The Cost of a Bad Hire – How Should One Avoid It?

The Cost of a Bad Hire – How Should One Avoid It?

The often-repeated managerial phrase – “A warm body is better than a nobody” – simply means that it is better to fill up a vacancy with an employee lacking the required credentials, than to wait for the “right” one to come along. But doing so can have unprecedented outcomes which can prove to be quite unfavourable for your company. The very definition of a ‘Warm Body’ – a person who is untrained, or poorly trained for a position in which he/she has been placed – fill a vacancy for the purposes of deceiving the observer in some manner. Such a person does not generate any value for the company, instead, in most of the cases ends up being a liability for the company.

What is meant by a Bad Hire?

Whether a company is just starting out or if it just wants to expand, recruiting is always an important part of its agenda. But there is always a possibility of taking on-board a bad apple, due to haste or misjudgement on part of the hiring manager. This person, the bad apple, may not possess the skills required to efficiently deliver upon his/her duties, and may even lack the understanding of the role that they are supposed to fulfil. If he’s a frequent latecomer, it raises another red flag. Someone always shows up late to work shows a lack of responsibility and an inability to adapt to unforeseen circumstances.

The Price to be Paid

Monetary Costs

According to Jörgen Sundberg, founder of Link Humans and a well known recruiter, it can take upto $240,000 to hire an employee. Even across varying markets and regions, the quantitative losses of hiring the wrong one can be upto 30% of an employee’s first year earnings. This could amount to lakhs of rupees. While this might not be a huge loss in for a multinational company, but, in case of small companies, especially start-ups which can only afford to take in a handful of people, the loss can be devastating.

Loss in Productivity

They say one bad apple spoils the bunch. If one employee isn’t delivering correctly, it is likely to adversely affect those working with or around him/her. Co-workers could waste valuable time in covering up for the mistakes. If we’re also dealing with an arrogant attitude, it also has a negative impact on the employee morale. All these factors may result in a decrease in productivity.

It’s the Manager’s Loss, Too

The responsibility of attracting, recruiting and retaining talent sits squarely on the manager’s shoulders. Considering the multiple aspects of the candidate’s profile – such as his/her skills, talents, work experience, and background, the manager has to find the right fit for the company. A string of bad hires can cause serious doubts on the manager’s hiring ability. One might even go as far as to ask – was the manager a bad hire, then?

How Can You Avoid It?

(Image Source: Sherwin-Williams)

It can take a while to realise you’ve hired the wrong person, and it may take even longer to let that person go and find a replacement. Certain measures that can be taken to avoid this tedious process are:

  1. Hire only when necessary: To avoid making a decision that you might regret later on, think about whether you really need to hire a new, full-time employee. If the work can be outsourced to others, say freelancers, you could consider that option. That way, you can terminate their services with minimal losses if they’re not satisfactory.
  2. Consider referrals: References obtained from previous jobs can provide significant insight into the candidate’s credibility and skills. A manager is unlikely to recommend a candidate if he/she isn’t reliable Considering referrals can minimise the risk of a bad hire to some extent.
  3. Define requirements clearly: Before recruiting, make the requirements for the job vacancy crystal clear to the potential candidates. You need to differentiate between skills that are absolutely essential for a new hire to possess before joining, and those that can be obtained after training.
  4. Pay attention: Keep a close watch in the initial months after recruiting an employee. A good idea is to take feedback from those who are working closely with this new hire. This will give you a better picture of the suitability of the employee to the job position. Additionally, if it turns out that he/she is not up to par, you can let them go quicker, causing a lesser amount of loss of money, time, and energy.



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