You rely on your employees to keep your business running and your customers satisfied, which makes finding the right candidates critical to your success. But let us remind you, in the U.S., managers have an average hiring success rate of only 50%. That’s far too many missed opportunities, and too many unfortunate consequences as a result. Aside from being a headache and a time drain, hiring the wrong candidate can cost a business an incredible amount of money, increase employee turnover, diminish morale, productivity and product quality, just to name a few. Here are five of the typical consequences that come with bringing on the wrong hire, and five things you’ll want to avoid to keep your organization’s on track.
1. Hurting Your Bottom Line
Even the right candidate is expensive: the upfront costs of interviewing, travel and hotels, training, testing. The wrong candidate multiplies those costs and carries additional hidden costs of diminished productivity. The Center for American Progress reports that a bad hire can cost as $6,000-$15,000, or 20% of an average employee’s salary. However, in their best-selling business book Who, authors Geoff Smart and Randy Street, calculate the cost of a wrong candidate to be as high as 15x that employee’s salary. That means an employee salaried at $100,000 could cost a business $1.5 million in both hard costs and productivity loss.
2. Lowers Employee Morale
In a recent survey from Robert Half of more than 1,000 small and midsize businesses, 53% of respondents reported that teams that work with bad hires experience increased stress. In the same survey, 20% of respondents said mistakes in hiring led to decreased confidence in management. Those results spell disrupted workflow, diminished productivity and increased customer dissatisfaction.
In a larger, wide-reaching organization employee morale is everything. If you’re empowering individuals to make important decisions on their own, then you’ve got to make sure they’re happy with their role and responsibilities, and often times that sense of happiness depends on stability provided by management. When management competence is questioned, which often happens as a result of bad hire, employee morale suffers.
3. Creates More Work for Team Members
Terminating a bad hire isn’t the end of that mistake. Between termination and finding a suitable candidate to fill the vacancy, other team members typically have to pick up the slack. That can take a serious toll in Portland or Seattle where, according to Glassdoor, the average time it takes to interview is 25.3 days or 25.0 days respectively. Not to mention the demands that interviewing, training and monitoring new hires puts on management and human resource departments.
At Herd Freed hartz, our time to candidate metric is typically around 37 days, which means that in that time we will present you with the candidate that is ultimately hired. That may seem like a long time, especially when you have a role to fill, but trust us, it’s better to hire slowly (combing through candidates to find the right people) and fire quickly (when it doesn’t work out) than it is to do the opposite.
4. Increase Employee Turnover
For all the reasons above, choosing the wrong candidate creates an environment that can lead team members to seek out new jobs, multiplying the problem you’re trying to resolve. People can only pick up the slack of a vacant position for so long. And the damage of poor leadership or management level hires is even greater. Rather than simply decreasing a team’s productivity and lowering morale, bad leadership leads to mismanagement of whole teams or departments that can ripple throughout a business. One Gallup report found that half of all employees have left a company to get away from disagreeable management at some point in their career.
The more responsibility for a role that you’re trying to fill, the greater the fallout from a bad hire is likely to be. That’s why, when attempting to fill an executive position, it’s best to work with executive search consultants that have experience sourcing and placing the very best executive talent available.
5. Wastes Your Time
The extra hours you put in should be to grow your business, pursue new ideas, and develop with your team. When managed in-house, it can take far too long to find and hire the right candidate, meanwhile typical responsibilities and workflow suffer as a result. There’s no need to bog down management and human resources with a problem that companies like Herd Freed Hartz strive to resolve so that your time stays your own.
Your business is what you do. At Herd Freed Hartz, saving your business time and money by finding the best leadership with the highest ROI is what we do. We understand that executive recruiting is as much art as science. At Herd Freed Hartz, we look beyond résumés and keyword-matches. We understand personality and the importance of culture fit. Our executive search consultants will work with you, listen to your story, utilize a business-wide approach, dynamic interviewing, and epic storytelling techniques to deliver peace of mind in the form of top-level executive talent.