their experience level. Don’t assume that industry veterans are out of your price range or may not be a good fit, or that less-experienced individuals may not cut it. Evaluate each person separately based on their own merits and credentials.
Partner With a Pro
“Our success has been based on partnerships from the very beginning.”
These are the words of a bona fide expert on business success: Microsoft founder Bill Gates. They summarize the importance of building strong partnerships to ensure your ongoing organizational success. Your staffing firm should be at or near the top of that list. Beyond steering you clear of hiring mistakes, the right firm can be an invaluable asset as you seek out the best talent – the first time. To learn more, contact the experts at BrainWorks today.