What is the real impact of a bad hire to an organization?

Much has been written and said about the expense of a bad hire.  The expenses of a bad hire include direct expenses such as advertisements as well as human resources department or recruiters’ time spent in attracting candidates, filtering them and scheduling and conducting interviews.  Once hired there is also training time that takes up a manager’s time as well as the new hire that is not yet productive.

Then there is the cost of terminating someone to include Human Resources, legal and any termination pay.  There is lost productivity if someone is not working out.  This is standard textbook information and why it is important to hire right the first time!

There is also the emotional cost of making a bad hire.  As you fret and document your case for a change, that’s time not spent working on your business.  Dealing with poor performing employees is a drain on managers’ mental capacity and has implications for the performance of the firm.  This effect is particularly acute in small businesses and entrepreneur-led firms, because the leadership of these companies is involved in most aspects of the day-to-day operations.  Bad hires are cancerous in that regard:  they crowd out the healthy and productive thoughts and grow until you’re literally forced to take action.  The “real” expenses include factors such as reduced team productivity and missed client opportunities as everyone in the department or organization is thrown off by the bad hire.

However, the damage can go further.  In today’s litigious society bad hires are often kept on while the warning and termination process plays out.  During this time an organization’s liability increases from poor customer service, reputation harm as well as perhaps inaccuracies or problems created in the companies’ information systems, databases and records.  It’s all the more reason to ensure your hiring process is one that maximizes results and minimizes the risk of a bad hire.  Are you using a consistent process in hiring that ensures objectivity with a clear and thorough job description?  Have you determined the personality needed in selecting the new hire?  Have you identified and reviewed why people succeed and fail in your organization? As you screen, interview and select the new candidate is this information both analytically as well as emotionally tallied and considered? Are you conducting thorough background and reference checks?  If the answer to any of these questions is anything but yes, then you’re taking on more risk than is necessary.

​If you would like to discuss improving your hiring process contact Warren Deutsch, CPC, President of Advance Resources for a complimentary consultation.  Advance Resources is a specialized Executive Search, Recruitment and Staffing company that offers candidate retention guarantees far in excess of the industry norm.