Nobody wants to hire the wrong person. You’ll spend time and money on training and trying to help them fit into the organization. Often, that time and expense are wasted because the individual will leave your organization soon –voluntarily or otherwise – and you’ll be forced to find a replacement. And that’s not even the real impact of a hiring mistake.
The Society for Human Resource Management suggests the cost of turnover can run as high as $150,000 for an accounting professional. Does that figure seem high? Of course, the financial costs – salary, recruiting expenses, severance pay, signing bonuses and relocation – are not too difficult to quantify. It’s the collateral damage to productivity, morale and your reputation that might surprise you.
Hiring, training and managing the new staff member takes time – time that would otherwise be spent on essential business tasks and operations. When you hire the right person, that initial loss of productivity ends up paying dividends in the long run. But hiring the wrong person may mean you’re spending more time on training, dealing with personality conflicts and correcting unacceptable behavior – just to start all over again with someone new a few months later.
While you’re spending time trying to coach an bad hire into acceptable performance, what is the rest of your team doing? The classic management guide First, Break All the Rules by Marcus Buckingham and Curt Coffman, makes a point that paying more attention to struggling employees and less attention to your stars alters the behavior of your top employees. Those top performers may start doing less of what made them stars in the first place.
Even if their behavior isn’t impacted, their attitude might be. Often, a bad hire leaves your good employees with the burden of extra work to make up for the poor performer. That added pressure puts you at risk of losing your star performers, too.
Your business’ reputation is key to attracting the talent you need. But a hiring mistake can put your credibility at risk in more ways than one.
- Your team may voice concerns about the organization and its personnel decisions to family, friends and professional contacts.
- Clients encounter a rotating cast of characters in your business and become concerned about your company culture or stability.
- A bad hire may leave negative reviews of your brand or business on websites, social media outlets and discussion forums.
That damage can be long-lasting and difficult to overcome.
It may not be possible to avoid bad hires entirely, but you can reduce them substantially by taking steps to ensure you’re bringing on the right people. For instance, if you’ve had trouble hiring people with the right technical skills, consider adding a skills assessment to the interview process. If the personalities of your new hires are a source of ongoing frustration, consider whether you have the right people doing interviews and explore pre-hire personality and behavioral assessments.
In the end, the most effective strategy for reducing turnover costs is to implement recruitment strategies designed to find the right technical, behavioral and cultural fit for the role you need filled. Investing in the recruitment process up front can save you far more than just the cost of hiring a replacement.