Finding the right talent for your business can sometimes feel like an uphill battle.
Companies can onboard new employees who appear to be the perfect fit, only to find that isn’t the case a few months down the line.
Whether it’s the wrong fit with your company culture or not meeting initial expectations, not all recruits are perfect.
Poor hires are inevitable at some point in a company’s history. Only 70% of employees put the correct information on their CVs, which makes it easy to choose the wrong new recruit.
Unfortunately, there's no perfect formula for ensuring every new employee is a great one. However, there are certain steps you can take to try and get it right first time.
Join us as we explore the potential costs of failed hires and provide top tips on choosing and retaining the right talent. With a little help, you can quickly source candidates who provide value in more ways than one.
Financial Cost of Poor Hires
As almost every employer knows, it takes many hours and resources to find the right fit.
From promoting open positions to scheduling and hosting interviews, the recruitment process can cost businesses thousands each year. The average cost per hire can cover around £3000.
Motivational speaker and self-development author, Brian Tracy, explains how “hiring the wrong person is the most costly mistake you can make.”
The direct and indirect costs of poor hiring can quickly add up, so it’s important to get it right and bring on professional help.
Direct Costs of Poor Hiring
The worst-case scenario for any employer is having to dismiss new starters before they’ve had the chance to add real value to your business.
Dismissing underperforming employees is never easy and most employers will try less severe actions such as internal coaching and disciplinary action, before showing new starts the door. Dismissal can involve the following costs for employers:
- Notice pay. Employees may be eligible for additional pay following the early termination of a contract. This depends on company policies and the dismissed employee’s salary.
- Accrued paid time off. If businesses offer paid time off (i.e. holiday or sick leave), they will need to compensate dismissed employees for unused hours.
- Vacancy. Dismissing employees can stretch internal resources as companies sometimes have to scramble to cover the additional workload. This can put unnecessary strain on valued employees and cause disruption across the entire business.
- New hiring costs. Finding replacement employees invokes recruitment costs all over again. Research suggests replacing a salaried employee could cost between six and nine months’ salary of the ex-employee.
Indirect Costs of Poor Hiring
Besides the direct financial costs of dismissing underperforming employees, the real cost involves the indirect impact on company culture and other employees.
With company culture being a hot topic in modern business, individuals who don’t align with company values can negatively impact productivity and the overall work environment.
One recent report found that 37% of companies claim poor hires negatively affect other employees’ morale.
Additionally, 18% of businesses claim poor hiring can impact client relations.
If underperforming new employees are unable to deliver the same level of support and service standards as high-performing team members, valued clients may cut ties with a business altogether.
Top Tips for Avoiding Poor Hires
You get the point, poor hiring is bad news for any business. Luckily, there are plenty of classic warning signs and steps you can take to ensure only the best talent walks through your doors.
Whether it’s relying on your gut instinct or using references on candidate CVs, here are some top tips to avoid poor hires.
Build Lean Teams
Some of the world’s most successful businesses rely on lean teams.
Incredibly, when Facebook bought Instagram for $1 billion in 2013, the up-and-coming photo-sharing app had just 13 employees.
Increasing employee headcount isn’t always the answer to business growth. Sometimes the best way to avoid poor hiring decisions is to keep your workforce small and build a clear company culture.
If you’re thinking of opening positions for a new role, take a look internally and ask yourself whether an additional employee is actually necessary.
However, if you’re working in a fast-paced and competitive environment, make sure your current employees can cope with the pressure of adding extra responsibilities.
Go with Your Gut
It may sound cliché, but relying on your instincts can sometimes be the best way to filter the right people during job interviews.
CEO and Founder of Node, Falon Fatemi, explains how “red flags always mean something” in the hiring process.
If you sense something might be off, you’re probably right.
Many candidates present a ‘new and improved’ version of themselves on job applications. In fact, 50% of surveyed applicants admitted to misrepresenting themselves in a positive light when looking for jobs.
During interviews, don’t just focus on a candidate’s professional skill set, try to understand them on a personal level and peel back the layers to find the real them.
Let Track Records Do the Talking
References are an easy way to spot any white lies on job applications and understand how candidates have performed in previous roles.
No matter how well you think you know someone, speaking to past employers can paint individuals in a whole new light.
Are Underperforming Employees Costing Your Business?
Check exactly how much poor hiring decisions could be costing your business with ThriveMap’s cutting-edge calculator.
ThriveMap analyses your employee headcount, industry sector, headcount growth, and staff turnover to estimate how much money you're spending on hiring the wrong people.
Recruit or Work with Change
If you’d like to work at a company who puts company culture and employee happiness first, take a look at our current job openings and learn more about what we do here.
Alternatively, if you’re looking to add some exciting and reliable new talent to your business, speak to one of our dedicated recruitment consultants to find out how we can help.
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