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The Cost of a Bad Hire

Hiring quality employees is one of the most important elements contributing to the success of your business. Talented and driven employees are the lifeblood of a company. Each employee brings value to your organization by pushing forward sales, connecting with clients, keeping up with essential tasks, and so much more. The value of a good employee cannot be understated.

Making a poor hiring decision can have devastating effects on your company. And although there is a monetary cost, money is not the only thing lost when a poor hiring decision is made. Employee morale, productivity, and performance are all at risk if you are not careful while hiring.

Out of all the candidates out there - you want to make sure you select the right fit for your company.

What is a bad hire?

But first, let’s define what we mean when we say “bad hire.” A bad hire, simply put, is someone who performs poorly in their job. They may be unable to complete the tasks required of them under their job description, or they are impossible to work with. Being able to fit into the rhythm and culture of your organization is a vital piece of job performance. Someone who is like a wrench in the spokes of your teams’ wheels can force your company to a screeching halt.

The impacts of a bad hire across the company are significant. Here are some of the most significant ways a poor hiring decision can affect your company:

The Fiscal Impact

The exact cost of employee turnover is difficult to quantify, although many have tried. Studies from The U.S. :Department of Labor estimates that the cost of an employee leaving is about 30% of that employee’s salary. But some believe that the cost of a bad hire increases as the level of the position does. According to a study by G&A Partners, if the employee who was not a good fit was in upper level management of any kind the cost could be 100%-150% of that employee's salary. That is a staggering number.

But where does this money go? After an employee leaves your company, you need that position filled. Your HR department will need to spend hours and hours recruiting talent, interviewing them, and finally onboarding the new hire. All of this costs money - and it may take longer because you don’t want to make the same mistake again. The longer the interview process goes on the more it will cost with recruitment agency fees, flying interviewees to your location, dinners, and more.

Loss of revenue of having a territory go unattended, customers not getting the attention they need and giving your competition an edge to swoop in and grab the business.

The financial cost of a bad hire is undeniable, and certainly something you don’t want to happen more than once if you can avoid it. But the financial cost of a bad hire is not always quantifiable. Let’s take a look at the more subtle ways a poor hiring decision can impact your company.

Impact on Employee Morale

One bad employee can lead to poor employee morale.

Part of being an employee is being a colleague as well. The people you hire will be working alongside the other employees at your company, and research has shown that employees are expecting their employers to see them as holistic human beings. According to the World Economic Forum “the role of leadership is to create psychologically safe spaces for employees.” Employment trends since the Covid-19 global pandemic have shown that workers are hoping for more care - both physically and mentally - in their places of work.

Introducing an individual who does not care for those around them will impact the dynamics of your company. If you are building an organizational culture of mutual respect and focusing on wellbeing, then all it takes is one person to upset this culture. One person can bring the team down by not respecting others, making off-color jokes, or spewing sarcasm across the office. If one person starts to belittle those around them then your office culture could crumble. A hostile coworker can lead to employees feeling less invested in your company or merely lead to a loss of productivity due to fear, anger, or conflict.

Although this is difficult to quantify in terms of money lost for your company - there is no doubt that a bad hire will impact your employees. This can lead to more employee turnover, and more money lost.

The Managerial Impact

Those in management within your company are crucial to keeping your company running. Your managers are interacting with employees everyday keeping an eye on task completion, project progress, and more. But when a manager has a bad hire put on their team, their time becomes sucked into managing that single employee. They must keep this employee on track - making sure that they are doing what they are supposed to - while also mediating and conflicts that may come up in the wake of this poor decision. Managers already use about a quarter of their time resolving conflict on their teams - which is time they could spend focusing on team goals, deadlines, and other important tasks. Adding a bad hire into this mix puts a strain on your managers. And you do not want to lose those in supervising and upper level positions as it is significantly more expensive to replace them.

A bad hire could be the reason a great manager leaves, and you do not want to face these consequences.

So What Can You Do to Avoid a Bad Hire?

This is the question every hiring manager is asking themselves right now. In the current market, the candidate’s are controlling the pace of the hiring process, and many organizations are feeling the talent shortage. But the worst thing you can do for your company is panic and hire the first person who walks in your door. Here are a few things to keep in mind to avoid making bad hiring decisions.

1. Streamline the Interview Process

According to the Brandon Hall Group, companies who do have a standardized interviewing process are five times more likely to make a bad hiring decision. Before you even consider hiring a new employee your company should have a plan in place for how you will recruit, interview, and onboard a new employee. Some things you should think about include:

  • Who will be in the room? Which managers, executives, and recruiters should be interacting with the candidate at each stage. These people should know beforehand that they will be involved in the interview process

  • Prepare questions ahead of time. Even if you have the most experienced hiring manager in the world, it is still a good idea to have a set of pre-planned questions available. Thinking through what you will ask each candidate will ensure you are vetting each candidate consistently.

  • Keep the interviews consistent. Having the same process for every interview will help everyone involved know what is going on at all times. During each step of the process, each person involved with the interview should know what is expected of them and the candidate, and this process should not change from interview to interview. The more consistent your interview process is, the more efficiently you can fill vacant positions at your company.

2. Look for People Who Fit Your Culture

A team that gets a long well will perform more efficiently.

This may sound obvious, but it is important to remember. Your company has a specific culture that not every person will be a good fit for. This does not mean that they are a bad employee, but that they may not be able to perform to the best of their ability within your organization.

  • Get to know how your employees view your culture. Instead of speculating about what the day to day culture is, figure out what those who are actively creating your culture have to say. Figure out what attributes, values, and personalities are most successful among your employees and look for these in potential candidates.

  • Go with your gut. This may sound counter-intuitive when trying to make a well-informed hiring decision. But you know your company, you know your employees, and you know when someone will not make a great fit. Do not try to force a candidate to work just because their resume is fantastic. If you have a feeling that a candidate will not fit your culture, and as a result will not perform well, trust your intuition.

3. Utilize Cygnet Healthcare Recruiters

At Cygnet Healthcare Recruiters, we specialize in finding you the perfect employee for your company. Cygnet has years of healthcare and business experience which has given us extensive networks of talent pools. We will listen to you about what you are looking for as well as get to know your company’s culture so that we can find the perfect person to hire. We promise to vet potential candidates and only pass along the ones who will be a great fit for your company!

Never make a bad hire again. Contact Cygnet to hear more about how we can help your company hire and retain only the most quality employees.

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