We have all made bad hiring choices, it is almost impossible to get 100% of hiring decisions perfect.
Making a bad hiring choice can be costly but the biggest cost comes from the failure to confront the issue and deal with it quickly.
Let’s take a look at an
example of two companies that make the ultimately failed hire of someone on a
Company 1 notices the problems
after 2 weeks and immediately raises the issue with the new employee. A further 4 weeks are spent attempting to
deal with these issues but the performance levels do not improve and the
employee fails his probation.
Company 2 starts to notice
issues after 2 weeks but puts them down to teething problems. Further concerns are vaguely expressed but
not to the proper authority, people keep a lid on it because, well no one likes
The employee attends the
probation meeting and a few concerns are raised but they pass on the grounds
that they address these points. A
short-term improvement in performance is achieved.
After month 4 some serious
mistakes are made and the previously underlying issues surface. The new employee is now given a warning about
future performance and the management team is fully involved.
One month later and the
employee is given his marching orders but, as there are no grounds for instant
dismissal, they are placed on a month’s notice.
Now compare an estimated costs
of the bad hiring decisions.
Company 1’s estimated cost is
approximately £7,000; a substantial amount of money but not when compare with
the 2nd example.
The cost to company 2 is
estimated at around £35,000! They are also
4.5 months behind their competitor in finding a great person to fill this role.
These are only estimates and
some factors involved are intangible but make no mistake, the costs involved in
bad hiring are large and they are multiplied by a failure to act.
Our examples include the costs
involved during hiring, the period the employee worked and the costs of
termination. These can be worked out to
the penny if you spend long enough working on it.
We have also included
intangible costs including missed business opportunities, disruption to the
business, reputational and emotional costs.
To avoid overstating the case we have deliberately underestimated these
factors but in reality these are the biggest costs.
What is the cost of a bad
night’s sleep spent thinking about these issues? The cost of your team dreading coming to work
with this person? The cost to your reputation when your customer’s get bad service?
Finally, we have deducted the estimated value of the person’s work from the overall cost because even the worst people do some work!
The point of this exercise is
to get a clear understanding, not of the costs involved in making a bad hiring
decision, but of the immense value in getting it right! This is what it is worth to you to take some
time out and really look at your hiring process and to ask yourself the tough
questions that will help you achieve the best possible hiring standards.
Note – for reasons of impartiality we have left a recruitment fee off
of our estimates!