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What Bad Hires Really Cost Companies (Hint: It’s More Than Just Morale)

Bad hires cost some companies as much as $50,000, new survey reveals.

According to a new CareerBuilder study, 69 percent of employers reported that their companies have been adversely affected by a bad hire this year, with 41 percent of those businesses estimating the cost to be over $25,000, and 24 percent said a bad hire cost them more than $50,000.

“Whether it’s a negative attitude, lack of follow through or other concern, the impact of a bad hire is significant,” said Rosemary Haefner, vice president of human resources at CareerBuilder, in a statement for the press release. “Not only can it create productivity and morale issues, it can also affect the bottom line.”

What’s driving up the cost of a bad hire?
The price of a bad hire adds up in variety ways. According to the survey, the most common money-sucks that result from a bad hire are:

  • Lost productivity (39 percent)
  • Lost time to recruit and train another worker (39 percent)
  • Cost to recruit and train another worker (35 percent)
  • Negative effects on employee morale (33 percent)
  • Negative impact on clients (19 percent)
  • Fewer sales (11 percent)
  • Legal issues (9 percent)

What defines a “bad” hire, anyway?
When classifying what makes someone a bad hire, employers reported several behavioral and performance-related issues:

  • Quality of work was lackluster (67 percent)
  • Failure to work well with other employees (60 percent)
  • Negative attitude (59 percent)
  • Attendance problems (54 percent)
  • Complaints from customers (44 percent)
  • Failure to meet deadlines (44 percent)

Why do bad hires happen to good people?
When asked what accounted for the bad hire, survey participants reported the following reasons that led to their hiring mistakes:

  • Needed to fill the job quickly (43 percent)
  • Insufficient talent intelligence  (22 percent)
  • Sourcing techniques need to be adjusted per open position (13 percent
  • Fewer recruiters to help review applications (10 percent)
  • Failure to check references  (9 percent)
  • Lack of strong employment brand (8 percent)

One-in-four employers (26 percent) stated they weren’t sure why they made a bad hire and said sometimes you just make a mistake.

“How to Avoid Making Bad Hires”: Readers and Experts Weigh In
The following pieces of advice come from both The Hiring Site readers and subject matter experts profiled on the site, all providing personal advice on dealing with bad hires.

“Part of hiring well comes down to who’s doing the interviewing. There are some people who can hit a fast ball and some people who can’t. Likewise, there are some people who are great at interviewing and some who aren’t. There’s some element of natural talent there. And that realization has had a profound impact on my company. It used to be, when I hired, only 30 or 40 percent of the people I hired worked out great, and now it’s up to 80 percent. And that’s because we’re much better at hiring.” - Jay Goltz, author of The Street-Smart Entrepreneuer

“In many companies, recruiting processes have trended towards demanding a full set of required skills for a candidate to be considered. This practice greatly narrows the field for the hiring selection. Companies that identify minimum, essential core skills for each position and focus more on the personal attributes of candidates will end up making better hiring decisions.” - Michael Howell, The Hiring Site reader

“The way to avoid ‘rushing to hire’ is to not wait until there’s an open requisition to recruit for. Continuous recruiting by your current employees and hiring top talent when you find them – not when you desperately need them – is the key.” - Rod Swartwood, The Hiring Site reader

“When I think of why people don’t succeed, it’s not because they don’t have technical skills. It’s because of those intangibles that don’t come up in interview that are hard to judge.” People who worked with that person know [if the candidate has those intangibles].” - Kevin Ryan, Gilt Group CEO, on the importance of checking references

“Most supervisors aren’t taught best practices in hiring, not to mention employee management…It behooves businesses to take some time to learn best interviewing practices to avoid some of the tangible and not so tangible costs of making poor hires.” -Dianne, The Hiring Site reader

“You can bring someone off the street [to replace a bad hire], but it’s not going to guarantee you’re going to find someone any better, especially if you haven’t done any of the internal organizational work to prevent you from hiring the same type of person.” -Anne Loehr, author of A Manager’s Guide to Coaching, on avoiding making the same hiring mistakes over and over

Mary Lorenz

About Mary Lorenz

Mary is a copywriter for CareerBuilder, specializing in B2B marketing and corporate recruiting best practices and social media. In addition to creating copy for corporate advertising and marketing campaigns, she researches and writes about employee attraction, engagement and retention. Whenever possible, she makes references to pop culture. Sometimes, those references are even relevant. A New Orleans native, Mary now lives in Chicago, right down the street from the best sushi place in the city. It's awesome.
1 comments
vanX
vanX

With over 70% turn over rate in trucking...7 out of 10 employees leaving, how come you never help the truckers solve that delima....I have gone for interviews and they ask about why I have so many jobs?!

How do you handle that in an interview?

 

It basically means the company is at fault,  NOT the driver,

The company  is doing something they shouldn't  be doing! Like not fulfilling obligations,pay,detention time,raises, bad equipment...But the driver is the one who is blamed !

 

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  20. […] of sound decisions. One wrong step in the process and you’ve undermined years of good work. Research indicates 68 percent of U.S. companies felt bad hires lowered productivity, affected team morale and caused […]

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