The Cost of Making Bad Hires or Losing Good Hires

Are you learning the cost of making bad hires or losing good hires? When Jeremy* hired Sandra, she seemed to possess just the qualifications and experience he had been looking for in a new employee. Although he felt slight concern about her level of assertiveness, Jeremy hoped Sandra would fit in well with his sales team. He set aside time and invested money to provide her with training that would get her up to speed. Within a few months, it seemed to be paying off. But suddenly, Sandra gave her notice, explaining that she needed to return to a less demanding role. Chagrined, Jeremy realized that he’d just thrown away everything he’d spent on her training. Worse yet, Sandra hadn’t yet started producing a profit.

Making a Bad Hire Is Costly

If you’ve experienced the cost of making bad hires or losing good hires, you’re not alone. According to a new survey by CareerBuilder, nearly 3 in 4 employers have been affected by a bad hire. In the past year, companies surveyed said they lost an average of $14,900 per bad hire. Employers shared that a bad hire caused them to be less productive, spend time recruiting and training a replacement worker, and be less able to perform their own work well.

How would you define a bad hire? Over half of the employers surveyed described workers who did not produce quality work, had a negative attitude, and did not work well with others. Nearly half also cited attendance problems and a mismatch between what workers claimed to be able to do and what they could actually do.

The survey also showed that many employers believe the best about a person, whether it’s deserved or not! 35 percent thought that a candidate who didn’t have all the necessary skills could learn more quickly than was possible. 32 percent took the risk of just hiring a nice person. 29 percent made the mistake of focusing on skills but not interviewing for attitude.These statistics support our long-held position that behavioral questions are the best way to get to know your candidates. Past behavior is the best indicator of future performance.

If you’ve ever ignored the warning signs like Jeremy in the true story above, you’re in good company–25 percent of employers did the same. Although the majority of employers felt they had the right tools to find the right person, 10 percent failed to do a compete background check. It’s sad but not surprising that 33 percent discovered that the candidate lied about his or her qualifications.

As you can imagine, many employers felt the urgency of filling the position quickly and probably rushed the hiring decision. They also had difficulty finding candidates who were truly qualified, which makes sense given the skills gap and the current candidate’s market.

Losing a Good Hire Is Even More Costly

If the CareerBuilder survey accurately represents the labor force, your employees probably feel like they’re more loyal to you (75 percent expressed loyal feelings) than you are to them. Only 54 percent felt their company reciprocated loyal sentiments. This means that many employers are setting themselves up to lose good workers–to the tune of $29,600 average cost per employee lost. 31 percent of employees are entertaining the idea of a job change in 2018. With these statistics in mind, you’ll need to keep your finger on the pulse of your employees. Strive to offer meaningful perks that actually speak their language, and create an affirming, recognition-oriented culture to make your workers want to stay.

How can you as an employer benefit from a survey such as this? The key takeaway is to make sure you have a solid hiring process. How you define your position and describe it in your job posting will influence the quality of candidates you receive. You’ll never catch a tuna fish if you go fishing in a koi pond! Once you reel in candidates, the type of questions you ask will determine the quality of the information you glean from the interview. Closed-ended (yes or no) or hypothetical questions will not get you the same caliber of information as behavioral interview questions that begin with, “Tell me about a time when….”

It’s sobering to learn about the cost of making bad hires or losing good hires, but you can benefit from others’ past mistakes. Let these statistics motivate you to develop a better hiring process in 2018.

*all names have been changed to protect anonymity