How to avoid the cost of bad hires?

You’ve recruited a new senior member of the team – great!

But, what happens if they don’t work out? And, what will it cost the business?

According to a study conducted by the Recruitment & Employment Confederation (REC), a significant number of companies underestimate the potential cost of making a poor hire. In fact, over 30% of companies surveyed believe that hiring mistakes have no cost to their business.

However, the truth is that a poor hiring decision at mid-manager level can result in significant costs for a business. In their Perfect Match* report, the Recruitment and Employment Confederation (REC) estimated that the cost of a bad hire is equivalent to 3 times the annual salary when factors such as recruitment fees, training, onboarding, wasted salary and decreased productivity are factored in.  

Conversely, if a good hire is made, the report estimates that top performers ‘…can create around 50% more value for the company’ as that increase in productivity spreads to those who work around them.**

Hiring, then, is an important strategic decision that can have a real impact – positive or negative – to the organisation.

This article explores how to navigate the recruitment process to avoid the cost of bad hires.

Forward plan

Rushing to fill a position can be extremely detrimental to the company, as you are far more likely to make a mistake, resulting in a bad hire.

Take a strategic approach and consider what staffing is needed to support your business goals over the next 1 - 3 - 5 years. Do you need to factor in succession planning for people due to retire? Have you got a big project starting in 6 months that will require a team of contractors?

Plan well in advance to build a pipeline of potential future candidates and avoid the temptation to rush into a decision. This will ensure all stakeholders, including your recruitment partner, will have a good amount of time to engage in the process and are invested in finding the right candidates

Define your ideal candidate in the job description

Although it may sound obvious, defining the exact qualities you are looking for in the job description is a vital step in the recruitment process.

The job description needs to outline the required experience, skills and qualifications that the candidate must hold for the job. By doing this, you will reduce the number of applications coming from unsuitable candidates.

One cost associated with bad hires is the waste of HR and management time. By getting the job ad right, you will naturally filter out people who are not right, leaving more time to consider those who match your requirement.

Take time with the interview process

Make the interview as objective as possible by structuring questions that will demonstrate the candidate’s skills and qualifications. Build questions around competencies, behaviour, management style, achievements and problem solving. If needed, look at including skills tests or presentations.

Once you have determined whether the candidate is technically qualified, the interview process is where you will really get a feel for whether the candidate is right culturally. 

• Do their values will align with the business?
• Do they display personality traits that fit with the existing company culture?
• Will they bring out the best in your team? 

Ensure that a good cross section of key colleagues and stakeholders are involved in the interview process to get a broad opinion base. But, not too many people to prolong the process and muddy decision making!

Trust your gut

As much as you can try and make the process objective, it's important to trust your instincts during the hiring process.

If something doesn't feel right about a candidate, don't brush it aside. It's important to pay attention to nonverbal cues during interviews and listen to your intuition. 

Rushing to fill a position with the wrong candidate can be detrimental to your company's productivity and morale. Taking more time to find the right fit will ultimately benefit your company in the long run.

A word of caution though, don't let unconscious bias masquerade as instincts - your recruitment process needs to be as inclusive and free from bias as possible.

Do your due diligence

You’ve found the ideal candidate. But, you still need to do the background checks. This is an area your recruitment partner will help with.

At Boston Hale, compliance and pre-screening is an important part of our service and it’s audited regularly as part of our Crown Commercial Supplier status – read about that here.

Robust referencing, confirming qualifications, right to work checks, probing gaps in a CV, DBS checks – all can help to gain a better insight into whether the candidate will make a good employee, or is a potential bad hire.

Thorough background checks are proven to pick up possible issues, even if the candidate has performed exceptionally well through the interview process.

In summary....

Good planning, a focus on the end goal and employing a rigorous recruitment process are all strategies you can employ to reduce risk and the costs associated with bad hires.  

The benefits of making a great hire are huge. Increased productivity, a boost in morale, a lift in performance.

The pitfalls of a negative hire stretch beyond the immediate cost, rippling out to the wider workforce and company culture. 

Working with a reputable recruitment partner can help mitigate the risk and increase your chances of success.

 

Talk to us about how we can help with your recruitment - from planning and implementing a recruitment strategy to taking ownership of the process, checks and onboarding.

 

* Source REC Perfect Match report 

** Source REC Recruitment & Recovery report 

 

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