Two Reasons Why Bad Hires Happen

July 2nd, 2014 | Articles, Hiring Resources | No Comments »

Why Bad Hires Happen2

Fixing a bad hire isn’t as simple as shaking out an Etch-a-Sketch to get a clean slate. Time is lost, labor is wasted, and a chunk of change is flushed down the drain. In fact, the Bureau of Labor Statistics says that a bad hire costs at least 30 percent of an employee’s salary. As of April 2014, when the average American wage was $50,564, that meant the average bad hire could cost an additional $15,169. Worst of all, the candidate is typically not the one at fault.

It’s a blunder that plagues respected business leaders (HootSuite’s CEO Ryan Holmes and Zappos’ CEO Tony Hsieh among them) and novice interviewers alike. Without an understanding of the source, it’s all too easy to recycle the same costly mistake and cost a company millions. The question that any interviewer needs to ask is “why do bad hires happen?”

The position isn’t fully defined

Nothing increases the chances of making a bad hire quite like jumping the gun on a new position. A job vacancy can be costly – some companies lose up to $5,000 a month – and it’s all too tempting to quickly cork a financial leak. However, that often leads to miscalculations about the role.

In fact, a CareerBuilder study found that 43 percent of bad hires happen because the company needed to fill the job quickly. However, a more extensive screening process isn’t the solution. Elongated screening processes usually backfire and 40 percent of all rejected job offers happen because one company moves faster than the other.

So, what’s the solution? Take more time in the planning stages.

We’ve found that when companies weigh and measure the essential elements of a new position (technical aptitudes, leadership levels, etc.), they are much better at eliminating bad hires. Parameters for candidates that frequently shift make it difficult to peg the right person. That’s why allotting extra time at the start speeds up the hiring process when it matters most.

Salary needs are higher than expected

Often, we look at the ineffectiveness of a bad hire and attribute the mistake to a mismatch of skills. CareerBuilder’s study found that 67 percent of bad hires do not produce the proper quality of work. What they fail to address is why we get so many ill-equipped professionals in the first place.

It could be that the perfect candidate’s salary requirements are higher than you originally expected. Technical aptitudes and leadership skills fluctuate with the market demand in each region. If you aren’t religiously checking sites like salary.com, your information can quickly become outdated.

Daniel Pink, author of Drive: The Surprising Truth about What Motivates Us, suggests presenting a competitive salary from the start to “take the issue of money off the table” for exceptional candidates. That way, you can focus on other important factors that allow bad hires to slip through the cracks.

The other ways bad hires happen

Though often overlooked, those two aren’t the only reasons why companies make bad hires. Here are a few others that lead to quick turnover:

  • The employee isn’t a culture fit – 60 percent of bad hires don’t work well with other employees. Others clash with the overall work environment. Whatever the problem, the bad hire doesn’t fit with the prevailing culture. Some CEOs go to the extreme and fire all those who don’t snuggly fit into the culture, but it’s less costly to screen them out (even if their skills are exceptional) from the start.
  • The employee is just a bad apple – Sometimes, bad hires just fly under the radar in spite of your best efforts to eliminate them from the running. CareerBuilder found that 54 percent of bad hires had immediate attendance problems, 44 percent received customer complaints, and 44 percent failed to meet deadlines. That’s when it helps to have a second perspective to provide some added scrutiny.

It can be hard to keep all of this in mind during the hiring process, but those that do will significantly decrease the number of bad hires that darken their door.

by James Walsh

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