THE BAD HIRE: An Expensive Mistake

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Let’s consider a scenario. You’re responsible for hiring employees, perhaps you even run your own business. It’s time to find a new employee to take up an important role in your organisation, and you’re under a bit of pressure to do not only make the right choice, but also to also make it fairly quickly. No problem, you think. You’ve made this decision many times before, and for the most part the employees you appointed were doing well. Of course there are exceptions, like Vuyo in Accounting, but hey, not the end of the world. You can find the right person. Let’s do this.

You use the options available to you, including LinkedIn, Facebook, your own network and recruitment platforms. In no time at all, you have your dream team shortlist. You’ve made a gut decision on these candidates because you have things to do and you don’t have the time to verify all the facts provided, but you’re confident. Within the hour you narrow it down to one candidate and extend an offer.  You don’t realise it yet, but you’ve made a bad hire. The truth is that even though it may seem more cost effective to have done this on your own, you realise that there are costs that you haven’t considered and you have made an expensive mistake.

Now more than ever it has become essential that those responsible for recruiting staff have to take on a more strategic role in helping to achieve concrete business objectives over the long term, which is something that requires dedicated focused time, knowledge and experience.

As management consultants who specialise in recruitment, we’ve often come across the question – Should I hire employees on my own  or should I use a professional to do it for me?

Lets break it down – what went wrong?

•  You didn’t give the process enough time and you made a rushed decision with limited information.

Hiring someone can be thought of as making an expensive investment. As with any investment, you need to do extensive research and really put the time in to make sure you are making the right decision. Not many people realise how important this process is.

• Because you don’t have enough experience in probing, you trusted each answer at face value.

When it comes to applying for a new job, people are dishonest more often than you may realise. Management Consultants know that everything needs to be verified. We dig deep to make sure the information we receive is correct and that we’re not being lied to.

• You went with your gut

It is good to trust your gut instinct, but it is important to remember that most companies doing their own recruitment don’t follow the required processes. Hiring someone is a huge step and due diligence is key, and new hires are no different. Before a decision like this you need to know the person’s track record, attitude towards others, attendance, strengths, weaknesses and personality.

• You didn’t do your checks

There can simply not be any shortcuts when it comes to doing checks on a prospective employee! You didn’t have a recruitment professional by your side and you certainly did not have the time and resources to do thorough reference and background checks, so you made a gut decision. Various different checks are recommended, including, reference, qualification and criminal checks, as well as confirmation of ID, salary earned, position held and other information

• You missed important facts

Speaking of financial implications, it can stretch far past a salary being paid to an incompetent employee or costs incurred because of on boarding and training. Because of your lack of background research, you’ve also missed the fact that the new hire actually contributed to the loss of several important clients earlier in their career because of irresponsible decisions and a lack of urgency. Unfortunately for you, past behaviour predicts future behaviour, and you’ve just lost your first client, costing you not only a significant sum of money, but also points to your reputation.

• You created expectations with the new hire

Once an offer is made and a contract is signed, the deal is sealed. The person you offered a position to has already resigned from their previous job and the process cannot be reversed – you have created expectations and need to adhere to legal requirements.

So what will happen now?

• Expect Hidden Costs

Think ofall the hidden costs of recruiting and training this person in the first place. You’re already trying to avoid thinking about all the time and money wasted finding and interviewing this person before you extended the offer, even before the training and on-boarding started… Your organisation takes pride in training people well – they should be capable of doing their job to the highest standard. This training takes time and costs money to do right, and may very well have simply gone to waste on the wrong person for the job.

Based on a study done in 2017, the average cost of just one bad hire at senior level can stretch upwards of R200,000. The study found that at minimum, the cost of hiring the wrong person is at least 30% of the employee’s first year earnings. On top of this, the study also found that 3 out of 4 people admit to hiring the wrong person at least once in their career and at least a third of employers said this was because of the candidate lying about their qualifications, experience, track record, achievements or performance.

• Expect even More Hidden Costs

The hidden costs of your decision can be far greater than you think. No, I’ll just fire the person, right? Not that simple. There may not be clear grounds for dismissal, and even if there were, the employee is rightfully entitled to performance management processes and coaching sessions, followed with verbal and written warnings, before an eventual dismissal may be considered. Employees have rights and need to be protected against unfair practices, but a bad hire could take advantage of this. In the long run, your decision may have easily cost the business hundreds of thousands of Rands.

• Bad Morale and Loss of Trust

Your problems don’t end there – the rest of your team has been impacted by your bad hire as well. When it becomes clear that a new hire isn’t up to the task, it creates frustration within the team as it may result in more work for team members, and even a loss of confidence in the company, resulting in a decrease in productivity, negativity and distraction. Perhaps employees have been complaining about your bad hire’s cultural impact on the rest of the team. Perhaps you would have known this if you had done your homework, but the new hire’s had quite the reputation in previous companies for saying inappropriate things and has actually had a grievance filed against them. Ultimately this can result in a loss of your top performers, one of your greatest assets – Top performers will be unsatisfied working with sub-par performers and will at some point stop subjecting themselves to it.

• Impact on the Brand

Remember that it’s not only customers who are talking about and reviewing companies on social media anymore – it’s also candidates and employees. Top talent will think twice about working for a company they’ve heard negative stories about. Top performers always do their research on a company and their internal work culture, and the moment they believe it’s not a good fit, they will likely not even bother applying.

Another effective tool in the management consultant’s arsenal is their ability to analyse the requirements of the position in order to provide the best possible candidate for the position. An internal recruiter will rarely have the experience or background to be able to understand what a position truly entails and where to look for the right person to perform in such a role.

Alright, so you made a costly mistake that you may regret for some time to come. At this point it’s time to reassess your priorities and the way you recruit. Hiring the wrong person can have a disastrous impact on your business, and hiring the right person requires the right experience and the necessary resources. You could spend an enormous amount of time and money building an effective recruitment process into your business, but why would you? Recruiters have been doing this for years – they know where to look, how to find the right person and the red flags to look out for, and they can verify exactly who the candidate claims he or she is long before a hiring decision is made.

Avoid bad hiring decisions and the massive expenses they lead to. Think of the hidden costs and the potential damage you last hire caused you, and consider it a lesson. A painful but necessary lesson. Like Mark Twain said: If you hold a cat by the tail, you learn things that cannot be learned in any other way.