No company sets out to make bad hires, but a staggering 95% of businesses make lousy hiring decisions every year. For some businesses, it is all about time pressure. Studies show that 30% of hiring managers choose the wrong candidate because they’re either under time pressure or simply do not know how to find the right candidate in the first place, or they lack the resources to test the effectiveness of their hiring process.
The problem? Bad hires cost money; a lot of it. In many cases up to 30% of an employee’s salary, and that’s only the financial cost. So how much can a bad hire really cost your business, and how do you avoid making poor hiring decisions at the outset? When a new hire doesn’t work out, it can have a lasting impact on your business. Here are some hidden costs of making bad hires that you should be aware of.
1. Decreased morale
Poor hiring decisions can decrease morale across your organisation. Why? Because your other employees are expected to pick up the slack or cover for their unproductive new colleague. Poor staff morale can lead to higher staff turnover, which only exacerbates hiring costs.
2.Time to fill
On average, white-collar recruitment processes can take 4-6 weeks from sign off to completion and then it can be another four weeks before the new hire actually commences. If you don’t get it right the first time, you could be waiting months and have your role look less and less attractive the longer it goes unfilled.
3. Decreased productivity
Studies suggest that new employees are 50% less productive in the first three months as they settle into their new role. Repeatedly hiring new candidates for the same position can drag this out, leaving room for your competitors to take up the market share you’ve lost.
4. Damaged reputation
Bad hires result in poor client or customer service, which, in turn, can damage your organisation’s reputation. In Australia’s current economic climate, no organisation can afford reputation damage, especially when it can be easily avoided.
Identifying the right talent with the help of a specialist recruiter.
Specialists take the guesswork out of the hiring process and help you source the brightest talent for your organisation while saving money in the long run. Just like you wouldn’t visit a dentist to get your hearing checked, you shouldn’t outsource your hiring needs just to` anyone. Just because you use an agency that gives you great rates for your blue collar hires it doesn’t mean they know what makes a great HR or procurement professional. Just as inhouse recruiters need to wear many hats they cant’ be expected to know in deep detail what makes a great IT, Finance, Procurement, HR, Sales or Marketing candidate. Specialist recruiters can help you identify precisely what you need from your new hire and advise you whether you are pitching the role at the appropriate remuneration level and the likelihood of finding suitably experienced talent in the marketplace.
Access to a quality candidate pool
Experienced recruiters have extensive networks that allow them to pair you with the most talented and suitable candidate the first time around. They know whom to approach, quickly. Many have spent years honing their ability to identify what makes people tick and why a candidate will succeed in some environments and not others. Although it’s true that not every new hire works out in the long run, you can reduce the risk of making bad hires by partnering with a specialist recruiter. And, in the current economic climate, choosing the right candidate the first time around has never been more critical.