How much is that bad hire costing your business?

How much is that bad hire costing your business?

Recruiting and hiring good employees is one of the most critical aspects of running a business. Finding the right candidates is crucial. After all, if you're not hiring the right people, your company's ability to succeed in almost every part of your industry could be greatly compromised. According to the U.S. Bureau of Labor Statistics, the United States will add 8.3 million jobs by 2031. Hiring managers have many essential tasks ahead. Here's some more information about the possible costs of a bad hire, the signs of a bad hire, and how to prevent it.

The potential costs of a bad hire

According to a CareerBuilder survey, companies lost an average of $18,700 on each bad hire. About 75% of employers say they've hired the wrong person for a position. Business owners said that bad hires reduced productivity and wasted time and resources they could have used to recruit and train a more competent person. Hiring someone can involve hours of reviewing resumes and conducting interviews. Other expenses include advertising for job openings, onboarding, and training.

You could also experience reduced employee morale, customer satisfaction, and increased stress. Bad hires can reduce the quality of the company's work and hurt the organization's reputation as well. People who don't behave professionally could even lead to harassment complaints or allegations of a hostile work environment from fellow employees. The legal fees to defend a company from these complaints can become very high.

Companies lost an average of $18,700 on each bad hire. About 75% of employers say they've hired the wrong person for a position.

The signs of a bad hire

There can be many signs of a bad hire. Employers surveyed by CareerBuilder said that bad hires often:

  • Didn't produce acceptable work
  • Had a negative attitude
  • Didn't get along with or work well with other workers
  • Had attendance problems
  • Lied about their skills or misled the recruiter during the interview

Another sign of a bad hire could be a new employee who asks for a promotion right away. Being ambitious is a good thing, but some people overestimate their abilities and then become resentful when they don't receive what they think they deserve. Even the best, most experienced candidates usually need at least six months to learn company policies and procedures and demonstrate their skills to managers. Many promotions can take years. Someone who wants to take the next step in their career without learning and making an effort at their current position is likely a bad hire.

A bad hire can also need a lot of help and reminders. People who don't try their best to learn new procedures and rules often make the same mistakes over and over. They may receive frequent complaints from customers or clients. Some bad hires seem energetic, excited, and full of ideas during an interview and when they start the job. Then, they don't try to implement their ideas or help team members with tasks that aren't listed in their job description. You may even notice someone “quiet quitting,” doing only the minimum required to fulfill job duties.

Preventing bad hires

To keep a bad hire from costing your company, follow these tips:

Create a clear, detailed job description

In job descriptions, list all or most of the duties that the new employee will have, and describe the work environment. People are often disappointed when a job isn't what they expected, and they could quit or decide not to make much effort. For example, a person who thinks they'll be working in their own office probably won't be happy if the manager leads them to a cubicle or an open workspace on their first day.

Conduct thorough background checks

Background checks are essential to rule out candidates who could become bad hires. The background check company you choose should comply with the Fair Credit Reporting Act (FCRA) and have accreditation from the National Association of Professional Background Screeners (NAPBS). Before you start a background check, let the candidate know. This gives anyone who knows their resume won't resist more scrutiny a chance to correct errors or withdraw their application. In some states, written permission is required, and you can only start a background check after extending a job offer.

If you discover something in a background check that makes you decide not to hire someone, you must let them know so they can dispute any inaccurate information. It's also a good idea to ask for references when hiring for many positions. For some jobs, employers often ask for a portfolio, samples of finished work, or examples of accomplishments in past positions.

Have an in-person interview

Digital conferencing and video calls are convenient, but they're still not the same as getting to know someone face to face. Unless a potential employee's duties will be 100% remote, it's a good idea to meet them and make sure they have a personality that's compatible with the rest of the team.

When possible, conduct interviews at the location where the new hire will work. This gives them a chance to see exactly what the work environment will be like. By preventing surprises, you can keep people from deciding that they don't want to keep jobs after your company spends money on recruiting, onboarding, and training.

Involve the entire team in decisions

When possible, ask the managers and others who will be working with a new hire who they prefer. You can show them the top candidates' resumes and involve them in interviews or discuss interviews after they conclude. If a manager or team member doesn't think they can get along with a candidate, consider choosing someone else. Otherwise, your new hire might become a bad hire. 

By hiring the best candidates and making good decisions, you can avoid the costs of a bad hire. CareerBuilder can help you eliminate errors in your business's hiring processes and reduce costs.

Related reading: Hiring tips

You can prevent some of the costs of a bad hire by bouncing back from hiring mistakes as soon as possible.

Many bad hires result from inadequate background checks

Here are some other ways to prevent hiring the wrong person

You can prevent bad hires by avoiding common hiring mistakes


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