August 21, 2018

The True Cost of a Bad Hire

the applied companies cost of a bad hire

Have you made a mistake and hired a poor performer for an open position? It can be very painful to realize that the person who choose at the end of a lengthy hiring process isn’t actually working out — or is actively causing problems.

Hiring Is Expensive…

One of the issues, of course, is the expense of the hiring process. Estimates vary from roughly 20% to 30% of a new hire’s salary to $240,000 for the onboarding process. The estimates include the cost of the hiring process plus training.

Because hiring is so costly, managers are often tempted to keep lackluster hires. It can all too easily seem like a smart move for the bottom line.

…But Keeping Bad Hires Can Be More Expensive

You might be better off taking the leap and replacing that bad hire quickly, for a number of reasons.

First, poor performers impact productivity. Productivity is key to results for most businesses. Whether the issue is simply poor work, slow work, or some other issue, it can damage business productivity in multiple ways.

If other employees have to step in to try to fix the damage, the productivity impact can multiply. Now, better performers aren’t at peak production either, because they are trying to deal with the bad hire.

Second, keeping a bad hire can affect morale and engagement among your employees. Your star performers won’t want to work with poor performers. Your medium performers may work with them, but become unmotivated and disengaged as a result.

Your relationships with the rest of the staff may suffer as a result. You’ll receive fewer tips about what’s going on. Your staff may check out mentally or even physically.

A Bad Hire Can Reduce the Rest of Your Team’s Effectiveness

Because of the potential negative effects of keeping a bad hire, it’s often a good idea to take the bull by the horns and let them go. It will minimize productivity and engagement issues in the long run.

In fact, many managers feel it’s the right move to set up key objectives and metrics openly from the beginning, and then terminate people who can’t meet them.

Making Sure You Find the Right Fit

But obviously, going forward, you want to make sure you find high quality employees. How can you make sure you find the right fit for your team?

First, make sure your interview process assesses the qualities and skills your employees will need on the job. Cut candidates who can’t meet them from consideration.

Second, check deeply into their background. Ask open-ended questions of their references, designed to get a perspective about how they performed and behaved in different situations.

Third, train new employees. Utilize your team to make sure that new hires understand how, when, and what to do on the job. Thorough training can set up employees for success.

Fourth, establish key metrics and objectives. Have a discussion early on that sets forth what metrics and objectives the employees need to meet. Don’t leave this open to misinterpretation. The more clear you are, the more your employees will know exactly what you want.

Trust a Staffing Partner in Reno to Assist with Your Hiring Needs

The Applied Companies is focused on the Reno, NV market and will help your business find the candidates that are the best fit possible for your open opportunities. Looking for a staffing partnership? Contact us today.

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