Cost of a Bad Hire: A Guide to Understanding the Weight of Employing Them

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The cost of a bad hire is something every company needs to focus on seriously. You know what they say, “everybody makes mistakes”. This is also true in the world of recruitment. Thousands of companies still go on with the recruitment even if their hiring process is unrefined. According to the Harvard Business Review, about 4 out of 5 employee turnovers are caused by bad hiring decisions.
 
A Brandon-Hall research brief worked on by Glassdoor, also pointed out that about 95% of companies admitted to hiring mistakes. And by mistakes, they meant employing the wrong people every year.
 
To further understand having bad hires, pinpointing the process errors that lead to them are necessary. We have listed four common mistakes that lead to bad hires and how to avoid them.

#1 Not standardizing the interview process
Many companies have felt that the interview process is the most impactful when it comes to hiring quality. Not having a pre-employment selection process makes it more possible to make a bad hire, too.

To solve this, the answer is a standardized interview process. This involves having a well-studied script with interview questions, developing questions that highlight core competencies, and utilizing a standardized rating scale.

#2 Having a weak employer brand
According to a study, employer brand is “a measure of the viability of a company’s employee value proposition”. Job-hunters also evaluate the companies they are applying to. So your brand should attain a certain level of “brand greatness and strength”. This is why companies have to exert any effort when it comes to the management and perception of their brand.

Establishing and maintaining a positive brand image is also necessary. Every business has to be careful when it comes to their social media posts, and online job postings as these are factors in building a brand image.

#3 Insufficient investment in the onboarding process
The onboarding process is one of the most critical parts after the employee has been hired. It helps the employee decide whether or not he or she will remain with the company.

Businesses need to have a consistent onboarding process to encourage the employees to be in the right company and that the business is also there for them. This is also the part when the company can socialize new hires in the company’s culture. Through a great onboarding process, you can hone your newly hired people into future star employees.

#4 Having a lack of data during the pre-employment process
Making informed decisions is part of the task of the recruiter. This can not be done without qualitative data to back up the decision. Remember, aside from evaluating applicants during the interview process and assessing the candidate before onboarding, it pays to collect helpful data and gather information about the job-seekers. Hiring a pre-employment screening service provider definitely helps.

What is the cost of having a bad hire?
Having bad hires can drastically affect businesses. According to the Department of Labor, bad hires can cost a company about 30% of its annual earnings. There were also studies saying that bad hires produce less quality work. They are usually the ones that exit the company early or cause some of their colleagues to leave.

Additionally, having bad hires has an impact on the team’s morale and productivity. They can also harm relationships with clients and damage company reputation.

What to do when you made a bad hire?
Once you have made a bad hire, there are still steps to make the situation better. It’s best to share your concerns with the parties involved and come up with solutions. The HR department must be involved, too. Let them understand the situation and, from there, build an action plan that benefits everyone. The “immunizing” method may also work. This involves rearranging desks and separating bad hires from the rest.

How to avoid bad hires?
Prevention is indeed better than cure. The recruitment stage is the part that you have to focus on to avoid bad hires. Take these helpful pointers to help you improve the process:

• Be specific on the skills and qualifications the role requires
• Come up with a clear and complete job description
• Highlight company values during the job interview
• Ask behavioural questions and assess candidates based on them
• Conduct employment screening
• Do background screening and social media inspections
• Check applicant references

 
Indeed, the cost of bad hires are not ideal. But the good news is, Globeia is here you help you out. Globeia offers comprehensive employment screening services to help your business find the best applicant, which in turn, removes the chances of making bad hires. We understand how precious your business is.
 
To learn more about what we do and offer, don’t hesitate to contact us. We are looking forward to partnering with you in building your company to reach its maximum potential.
Address: 1185 Victoria Park Avenue, Scarborough, Ontario M4B 2K5
Phone: 416-288-8070
Email: info@globeia.ca
 
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Note that this article only intends to inform and educate readers to help them with similar problems. Any text or information from this publication should not, in any way, be taken as legal advice. We also disclaim any responsibility for the damages that may occur out of the details laid out here. It’s always ideal to consult with experienced legal counsel to learn more about a certain subject and its processes. Also, we do not take any responsibility to update content that was posted in the past.