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Is a ‘somebody’ better than nobody? - The true cost of a bad hire

27/06/17 Nick Drain Consultant - Key Accounts

Most engineering and technology businesses focus the bulk of their attention on increasing revenue. That’s obvious for many reasons, but what about the other facets that make up a business’s bottom line? One of the simplest, yet often overlooked ways a business can lose money is from bad hires.

When faced with open positions and the pressure to hire, or tolerating a poor performer due to a freeze on hiring replacements, many managers believe ‘having a warm body is better than nobody’. However, a ‘warm body’ (or bad hire) is far worse than leaving a position vacant until a replacement is found.

When a manager makes a ’bad’ hire they are often blind to the employee’s shortcomings because the hire is a reflection of their ability to select employees. They want that employee to succeed and will often miss the warning signs of poor performance and become defensive if someone points it out.

The Recruitment & Employment Confederation’s (REC) latest report ‘Perfect Match – Making the right hire and the cost of getting it wrong’ found the following key facts:

85% of HR professionals have worked for a business which hired the wrong person for a job 
2 in 5 new hires turn out to be ‘bad hires’ within the first 18 months
1 in 5 hiring manager ‘don’t know’ how much a ‘bad hire’ costs
88% of business leaders have allowed a toxic worker to stay too long in the business 
A ‘bad hire’ at mid-manager level could end up costing organisations more than £132,000

Bad hires are often made due to the hiring-manager’s poor understanding of, or application of, the hiring process. At Redline, we work with clients who often lack a dedicated recruitment department, recruitment manager or a human resource function. Redline’s 35 years’ experience of hiring technology professionals and knowledge-led approach means we can fill the void, ensuring there is a detailed understanding of their hiring objectives and the true cost of a hire is understood.

Nick Drain, Redline’s Key Accounts Consultant, looks at the impact that bad hires can have on an organisation: “When one employee is underperforming or carries around a bad attitude, this can have a knock on effect with other employees. This can be devastating for those employees as they will have to pick up the slack, cover up mistakes etc. Good employees will resent having to put up with the nonsense and as a consequence, often morale will suffer, standards may drop and it potentially could result in good employees resigning.”

Nick continues: “Unfortunately, bad hires are not always easy to spot and the cost of a bad hire is significant. It can bring down a team, manager, or entire organisation. While there are no guarantees, taking the time to cast a wide net and doing your due diligence in selecting employees is well worth the effort and will minimise the chances of a bad hire.”

“The time spent on performance management is also affected. A bad hire can use up more time and focus of a manager. Instead of coaching and developing other employees, the manager is often stuck in an endless cycle of having to listen to complaints from others, give corrective feedback, micro-managing, handing out discipline, and eventually having to be dragged through a painful disciplinary process. Trying to get a bad hire to meet even minimum expectations is never-ending. One problem may temporarily go away, but it is soon replaced with another issue.” says Nick.

Nick continues: “In many ways, a bad hire's effect on company’s culture echoes beyond the employee's tenure. Poor performers lower the bar for other employees, and bad habits spread like a virus.”

What can be done to minimise the risk of employing ‘bad hires’?

Take your time

It can often feel like when you need to hire, you need to do it quickly. There is often pressure from existing employees who are dealing with increased workloads. Remember that by hiring someone in haste, you risk having to do the whole process again, or as Redline have seen, doing much greater damage. Talk to the team, explain what is going on and acknowledge the extra work they are shouldering. Give existing employees a small gesture, bonus or some other recognition. Goodwill will get you a long way.

Diversify

Frequently, the best new hires come from referrals, including employees, friends, recruiters, and others in their network. Go beyond posting job openings and hoping the right person will apply. However, a recruitment company are more likely to find a suitable candidate much easier as their network and database is often far more extensive than an organisations.

Test drive

If at all possible, hire the employee for an individual project first, perhaps on contract. That way you’ll get to see what the deal is before committing to an ongoing role. It is much better to spot any weaknesses at this stage and you may even find that they are more suited to a different role or are up to a bigger challenge than you had initially thought. By taking these steps, you should be able to spot anyone who doesn’t have the skills and commitment to thrive.
A successful company depends on committed, engaged employees. Take the time to do a thorough screening of potential candidates and you will minimise the risk of a bad hire damaging your organisation.

Follow up references

It is astounding how many organisations do not thoroughly investigate and check references. This doesn’t just mean checking that the candidate worked where they said they worked but talking to the referee and getting a sense of what they think. Are they rigidly sticking to a neutral line, suggesting they are less than keen but don’t want to actually say so, or are they effusive and happy to talk about that person? Trust your instincts and if your thoughts are hasty, use a recruitment company to carry out reference checks.

Bridge the Gap

You could always bridge the gap by asking a recruitment company to provide temporary/interim contract professionals to assist with heavy workloads while replacing bad hires. The right person can lift the burden from existing staff, keep projects moving, and may be evaluated on the job for a potential permanent job role.

Delegate

The most challenging hiring step is evaluating candidates based on their skills and potential fit. Delegating these responsibilities to a specialist, trained interviewer and recruiter can reduce hiring timelines and ultimately save money as the recruiter does most the work. And remember, the vast majority of reputable recruitment companies will offer a comprehensive refund policy, as their goal is a long term relationship, not just a quick result. 

If you are struggling to find skilled candidates for your business and require assistance and advice, or if you have a vacancy you would like us to assess for you, please complete the vacancy form via this link  and we will get back to your shortly. For more information on this article, please contact Nick Drain on 01582 878837 or email NDrain@RedlineGroup.com