Written by
Phil Sheridan

Published
20 Nov 2015

Counting the cost of a bad hire

20 Nov 2015 • by Phil Sheridan

The signs of economic recovery continue to improve, whether that’s a gradual rise in salaries or lower unemployment. The challenge for employers is that with the economic recovery, comes the return to a candidate’s market. Due to the growing shortage of skilled professionals the balance of power is shifting back to jobseekers and businesses are now competing for in-demand talent.  

One issue employers face in maintaining a high performing workforce, is avoiding hiring mistakes. The need to fill vacancies quickly should not be the only driver in the recruitment process as the costs of making hiring mistakes should be considered as it can have a serious impact on a company’s bottom line, whether that’s caused by lower productivity, reduced motivation or the need to re-hire.

The good news is that with a thorough recruitment process there are ways to minimise the risk of a bad hire. The first stage is to understand why hiring mistakes happen.  Poor choices can result from a series of factors, whether it’s a lack of qualified candidates, a failure to focus on specific role requirements, poor interview techniques or not having the right people involved in the recruiting process.

By following the simple dos and don’ts outlined at the end of this article, companies can reduce the risk of hiring the incorrect candidate. But what action can be taken when the realisation dawns that a new employee is not going to work out?  

Some of the usual warning signs from our latest report, Management Insights: How to avoid common hiring mistakes are pretty clear: tasks are not completed on time or to specification, the new person fails to integrate or collaborate with the rest of the team, poor time management or simply complaints from customers, colleagues or business partners. 
 
Sadly, this picture is fairly common. In research undertaken by Robert Half, 70% of HR managers said that they had hired an employee who had not met expectations and as many as one in 10 employees are seen as poor choices for the organisation.

Once underperforming employee has been identified, the next stage is to decide how to remedy the situation. Robert Half suggests that actually terminating the employee’s tenure should be the last resort, and that two alternative strategies should be considered first.

Number one, assess the employee’s performance. It could be that they don’t fully understand the demands of the job, or have been poorly briefed. Providing training and coaching may prove effective in these cases. However, the assessment should also ascertain whether the employee has the necessary aptitude to fulfill their role.  

The second course of action is to consider reallocation of the individual to another role. Unseen talents may emerge when more appropriate tasks are provided.  

If these first two courses of action fail to solve the problem, the remaining course of action is to let the employee go in the full knowledge that you have done all that you can to find a remedy. While this process may be uncomfortable, ultimately it may be the best course of action to follow. If it comes to this, it’s important that the procedure is managed fairly and delicately with all legal processes observed.
  
Our research with UK hiring managers reveals that nine in 10 (91%) say that it is now challenging to identify and recruit skilled professionals. This situation is predicted to worsen as the economy continues to recover and skills shortages build.  Only with a robust and well-structured recruitment process can organisations avoid the risk and consequence of making potentially expensive hiring mistakes. 

Robert Half’s recruiting dos and don’ts to avoid a bad hire:

Don't

1. Go it alone    
2. Neglect the job description
3. Think the Internet has all the answers    
4. Take too long
5. Offer a low salary
6. Fail to differentiate between must-have and nice-to-have candidate attributes

 

Do!

  • Consult colleagues on attributes and competencies for the open role, and work with a specialised recruitment consultancy to find the best candidates.
  • Providing detail to ‘sell’ the job will result in more suitable applicants. Details such as team size, reporting lines, corporate values and training opportunities will all prove attractive to potential candidates
  • Cultivate a talent pipeline by personally reaching out to your network and recruiting sources. Online tools can be valuable, but personal interaction is the most important aspect of the hiring process.
  • Extend an offer once you identify your top candidate. Companies that don't move quickly risk losing good people to other opportunities.
  • Offer a compensation package that, at a minimum, meets the market standard. Stay current on prevailing trends by reviewing resources such as the Robert Half 2015 Salary Guide.    
  • Identify the skills that are mandatory and those that can be developed. The goal is to hire the person who is the best match for the job and your work environment.