Why Bad Hires Happen to Good Companies
“Our people are our greatest asset.”
Ask most executives, “What is your company’s most important asset?” and they’ll tell you, “Our people.” But when it comes to talent acquisition, there are lots of good intentions and far too few good actions. Your company is only as strong as its weakest link. It’s time to put your money – and your time – where your mouth is, starting today.
A bad hire is costly. So is an average one. In our previous blog post titled The True Costs of a Wrong Hire: A Breakdown, we discussed the true implications that a bad hiring decision can have on your organization:
- A poor hiring decision for an employee earning $100,000 a year could cost, on average, $250,000 straight out from your bottom line. (source: Dice.com)
- The Harvard Business Review has notes that up to 80% of corporate turnover is due to bad hiring decisions.
- 39% of employers confirmed that poor hires cost them productivity. (source: Yahoo Finance)
- One out of four said bad hires resulted in direct hits on client solutions.(source: CareerBuilder)
- One out of ten said hiring mistakes negatively impacted overall sales revenue to their company, even when the failed hire was in another division. (source: CareerBuilder)
And perhaps most telling of all, 95% of companies reported that bad hires dampened team morale, which has endless indirect costs!
There are numerous reasons why “mis-hires” happen. Some of the top factors are:
- Failure to plan ahead. Outdated hiring plans. Lack of foresight on staffing needs as your company evolves. Turnover on the part of top talent.
- Weak recruiting. Resting on your laurels and falling short of an “always be recruiting” strategy.
- Seat-of-the-pants interviewing. Inconsistent processes and questions. Failure to involve the right high-performing employees or take a 360- degree approach.
- Insufficient assessments. Not holding thorough debriefings to achieve team consensus prior to a final hiring decision.
- Poor reference checking. Cutting corners. Skipping key steps like background or reference checks in the interest of time or an inaccurate reliance on “your gut.”
- Kidding yourself and just getting the answers you want to hear. Ask the tough questions and know the candidate’s weaknesses ahead of time to be able to hire with your eyes wide open.
And the #1 Reason for Bad Hires: Key Managers Act as Observers!
The world of recruiting has changed. You are in a global competition for top talent. Attracting and winning the people you really want to hire isn’t just about recruiting. It requires a combination of sales, marketing, and recruiting skills.
As an executive, you can’t leave hiring to someone else. Great recruiting requires a collaborative process—between managers, HR departments, and often outside professional recruiters. The number-one contributor to bad hires is lack of sufficient involvement by key managers.
You can get involved by learning how to sell your company and the opportunity. Practice painting a picture of what’s to come for potential new hires. Don’t over-interview by just asking questions and realize you need to sell the dream, as the interview process is a two-way street. Ask for help on this if you don’t know how. Try to land every candidate you interview so the decision is in your hands!
Who you decide to partner with and the recruiting strategies that you follow will directly impact hiring outcomes. In the following posts, walk with us through best practices, strategies and steps to navigate the 2015 labor marketplace and win the talent war.