It’s hard to predict how effective a new hire will be, especially when you’re basing your judgement on a piece of paper and a 30-minute conversation. This seemingly menial task, however, can be extremely costly if done improperly. It has been said that a bad hire can cost a company “thousands of dollars”, however is that really the case? In an age where businesses try to run as lean as possible, a business can’t afford to have wasted resources and personnel. Time is money and money makes the world go round. So, what exactly are the opportunity costs of a bad hire and how much can it impact the future of your business? Let’s delve into that right here right now.
It’s very easy to be deceived by a potential candidate. Prior to knowing if the candidate is a good fit, the candidate might project great vocal communication, have the necessary prior work experience, and fit the profile and energy a recruiter seeks. However, as mentioned, this initial interaction can be very deceiving. Candidates try to project their best selves; they dress in their nicest clothes, speak only of their best accomplishments, and are on their best behavior always. Obviously, this can lead to some disappointment once the hire is onboard and the staff realizes that they’ve been duped and left with a dud of a worker who lacks work ethic and snatches people’s lunches.
We’ve all encountered bad coworkers or people who really didn’t “fit in” with company culture. However, to spot a bad hire you need to understand their characteristics and what they bring to the table. First off, a bad hire clearly doesn’t spend his or her time wisely whatsoever; usually one can find them looking up endless YouTube videos on how to “Get the perfect beach bod” while they should be forecasting the sales and revenues for the upcoming quarter. Another tell-tale sign of a bad hire is if the new hire lacks initiative. This hire would be comfortable performing the same tasks day to day and would settle into their position with no ambitions for change or future growth; aka this person is just going through the motions and lacks passion.
A bad hire also will tend to make the wrong decisions. Either they fail to do proper research, or they just lack brains, but someone lacks good professional instincts is not someone you want on your team. An additional characteristic of a bad hire is someone who just doesn’t mesh with company culture. This could be just based on personality or the way they perform tasks and communicate within a team; someone who doesn’t mesh with the team is preventing it from reaching maximum potential. All these characteristics lead to wasted time and effort. A business undoubtedly would be losing money if a hire is exemplifying these characteristics, especially over a long period of time.
You may think, “Oh well I’ll just check references and do a more thorough interview than normal, and I’ll be alright”. That’s what everyone thinks and yet, the likelihood of a bad hire is still immense. In an era where everyone is constantly looking for bigger and better, within all aspects of life, it’s hard to find employees that are not easily swayed by shiny new positions or new possible opportunities. Typically, good employees choosing to leave current positions do so because they are overqualified and seeking to improve their job title and compensation, which leaves the door open for bad hires to enter the workforce and to underwhelm when compared to the previous, overqualified employees. In a 2016 survey by Deloitte, an estimated 66% of millennials expect to leave their organization by 2020. Finding loyalty and the “right fit” has become increasingly harder for recruiters to accomplish. According to research conducted by Kronos, 87% of HR leaders are considering an improved retention as critical or high priority for the company for the next 5 years. This all suggests that money is being thrown to the waste bin at a faster rate than ever before, due to high employee turnover. These statistics just go to show how costly it is not finding the right hire from the get-go and how increasingly important the recruitment process is becoming.
How much money is being spent on bad hires do you ask? Let’s take a look at some numbers:
- If a bad hire is accused of committing employee fraud, he or she can cost the company upwards of $65,000 USD (Recruitloop, 2017).
- The service industry as a whole experiences $62 billion in lost revenue due to poor customer service (Recruitloop, 2017).
- The average cost for hiring and training a new employee is $4,129 (Human Capital Report, 2016).
- It is cited that the average cost of a regular bad hire is $15,000; however, losing a good hire is at least double that (Human Resources Online, 2017).
Furthermore, a bad hire can affect the quality of the work of the entire company. When asked how a bad hire affected their business effectiveness, 37% of employers cited less productivity, 32% said lost time to recruit and train another worker and 31% found compromised work quality (Human Resources Online, 2017).
Employees themselves also find that their position is not a good fit. This survey also showed that 2 in 3 workers accept jobs to later find it wasn’t a good fit with them; roughly 50% of these workers quit within 6 months of being hired (Human Resources Online, 2017).
It’s definitely a two-way street for employers and employees to feel satisfied. Both sides need to put their best efforts from the start to achieve a successful hire that is happy to be there. If this can’t be achieved, either party can be dissatisfied, and that position will most likely be empty again soon, either in the form of a fire or an employee quitting. Organizations that invest in a strong candidate experience improve their quality of hires by 70%. If an organization doesn’t try to invest in improving the candidate experience, then the candidate will feel unappreciated and will likely lack the drive needed to perform at his or her best. This is an endless cycle which can cost larger companies hundreds of thousands of dollars each year and will interrupt the work flow of smaller companies abruptly.
The only way to break this cycle is finding a method in which recruiters can track employee engagement and interest without having to deal with the façade candidates project when trying to be hired.
The best method for this would be to hire candidates who are engaged to job listings and who seem interested in the position itself not the compensation nor just being employed. Put simply, the goal is to find candidates who can contribute and truly engage with the position. This method is bound to yield growth and stability within the position. What a recruiter wants to avoid is someone who will just go through the motions of the job and who’s there to boost experience for resume purposes- aka someone who plans to leave in the near future. This, naturally, can be very hard to figure out; however, there are methods which can help enhance the search for engaged and committed candidates.
There are resources and services available to help track a candidate’s interaction with a job listing and his or her follow-up research about the position. This is vital because not only does it show the initiative of the candidate and their actual interest in the job position, but it does so unbeknownst to the candidate. Therefore, these programs can weed out the candidates who apply just for the sake of increasing their chances of landing a job. Paying attention to engagement metrics is vital because this will lead to less “bad hires” and therefore save the company an immense amount of money. This tracking technology is the future of online recruitment and will likely benefit companies throughout all industries.
One of these services which is currently available to recruiters that aids in tracking candidate engagement/interest and ranks said engagement, is Candidate ID. This system automates the talent pipelining process to provide an organization with a shortlist of qualified, engaged candidates by tracking their engagement to job listings, articles and other relevant pools of information related to the posted position. This is the future of recruitment and provides the time-saving automation needed to help businesses become leaner and increase employee retention.
Currently there is an increasing trend of millennials seeking jobs to satisfy their needs, in terms of pay and overall fit. We are in an age where people constantly seek better treatment; expectations are high and if they are not met… on to the next. This philosophy, however, is extremely counterproductive within the workforce. The more employees that leave, the more resources and time a company must devote to staffing and training. There is a solution to this however and it begins with tracking candidates’ behavior towards job listings, especially when they are not expecting to be interacting with a potential employer. Then, and only then, can a recruiter get a sense of a candidate’s true intentions and interest for a specific position.
The automation of online recruitment and particularly the tracking of candidate behavior may seem invasive. However, if candidates won’t take the time to properly engage with the company or roles they are applying for, why should the company engage with them at all?