What is the cost of a Bad Hire?

What is the Cost

of a Bad Hire?

zalp.com

What or Who is a Bad Hire ?

A Bad Hire is an aftermath of a poor hiring decision, in simple words an employee who is not compatible with your organizational goals, objectives and philosophy for any of the following reasons • Skill Mismatch for the Job • Cultural misfit • Attitude Issues • Inability to perform

Interesting Facts on Bad Hiring

•53% of all the Job applications contain false or inaccurate information •34% of all the Job applications carry blatant lies about their educational qualifications , experience and skills •Less than 50% employers were able to catch the fake information contained in a job application • 9% of the job applicants falsely claimed that they had a college degree •A sizeable number contain false information regarding why they have left their previous job and listed false employers •It has been estimated that a single bad hire costs an organization up to $50000

•Source : Society of Human Resource Management Recruitment and Selection Presentation 2008 •Wall Street journal 2003 •Career Builder.com Survey 2008 Resume Inflation : Two Wrongs May Mean No Righs , By Barbara Kat Repa , Nolo.com, 2001

Traits of a Bad Hire

• Relationship with Co workers and Employers – Disrespectful, Unhelpful, showing superior attitude, not fitting in the company’s environment and values. Working against the collective goals even when in a Team. Showing prejudiced behavior and spreading rumors and gossip. Not having any rapport with customers. • Work – Unable to grasp simple instructions. Repeatedly makes similar and expensive mistakes. Not able to work independently. Not punctual, takes extended lunch and tea breaks. Highly erratic in terms of motivation. Talks more but delivers less. • Attitude – Shows no respect for company policies and rules. Will not accept instructions or directions from a manager or a supervisor . Will not accept responsibility

Cost of a Bad Hire A bad hire has a negative impact on the following stakeholders:

• Organization • Employers / Decision makers • Co workers

Impact on an organization

•Cost of a bad hire to an organization is the summation of hiring cost + compensation + Cost of maintaining the employee + Disruption cost + severance •Revenue and productivity Loss are also the after effects of a bad Hire . When added to the cost of failures and missed opportunities this can be a tremendous loss for the organization • Time and Cost spent in training the employee , Relocation Cost , and expenses involved in immediately hiring someone new are some of the other additional overheads •Indirect cost to an organization includes the time spent in evaluating, hiring and managing them on board , time spent by other employees in mentoring them and damage to customer relationship

• In a study it was found that the 75% of demand for new employees is to replace the workers who have left the company

Impact on Employers / Decision makers • A bad hire impacts the morale of the employer / decision maker . •It forces them to question why and where they went wrong as more often than not they start blaming themselves. •Their capabilities as decision makers might be questioned by the management

•Stress and Inconvenience is another after effect of a bad hire . • Employers spend precious time worrying how to manage the person and rectifying their mistakes which could have otherwise been utilized to achieve organizational goals.

Impact on Employees / Co workers

•Negative impact on Employee Morale as the current employees may have concerns regarding their job security and might also start having doubts regarding management’ s decision making ability. •Lost productivity:- Current Employees are often asked to shoulder more responsibility or to take over the new employees work to avoid mounting organizational costs . •Employee Turnover:- Many of the top performers leave the organization when they feel that the performance of the organization is being affected or they are being burdened with additional work.

How to do it right the first time

•A detailed job analysis goes a long way in ensuring that you hire the right person for the job. A basic job description , listing out the attributes of the person who had held the job, before it was open helps you in identifying your exact requirements. •Detailed prescreening and reference checks are very important tools to make sure that you have the right person on board . It also helps you in avoiding candidates with criminal background and those who can be a misfit in your organizational culture. Other tools like online tests , assessments, psychometric evaluations also help you to expand your bandwidth.

•While some cases are not within the control of the hiring manager , according to a survey , in 75 % of the instances , a thorough check of the candidates and their backgrounds can ensure hiring the right person

How to do it right the first time

•In depth interviewing process , where you can ask the potential candidates to work on case studies , give presentations. This also provide a view on the candidates’ thought process. • An interview panel consisting of senior colleagues will help to make sure that you get a complete perspective on the candidate. •In case you have more than one suitable candidate shortlisted for the position , bring them on board for a brief stint or give them a small assignment to help you choose the right person. •Don’t compromise . If it doesn’t feel right , it is better to start the hiring process again rather then bearing the burnt of a bad hire decision.

In a new study , it has been estimated that meeting the candidate more than once has helped employers to avoid a bad hiring decision. In more than 60 % of the cases. Candidates are met at least twice

Remedial Measures

•Coaching and training the employee with the necessary skills, thus enabling him / her to perform the job better and making them more suitable for the requirements not only makes them loyal towards the organization but also goes a long way in changing their attitude and behavior. • Hire Slow Fire Fast – Despite the coaching & training if you feel that a bad hiring decision has been taken, no time should be wasted in relieving the employee to avoid incurring further costs and losses. Retaining them is a punishment for the employee, organization and other team members .

Remedial Measures

•Role Change to another position where the person might be a better fit can help the person and the organization in the long run. •It also helps the employee to be aware of their skills and talents making them more efficient and productive . •Learn from the past . Re-evaluate your hiring process and avoid making the same mistakes. Make the hiring process more structured and systematic. The interview process can be divided into technical screening, psychometric and other assessments, Case studies & HR Interaction . •There are many more evaluation criteria which have been developed by researchers like situational tests , EQ tests which can be completed online to get a complete assessment.

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About Zalp

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Why Zalp

7 easy and convenient ways to refer

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