The hidden costs of bad hires, and how to avoid them

Interview, onboarding strategies key

Your organization has probably made some poor recruiting and hiring decisions. But employing a few simple and tested strategies can help better ensure you bring on the right people, Lydia Dishman reports for Fast Company.

According to a study from the consulting firm Brandon Hall Group, up to 95% of companies admit they recruit the wrong people each year. And each bad hire is expensive: The basic costs of advertising a position, hiring recruiters, and running the interview process can range from about $750 for an entry level position to $3,800 for an executive.

But the true costs of a bad hire are much higher, Dishman writes. They include salary and training time costs, unemployment fees, issues with team morale, and business disruptions.

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"The cost of a bad hire is much less of a recruitment metric and much more of a business metric," according to the Brandon Hall report.

Making the right hires

Nearly 70% of companies said a flawed interview process contributed to low-quality new hires. And companies that lacked a standard interview process were five times more likely to make a bad hire, the Brandon Hall report found.

Companies can hire better candidates if they systematically assess a candidate's "soft skills"—such as whether a candidate is a good cultural fit—early in the interview process, Dishman writes.

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Having a strong organizational brand can also decrease the likelihood of hiring the wrong person, Dishman says. "Candidates are shoppers, too," she notes. "They are looking for a job at a firm they can feel good about working for."

And branding can mean investing in a positive candidate experience, even for those who don't make it. According to Brandon Hall, companies that invested in a positive candidate experience—such as by providing high-quality interfaces to apply online or by phone or interacting with applicants on professional networking sites—improved the quality of their hires by 70%.

Getting started on the right foot

Hiring the right candidates is only half the battle: It is also important to invest in onboarding and training, Dishman writes. Brandon Hall found that companies with a strong onboarding process improved retention of new hires by 82% and increased employee productivity by more than 70%. "Onboarding should not be viewed as a one-week orientation but rather a year-long program that helps new hires feel acclimated and motivated to perform," the researchers wrote.

According to the study, effective onboarding can include:

  • Mentorship programs;
  • Social opportunities; and
  • On-demand online training tools (Dishman, Fast Company, 9/1).

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