Finding qualified candidates for open positions is one of the most important aspects of a successful organization. Like minded and goal orientated hires are important to continuing the culture you build for your team and brand. Hiring the wrong person can cost a company both time and money for a multitude of reasons. A lot of people assume that once you realize a new hire is a poor fit, it is as simple as letting that person go, but there is so much more that goes into the hiring process. In a survey conducted by CareerBuilder in Canada, it was determined that a bad hire ends up wasting 27 weeks of an organization’s time, including an average of 7 weeks to put a replacement in place. Hiring a poor fit is more common than most of us want to admit but by implementing key hiring practices, bad hires can all but be avoided.
Some of the costs associated with a bad hire include:
The Recruiting Process
An organization’s recruiters or hiring managers must post the job on relevant job boards for the candidates they are trying to attract. Once applications start coming in, the recruiter must then spend their time screening the resumes and scheduling interviews for a time that works for both parties. Not only is this time consuming when posting in multiple places, it typically costs money to advertise job postings, adding to the expenses associated with recruitment. Your company is using resources and time to try and find the best fit and you want to ensure that this process is the best for hiring your ideal candidate.
Interviewing can be a tedious and time-consuming task. Often a hiring manager must interview multiple applicants in order to find the right fit. In many organizations, candidates who pass the first round of interviews are often required to have another interview for a second opinion, adding to the time spent to find someone to fill each position. With this being a multistep process, hiring managers must spend a lot of time in interviews when they could be focusing on other tasks.
When a candidate starts with an organization, expenses are incurred involving everything from equipment to setup time. Providing new employees with devices such as phones and laptops, as well as the time it takes for HR and benefits set up can be costly. You want your new hire to feel welcome and supported which can mean you provide them with swag and company materials that can cost you time and money as well.
Once the candidate has been chosen, significant time and effort is invested in training that individual. Training often involves other employees spending time getting the new hire up to speed on processes which takes them away from their daily tasks. Each person on your team is valuable and you want to ensure that the training they provide is to the right individual who will work just as hard as the rest of your team.
Impact on Current Employees
Not only do current employees often have to spend time training new hires, if that individual is not a good fit for the organization it can cause problems with the company’s culture. If the new hire is not productive enough, the rest of the employees end up picking up the extra work causing unnecessary stress. This can affect morale, teamwork and even the reputation of your company. Culture is very important and having everyone in the same mind set with a similar goal is a key to success. This is more unlikely to happen when anew hire is the wrong fit for the drive and purpose you promote at your company.
With 86 percent of business owners admitting that they have made a bad hire, mitigating the chances of making a mistake during the hiring process is top of mind for many organizations. To help avoid hiring the wrong person, establish a streamlined screening program that includes the following steps:
Your best employees likely have a friend or former colleague that may share attributes that would be a great fit for your organization.
- Have a referral process so that current employees can be rewarded for recommending candidates that would be a good fit for an open position within your company. In a survey conducted by Robert Half, 56 percent of businesses said their best new hires came from internal referrals.
Ensure that your evaluation and interview process is thorough and well established ahead of time.
- Create a list of basic requirements, hard and soft skills, as well as hiring manager preferences. This will make it easier to decide whether the applicant will be a good fit for the position.
- Have more than one person interview each candidate or consider a team/panel interview to allow the candidate’s potential colleagues to get an idea of what it would be like to work with them.
- Design the interview questions in away that requires the candidate to provide specific examples to demonstrate their skills and qualifications. Questions that can be answered with just ‘yes’ or ‘no’ will not provide you with adequate context or information to make an informed decision.
- Ensure you provide prospective employees with the opportunity to ask questions – about the company, about the role, and about their expectations around remuneration and total compensation. In many cases, the cause of a bad hire can stem from a lack of open communication around expectations.
Once you have found the successful candidate after the interview process, it is vital that you conduct a background check to verify their qualifications and experience
When it comes to resumes, some candidates can misrepresent or exaggerate their credentials, education and work experience.
- Have a well-documented background screening policy. With a large majority exaggerating skills and competencies on resumes, an employer cannot rely on what they see on paper.
- As part of your screening policy, you should have defined searches for each position. Criminal record checks are typically done for all positions, checking for convictions that are recent and relevant to the position. Other important search types to include in the background check are, education, credential and employment verifications, which will help to confirm if the candidate has the required experience and skills needed for their job. Finally, regardless of how well you know the person you are hiring, eReferences should be included as part of the background check in order to help identify any red flags in their previous job history. For more information on essential components of an effective background screening process, check out this article.
The estimated cost of a bad hire is somewhere between 1.5 to 3.5 times their annual salary. Taking into account the costs associated with onboarding and offboarding a person, such as posting the position, the time spent on hiring, onboarding and training, potential loss because of theft of property or time and loss of productivity, having processes in place that help to reduce the risk of making the wrong choice are essential to an organization’s bottom line.
For more ways to streamline your hiring process, read this article that includes actionable tips for improving remote hiring.
To learn more about how ScreeningCanada can help reduce the chances of making a bad hire, reach out to our product team.