The Real Cost of a Bad Hire? Hint: It Is More Than Just Money

It’s a tough fact that most of us have made a bad hire at some point. In fact, almost three-quarters of employers have done so. Despite their best efforts to make sure applicants had the right education, experience, and skills, the new hire didn’t work out.

The cost of a bad hire averages 30% of that employee’s projected first year’s earnings. In dollars, this ranges from $17,000 to $240,000. That’s a big hit financially, but a bad hire costs a company in other ways too.

Yes, recruitment, training, and supervisory costs are there, but a bad hire can also cost you in

  • Productivity
  • Reputation
  • Clients
  • Brand image
  • Team morale
  • Legal Fees

Legal fees are less common, but when they hit, they hit hard.

How Do You Know You Have a Bad Hire?

Sometimes it’s clear from day one that a new employee is not up to snuff. Sometimes it can take a while as the mistakes and complaints add up. Either way, the warning signs are clear. Some of these signs include:

  • Quality of work is not up to standard
  • Missed deadlines
  • Repeated mistakes, tardiness, and absences
  • Lacks of skills, experience, and knowledge they claimed to have
  • Customer and coworker complaints

A CareerBuilder survey showed that of employers that made a bad hire, the reasons were that they

  • Thought the candidate would quickly learn skills they didn’t have (35%)
  • Didn’t know the candidate lied about their qualifications (33%)
  • Hired the candidate because they were a nice person (32%)
  • Were pressured into filling the role (30%)
  • Focused on skills instead of attitude (29%)
  • Ignored warning signs (25%)

These percentages show the range of issues that lead to a bad hire. Some of them were failures in the hiring process, like not checking references or qualifications, and others were based on subjective assessments of the candidate’s personality or ability. But how could they have avoided a bad hire?

What’s Needed to Avoid Bad Hires?

While there’s no guarantee that every hire will be a perfect hire, there are steps you can take to avoid the pitfalls of hiring new candidates.

Check References

First, actually, check references. Don’t assume that because the reference is there, it’ll be a good one. Second, don’t wait until you’ve selected some candidates or even made an offer. Check references while you’re in the interviewing stage to weed out problematic candidates earlier.

Assess Skills

When you can, conduct formal skills assessments of software, tasks, and the like to confirm that a candidate has the skills they say they do. This also helps confirm the level of skill they claim to have.

Concrete Examples

When interviewing, ask questions that need concrete examples in the answers. The key to this is avoiding answers that only need a few words to answer. You can answer questions like “What’s your strongest skill” or “What motivates you” with “Critical thinking” or “Helping others,” but these answers don’t help you. Probe deeper to get a specific example of when the candidate needed to think critically, or what it means to help someone in your industry.

Stay Objective

Wherever you can, focus on objectivity. As the earlier examples show, don’t hire the ‘nice’ candidate or the one you think will learn skills on the job. Focus on what you can evaluate and verify factually.

Why You Should Consider a Staffing and Recruitment Firm

Here’s the catch. While it looks easy to implement these changes, they’re often difficult to implement. Designing formal skills tests or verifying qualifications can be time-consuming and confusing. That’s why companies like TCSS are here to help. TCSS offers recruitment experts to find, evaluate, assess, and train new candidates. Our services include finding contract labor, contract-to-hire, and permanent placement roles. We can also help you develop your hiring and HR departments and methods. For more details and information about how we can best help you, contact us today.

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