The Startling Effects of a Bad Hire

“I gotta do it,” you think. “I have got to fire Jimmy.”

You’re looking at a folder in your email , a folder that contains reports, data, and other information all about Jimmy. Most of it’s negative. He’s not meeting your company standards, he’s gotten several complaints from co-workers, and you have proof from IT that he watches YouTube. A lot.

The worst part is that you’ve talked to Jimmy before, and he hasn’t changed.

Frustrated, you compose an email to him asking him to come to your office. “He seemed like such a good hire at the time,” you say right before your head hits the desk.

If this scene sounds familiar (especially the head + desk part), you’re nowhere near alone in having made a bad hiring decision.

According to a survey by CareerBuilder.com, 69% of over 2400 hiring managers and human resources professionals reported that they’d been negatively impacted by a bad hire in 2012. That’s almost 7 out of every 10 businesses. See? You aren’t alone in this situation at all.

But the problems really start to surface when you look at the effects a bad hire has on a company, especially the financial ones. Most of the companies in CareerBuilder’s survey, for example, said they’d lost over $25,000, and 24% of the companies claimed a $50,000 loss per bad hire. This total comes from the cost of training the bad employee, losing sales because of them, and then having to train a replacement for them anyway.

This doesn’t take into account how the financial loss affects the company years down the road, either. An infographic from The Undercover Recruiter reveals that a company who fires a mid-level manager making $62,000 a year would incur a loss of $840,000 over the course of the next 2 ½ years after the firing.

Yikes.

In addition to financial losses, companies who have a bad hire also have to deal with morale and attitude problems. Generally, the bad hire is the one who carries the bad attitude (CareerBuilder found 59% of employers reported this to be true). This negativity transfers over to the hire’s interactions with their co-workers, and 98% of managers agree this slowly destroys team morale. Also, because a bad hire can’t keep a positive attitude around customers, companies start seeing even more repercussions.

Bad hires also result in less productivity and quality, wasted time, legal issues… you don’t really need more proof that bad hires are bad, do you?

A Few Ways to Avoid a Bad Hire

By now, you’re probably asking, “OK, so how do I prevent myself and my company from ever dealing with a bad hire? We can’t afford to deal with that!”

If you know what you’re looking for and if you’re willing to try some new approaches, consider these suggestions to avoid a bad hire:

Make it a group effort. Bring in multiple managers or team members to help decide on a candidate. This not only ensures that the candidate feels like a good fit for the team, but also helps catch flaws in them you may have missed on your own. Groups also take on some of the tasks of reduced or smaller recruiting departments, which can’t get through applications quickly enough on their own (another main hiring problem).
Take your time. CareerBuilder’s survey said that 43% of bad hires resulted from a perceived need to fill the job quickly. While this may be true in some cases, don’t try to hire so quickly if you don’t actually need to. If you have time to make a decision, take it — it could be the difference between a great hire and that $840,000 loss.
Require a assessment. The two lead predictors of job performance are intelligence and work ethic, yet neither of these are accounted for in the traditional hiring process. Identifying problem solving ability and other personality factors, by using a talent screening process like the one Cream.HR offers, will allow you to choose the candidates that are the best match to both the position and company culture. Read here for information on how personality factors contribute to hiring.

The Lessons Learned from Good and Bad Hiring

With these hiring suggestions in mind, you’re far less likely to hire a bad employee like Jimmy ever again. Yes, sometimes hiring mistakes just happen; after all, 1 in 4 of CareerBuilder’s surveyed employers said they didn’t know what they did wrong.

The key is to learn from it for the next time around. Understanding the effects of bad hires on your company and having the right means to detect them in the first place will help you get a lot of those awesome employees you’re looking for.

No more Jimmys, okay?

Tell us about your worst hiring experience and what you learned from it in the end!