How much is this bad hire going to cost me? If you are a team leader with a few years of experience on your shoulders, you probably found yourself asking this question more often than expected – or wanted.
Well, there is no reason to blame yourself ‘till you find redemption. Apparently, only 19% of new hires are entirely successful and, by 18 months, 46% become disastrous additions to a company.
Who is a bad hire?
Bad hires are people that make you and your team work more for countless reasons. Let’s look at an example out of context, the Spanish series La Casa de Papel. The story is about a band of criminals guided by a super boss, The Professor. He predicted any possible police reaction, giving clear instructions and rules on how to rob the bank. He even trained his companions for months. Did the money heist go as expected? Of course not.
That’s because behind a great plan, there are people. Two team members, Rio and Tokyo, did everything but to follow the rules. Rio was the best hacker on earth and if you need a bodyguard, Tokyo is who you want. Despite their amazing skills, they fell in love and made robbery very personal (to be fair, everyone did it at some point), putting the rest of the team in danger. Eventually, the group manages to rob the bank and escape to a tropical island.
At least until Rio and Tokyo break the rules again and, once more, the team had to come together to rob another bank. Why are those two bad hires? Their skill set is great and, I agree, without drama there is no story. But try to put yourself in their team’s shoes. Would you ever hire someone so problematic and unpredictable? Definitely not. You want results for your company, not thrills.
How Hiring the Wrong Person Impact Your Team
When hiring someone, the first thing you should look for is someone who has a cultural fit with your team. Especially in remote companies, having people on the same page is necessary to grow despite the individual experience. What happens when you hire someone who doesn’t align with your company culture?
Loss of Productivity & Decreased Teamwork
One of the biggest challenges when hiring the wrong candidate. Who doesn’t align with your culture won’t align with your goals either. Your team will burn out trying to cope with low-performed tasks, getting late with deadlines and the client’s requirements in the long run.
Loss of Clients
If your team is late in delivering projects, most likely your clients will start soon to look for alternatives, and competitors.
It is a competitive world and it is all about reputation. You built your company brand in years of hard work and marketing strategies. Leaving your clients with the wrong person won’t impact only the project but also how people review your work.
A bad hire is not only a problem because of slow delivery. The more time your managers spend on someone, the less time and energy they will have for their tasks.
Recruitment and Training Costs
Yes, hiring processes are expensive, and so are training. You have to pay for job search websites and maybe recruitment agencies. Plus, your team spends time writing a job alert, scrutinizing Cvs, and so on. After all of that, you have to train your new candidate. Even with the best onboarding process, training takes time and effort for you and your team. Doing all this with the wrong person isn’t just a waste of time, but a waste of money and energy.
So, keep in mind that the first cost of a bad hire is your team. Even if someone has amazing skills, always look at how the team works. For that, we follow a simple rule, AKA the “No Asshole” rule. In the long run, there is no ability that can justify the impact of a bad hire on your team – and, at the end of the day, they are the one doing the work. Try to remember it when you get to the point where you will have to decide between saving your team or keep a bad hire.
What Do Statistics Say About the Cost of a Bad Hire?
So far, we have been looking at the human capital of a wrong hire. Shall we try to place some numbers to these costs?
According to SHMR, the average cost-per-hire is $4.129 while filling a vacancy takes around 42 days. The United States Department of Labor confirms that the cost of a bad hire is up to 30% of the employee’s wages for the first year. Gallup estimates that, only in the U.S., wrong candidates cost businesses anywhere from $450 billion to $550 billion in lost productivity each year.
Additionally, 34% of CFOs said that bad hires strongly impact productivity and team schedule. With poorly-performing employees, managers have to spend 17% of their time supervising someone who is not worth it for your company and its efforts. In a standard working week, it is almost an entirely wasted day!
According to CareerBuilder, almost three-quarters of companies with a bad hire reported an average of $14,900 in lost income. Between these employers, 74% simply hired the wrong person for the job.
If you are a small business, these costs will have a significant impact on your budget. You shouldn’t underestimate these data, hoping that your case will be different. It won’t happen.
How to Avoid Bad Hiring?
Hiring the wrong candidate can happen for many reasons. And it can happen to all of us. What really matters is recognizing when you make the wrong decision and how you deal with it.
Warning Signs of Bad Hires
- Little attention to quality and standards
- They repeat the same mistakes over and over, no matter how many time people told him/her off
- They claimed skills on the CV that are clearly missing when working
- They have a complaining attitude and rarely take responsibilities for what they have done
- They are constantly late and underperform
- They complain about their coworkers creating friction in the workplace
- Above all, bad reviews from your clients
Dealing with a Wrong Hire
There is never an easy way to do this. What you can do is set a couple of evaluation meetings explaining what is missing. Or give another try moving your bad hire to another department where his/her skills could be more appreciated.
If this doesn’t work, taking action is better sooner than later. As a team leader, you can’t waste time hoping that someone will have a night epiphany turning them into the perfect employee. Waiting for these hard decisions will also impact how your team sees you. If you know nothing else can be done, the only thing you can do is be honest and fire your lousy hire.
Improve your Hiring Process
The best thing you can do to avoid bad candidates is to improve your hiring process. If you know how to recognize a bad apple, you won’t infect your neighborhood.
At DistantJob, we are experts in the remote hiring process. To pick the right candidate, we pay attention to soft skills and attitude during the interview process. If someone doesn’t look committed when getting a job, he/she will likely be even lazier once he/she gets that position.
As we said, there is never an easy way to deal with bad hires or choose the best person for your company. You can learn from your experience and listen to your team to improve the different stages of the hiring process. And if you still have doubts, contact us for more tips!