The Cost of Making a Bad Hire

The Cost of Making a Bad Hire

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It goes without saying that recruiting and hiring employees is the most critical aspect of running a successful business, no matter the size. Without good employees, it can be very difficult to get things done. But making a good hiring decision is a hard one. Many times the person responsible has little to no training in the interview/hiring process. In fact, the Harvard Business Review says that up to 80% of employee turnover is related to bad hiring decisions.

The main factors associated with making a bad hire include:

  • Poor skills match for the position
  • Unclear performance objectives
  • Lack of cultural fit between the employee and the company

Did you know that the cost associated with making a bad hire can easily reach 2.5x the employee’s salary? And that cost only increases the longer the employee is in the role, and the higher level position they are in.

It’s not just the cost of the salary for the employee, but the expenses associated with their interview process, any relocation package, COBRA, and unemployment. Then, there’s also the cost of that position being empty while a search for a replacement occurs, the disruption among productivity, negative impact on employee morale, missed sales opportunities, strained client relations, and in some cases potential legal issues.

So what can you do to help decrease the chance you’ll make a bad hire?

  • Go with your gut during the interview and hiring process.
  • Reference their references. Look to see who the references are and what the relationship with the candidate is. Will they be biased into giving an overly positive reference?
  • Bring in an unbiased 3rd party. Maybe an employee from another department who may occasionally work with this employee to give their opinion.
  • Use situational interviews to see how they world perform in different real-life scenarios.
  • Set clear expectations for the new hire.
  • Partner with a staffing agency to assist with your recruiting needs.

Here at Key Resource Group, we have staffing managers and recruiters who specialize in different industries, and are able to put their knowledge and experience to work for you. We have the time to dedicate to determining if candidates are qualified by putting them through skills testing and extensive interviewing.

Working with KRG will decrease the time, effort, and expense of looking for that perfect candidate, so next time you don’t make a bad hire. Contact one of our recruiters today, so we can start looking for your next great employee.

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