The Staggering Cost of a Wrong Hire
Date Posted: 08/11/2015
Hiring isn’t easy. So when a position has been vacant for some time and you are anxious to fill the position, it can be enticing to hire someone who is just an OK fit or who’s even a bit under-qualified. The danger is, hiring someone who’s not quite right for the job can have a pretty bad impact on you, your company and the rest of your team. According to an online survey of over 2,000 HR specialists and hiring managers, 69% of companies experienced costly bad hires which cost them up to 5 times a bad hire’s annual salary. The survey also reveal that the higher the position and the longer the previous person remained in that positron, the more it would cost to replace him/her.
The cost of a bad or wrong hire includes more than just the annual salary of the employee. It includes the HR staff costs; the interviewing costs; the training and orientation costs; the relocation costs as well as the costs for advertising the position in various newspapers or job websites. If an employee is fired and decides to sue the company for wrongful dismissal, potential litigation expenses would also be involved.
But, it’s not all about the money. Hiring the wrong employee can indirectly impact on other employees and your entire business which could also lead to customer dissatisfaction; loss of sales; reduced quality of products/services; low morale and increased workload on all other employees. Also, when the person is ultimately terminated, there’s always a disturbance or rumours among other staff, questioning what caused the termination, etc.
According to a survey by Harvard Business Review, 80% of employee turnover is because of bad hiring decisions. Here are some reasons that lead to bad hires:
1. Urge to fill the job position quickly
2. Inadequate talent intelligence
3. Poor sourcing techniques
4. Unqualified recruiters to assist in screening and evaluating applications
5. Failure to perform reference checks
6. Lack of strong employment brand
7. Job roles and responsibilities (particularly for new positions) not clearly defined
8. Mismatch of skills and salary expectations
9. Failure to blend into the work environment or culture
With all these issues, who exactly is a bad hire?
A bad hire can be defined as someone who has poor work performance, inability to work well with other employees, having a negative attitude, and attendance problems, getting complaints from customers and failure to meet deadlines, etc.
One should also consider that bad hires are not just employees who were recently hired and quit within 6 months. They also include employees who are still working in the company for years but who have become lazy or incompetent and are becoming a liability to the company’s growth and productivity. And the longer they stay the more it will cost the company in the end.
Hiring the right person for the job is a critical aspect for any company. After all, a company is only as good as the people who work for it. We have already covered the subject on hiring tips in our previous newsletters, e.g. “7 Big Hiring Mistakes” (October 24, 2013); “5 Successful Recruitment Strategies” (February 28, 2014); “How to Hire Successful” (June 10, 2014) which you can refer to in our blog under “Archive”.
Recruitment can be a very complex task if not done professionally. Many employers worry about making recruitment mistakes and therefore take the prudent step of turning to professional recruitment specialists to help them achieve better results. So, why not let Ikon and Ikon Executive Solutions (IES) help you interview and hire the right candidate for any job openings that you have from senior executives to rank and file staff.
Ikon’s extensive database of qualified candidates for a variety of jobs can make the process less time consuming, costly and frustrating. Ikon can save you money and time. We have files of pre-screened qualified applicants who can be referred to you immediately. This saves you the time and energy of reading countless resumes carefully, checking facts and interviewing unqualified applicants. Building an on-going relationship with Ikon gives you the added advantage of having us inform you about highly qualified candidates who become available even when you do not have an immediate opening. Ikon doesn’t charge you a fee unless you hire the person and that person starts work with you so there is no risk at all on your part. Ikon also guarantees to replace staff they have placed with you.
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