The Hidden Cost of a Bad Hire
Most employers are interested in building a competent team that delivers projects efficiently and timely. This is only possible with a recruitment process that ends up selecting the best candidate for a role. But like it or not, there is always the tendency of ending up landing a “bad hire”. Sometimes a candidate who possesses the right credentials performed excellently in the interview process and had impressive references turns out to be below par after hiring.
What do we mean when we refer to someone as a “bad hire”? A bad hire is an employee who negatively impacts productivity, morale, performance, retention, and organizational culture. Ending up with a bad hire can be costly because every employee is expected to impact performance, the firm’s culture, and its successes. While many employees may experience performance challenges or interpersonal conflicts over time, that doesn’t make them a bad hire. Instead, bad hires are identified from their earliest days at work either because they lack the skills they claimed during the hiring process, or they are unable to get along with the team. Although the effects of bad hires are evident, the practice continues.
Reasons why bad hiring persists
- The position has remained unfilled for a long time and internal pressures make hiring for that position important.
- A candidate was unqualified for the role but was able to navigate through and convince the recruiters to hire him.
- The employer did not do enough background checks nor consulted references.
- A recruiting department lacking in manpower or efficiency was more focused on reducing time than determining the quality or suitability of candidates.
A bad hiring decision means that the organization’s resources are spent inefficiently across different facets. And a couple of avoidable costs are equally incurred. Below are the hidden costs of a bad hire.
Lost productivity
You may not be able to measure the costs of lost productivity of a bad hire. However, it depicts a situation where labor is not meeting its obligation or potential. Naturally, lost productivity depends on the role and responsibilities assigned to an employee, and whether work is done poorly, lately, or not done at all. Productivity can also be lost when other team members have to switch tasks and do or re-do, a ‘bad hires’ task. It could result in high overhead costs. Therefore, business owners or managers endeavor to check on the status of work, remind employees of deadlines, and schedule meetings if need be.
Reduces teamwork
When all of your team members work in harmony and focus on achieving the same goals, mission, and values, your firm will be productive and floating. On the other hand, if there is an unproductive and undedicated employee, it will off cause affect the team’s performance. Bad hires tend to sabotage projects and even bring an entire team down because of the bad energy and disaffection their actions can create.
Depletes other employees morale
In small and medium scale enterprises (SMEs), a bad hire can negatively impact the entire workplace; not just his immediate team. Colleagues often have to correct bad hires’ errors or pick up their slacks, which increases their workload. This can lead to an outright feeling of resentment toward the management.
Increases burnout and turnover
A bad hire experience leaves your employees who have had to endure its effect with a “once bitten twice shy” mentality. This will make them presume that anyone else you will bring thereafter will also fail. Changing this perception may be hard and could affect their relationship with you. If the work environment feels uninspiring and lagging in motivation, your top performers may be heading towards the exit door.
Recruitment cost
Once a bad hire is no longer on the team, the employer will feel the need to hire a replacement. This is so because, keeping the role unfilled can lead to continuous loss of output, morale, and finance. Starting a new recruitment process means you have lost whatever you had channeled in recruiting the ‘bad hire’. Similarly, the new recruitment will come with its own cost leading to loss of firm revenue that could ordinarily be allocated to other projects.
Training cost
When you find a replacement, you may need them to quickly integrate and continue work on the projects that the bad hire was handling. This may require you to invest in training them and providing them with the requisite knowledge and tools they need to perform. No matter their level of expertise, they will need help with the learning curve to adapt and fit in.
Lost time supervising a bad hire
You may be giving a bad hire the benefit of the doubt, leaving him around and hoping for improvement in performance. This will mean a supervisor putting an eye on literally everything he does. The time that will be spent on supervision could perhaps be used to perform other functions; Hence, structurally impeding your efficiency level.
Reputational cost
Although it may be difficult to put an exact figure on how much your firm’s reputation is worth, there is little doubt that only a few organizations can afford a bad reputation. Sadly, in this digital age, one disgruntled or resentful employee can have a damaging impact on your firm’s outlook. An unhappy employee can leave a negative review on feedback and company review sites online, which may be read by prospective clients, customers, job seekers, and other employees. Regaining your customers or lost reputation can be a difficult battle, one you can reduce by hiring the best person in the first place.
Poor customer experience
Most of the costs highlighted so far are internal to the firm, a bad hire can also leave a negative mark when he comes in contact with clients, suppliers, partners, and customers. This could affect your business. Strong training and induction programs should be able to curb this, but a bad hire with a defective attitude will never be able to appreciate and value the vitality of customers to the organization.
Litigation
In rare cases, a bad hire you fired because he is bringing down your team and disrupting your growth can sue for damages. This means that you will end up paying high legal or even settlement fees. By avoiding hiring bad candidates, you can prevent this from happening.
Conclusively, when hiring next, subject the candidates to an in-depth assessment to ensure they don’t just have the right skills but the right attitude to succeed in your organization. It will save you a lot of time and money if you make a safer investment in your workforce.
