Making a bad hire costs time and money: here's how to avoid it.
A bad hire is every business’s nightmare, but unfortunately it’s far from unusual. Making a good hire, especially at senior level, can be invaluable, providing a firm with the resources and ideas to grow, reach new markets and increase their reputation. On the flipside, a bad hire can slow business growth, damage company morale and cost money. With one in eight HR decision makers in the UK admitting that their organisation has made a bad hiring decision, it’s clear that businesses aren’t putting enough effort into their hiring process: not surprising, when one third believe that hiring mistakes don’t cost their businesses anything.
This approach needs to change. From the financial costs of hiring, to the business cost of making a bad hire, taking the time to thoroughly vet candidates has never been more important, especially in today’s competitive market. And whilst most of the money you’ll spend finding mid- to high-level candidates is a good investment, there’s a lot to consider that many hiring managers don’t even think about.
So what’s the realistic cost of hiring good employees- and what should you be doing to optimise the recruitment process?
The challenges of hiring
A lot of thought and money goes into hiring good employees- as it should do. Recruiting is expensive and takes into account several different factors, including physical hiring costs, which involve advertising the vacancy, agency or refer-a-friend fees and making contact with promising candidates, as well as the training time from senior staff that is lost when they turn their hand to finding their next star hire. Businesses not only lose money, but management time during the interview process: approximately ten to twenty hours on average for a mid-level job, during which senior staff aren’t doing their job. Furthermore, once a hire has been made, it takes an average of three months for them to start performing at their full capacity.
This all adds up. The average cost to a business to hire a new member of staff can be up to £50,000, which takes into account everything from management time to lost productivity.
Making a bad hire
For a bad hire, however, these costs can be much worse. Not only can a poorly thought-out hire for a mid-level manager cost a business up to £132,000, but it has the potential to affect the performance of the firm itself. Once a bad hire is made, a company will lose money replacing them, as well as lose more management time; furthermore, it can create the impression that the firm has a high staff turnover, which will correspondingly affect that company’s morale and reputation.
However, there are things that businesses can do to mitigate these problems and develop a process for attracting the right people with minimal fuss. Creating a robust interview process is one of these methods. Indeed, taking the time to conduct Psychometric Testing and Behavioural Profiling will give you a much better idea of the kind of person the candidate is, and whether they’d fit well into the company; this will consequently make it much easier for senior management to identify high-quality candidates.
When it comes to sourcing candidates, it can also help to ask your staff for referrals: given that any bad decisions on their part would reflect on their reputation, you’re likely to receive relatively strong candidate recommendations from them.
Finding the best solutions
Your recruitment strategy should always include identifying and attracting the absolute best candidates on the market. When looking to fill mid to high-level vacancies, seek out a good quality recruitment partner with whom you can work exclusively. Though most hiring managers go directly to job boards when head-hunting, recruitment agencies provide a far better quality of service which allows them to bypass poor-quality candidates that might be found through a job board. Instead, they invest time and resources to finding talented passive candidates, who will be vastly more suited to the role at hand.
It’s also worth noting that, when working with a recruitment consultancy, it’s better to choose a Retained Solutions method, where you work with only one agency, for the best results. Working closely with one partner that understands your business and requirements will inevitably result in a better match as well as create a close and trusted relationship that makes for a steady stream of high quality candidates for future vacancies.
Regardless of the vacancy, finding good-quality applicants and avoiding making bad hires is crucial if a business wants to succeed and grow. Given the impact a new recruit can make on any business, it’s always worth taking the time to make sure you have the means to choose the right person for the job, who will bring the right value to the business, rather than making a hasty decision that you might well regret later.
At IDEX, we work hard to ensure that we deliver an excellent service to our clients. From Psychometric Testing to our unique Four-Step methodology, our status as a trusted partner ensures that the candidates we find are the best for the role- and the best in the market.
Find out more about our Four-Step methodology here, and have a look at what we can do for you in Retained Solutions here.