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The organizational cost of a bad hire — and how to fix it

The organizational cost of a bad hire — and how to fix it

So, you’ve got the feeling you made a bad hire — recruitment can be a delicate process, but what do you do when it has gone wrong? With the cost and impact of a bad hire stretching right across the business, you need to act soon.

What happens when you make a bad hire? 

Bad hires happen for a number of reasons. Maybe you’re under pressure to fill a talent gap fast. Or perhaps you let your bias get the better of you, hiring for likeability over added value.

Making a bad hire doesn’t just impact their immediate colleagues, the ripples can be felt across your whole organization. Here are just some of the effects of making (and retaining) a bad hire.

Bad hires can cause good people to leave

If existing staff don’t feel properly consulted about a new hire, or if their concerns are not taken seriously, they can easily be left with feelings of frustration and resentment.

It’s not hard to understand why. We spend one-third of our lives at work and we’re in the company of our colleagues more frequently than our loved ones. Imagine you were working alongside someone you consider lazy, unmotivated, or antagonistic — how would you feel if they continued to be employed? 

🗯 Your workforce is a team. A good company culture motivates your staff to work well for each other, as well as for their paycheck at the end of the month.

It’s hard to want to go the extra mile for your employer when others around you aren’t pulling their weight.

For many, these feelings of frustration can become strong enough that they may decide to leave the company themselves. This leaves you with your problematic new hire…and one or more experienced team members down.

Company culture can become threatened

The feelings of resentment that might lead long-standing staff to leave can also have an impact on corporate culture more generally.

Your workforce is a team. A good company culture motivates your staff to work well for each other, as well as for their paycheck at the end of the month. While some will go the extra mile to finish a project, far more of us will put in extra effort to avoid inconveniencing our co-workers. 

But what happens to this camaraderie if one person is clearly not on board? Then you’re unlikely to achieve ToMo (total motivation), as Harvard Business Review calls it.

Physical costs and overheads

Of course, there can also be substantial direct costs associated with making a bad hire. Depending on how long they remain in post, you may have to make significant outlays in terms of recruitment costs, training, and their salary. And that’s before you consider the hours HR can spend trying to resolve the situation.

In fact, the U.S. Department of Labor estimates the cost of a bad hire to be up to 30% of the employee’s first-year earnings. In some sectors, this could amount to tens of thousands in wasted capital. 

What can we do to limit the impact of a bad hire — and how can we avoid it entirely?

Can a bad hire be ‘fixed’ before it’s too late?

If you’ve found yourself with the sinking feeling that your newest recruit might, possibly, have been a mistake… What can you do?

Not all bad hires are lost causes. If you act early enough, then the issues we shared above might just be avoided.

Probation periods are here to help

It might sound obvious, but what else are probation periods designed for?

Most employment contracts open with a clear period of time during which you can support your new recruit and find out whether they can succeed. But this window will close, so don’t drag your feet!

👉 What’s the fix?

The first question to ask is whether the problems you see are just teething problems, or whether they reflect something deeper and more long-term. It’s important to speak to the recruit and their team members, to get a comprehensive picture of what is going wrong, and why.

Use your feedback

Next, you need to gather feedback from anyone your “bad hire” recruit is reporting into and working with. The senior team needs to be aware that there are problems. Discuss possible solutions with their line manager, HR, your onboarding team, and those responsible for training.

👉 What’s the fix?

  • Use the information you have available to you. 
  • Take the time to really understand the feedback you’ve had from other team members: what are the higher-level insights, what isn’t working — and why
  • Look back over your new hire’s application to help you understand where any mismatch of expectations might have come from.

Keep on communicating

When you’re faced with a potential crisis, it’s all too tempting to clam up and cut yourself off. But this won’t help anyone — least of all the new hire. Chances are they’ve recognized that things aren’t going well, so explain the difficulties wherever possible. 

👉 What’s the fix?

“Bad hires” deserve honesty, too, and if you cut them out of conversation and feedback loops then you can never expect them to turn things around. At the same time, reassure existing team members that their concerns are being dealt with and keep the channels of communication open. 

It’s also important to ask your network for support. It’s easy to feel bad when we make a bad hire, but you’re absolutely not the only hiring team to go through this. Reach out to fellow professionals for advice, suggestions, or even just a supportive sounding board.

🗯 Could it be that this ‘bad hire’ is struggling because of you and not them?

Invest in introspection

Time for some soul searching: are you giving new recruits the support they really need? Could it be that this ‘bad hire’ is struggling because of you and not them?

👉 What’s the fix?

Feedback flows both ways, so sit down and discuss the challenges as you see them with your problematic recruit — giving them the space to speak their mind too. It might be that they’ve felt unprepared to perform in the role or that your interview questions were inspiring and exciting, but the day-to-day reality of the role has been something else.

We’re in the midst of a huge retention issue in many, many businesses. How can we expect to fix it unless we question our employee experience?

… but if it’s really not working

You absolutely need to be willing to part ways with a new hire who just isn’t right for the job. It’s never pleasant, but your job is to look after the best interests of your company. 

The true cost and repercussions of keeping a bad hire can be significant and long-lasting. It might just mark the start of the end for your organization if you let it become a habit.

What’s important is that we learn from our mistakes and try to make “bad hires” a thing of the past.

Avoiding costly hiring mistakes in the future

Set aside your feelings of failure and stop beating yourself up! As every people management textbook will teach you, every misstep is an opportunity to learn.

Here’s how to stress-test your recruitment approach to ensure bad hires don’t happen again.

Assess your recruitment process from start to finish

Even if your earlier introspection made it clear the issue was with the hire and not with your business, there are always opportunities to improve.

‘Bad Hire’ Review Checklist

Walkthrough the hiring journey and, at each stage, ask yourself why you chose this particular hire and where your judgment could have been clouded.

It’s important that team leaders and the rest of your recruitment team complete the exercise with you.

  • The job description.

    Was this accurate? Appropriate? Sufficiently detailed? Ambiguous? Were you losing high-potential candidates right away creating a “pipeline problem” that led to the bad hire?
  • Interview process.

    Was there a unanimous decision? What criteria were used? Can you improve on these?
  • Skills assessment.

    Were you looking for the right skills? Are there better ways to evaluate these? To what extent were you assessing future potential as well as competencies evident today? This is something we explore in more detail in another blog here and Headstart’s contextual skills assessment tools can help you out.
  • Onboarding.

    Was the onboarding team prepared for the difficulties they faced? Did they have the tools they needed to support the new hire?
  • Firing process.

    Were you able to make a timely decision to fire your new hire? How well was this carried out? Was it clear whose responsibility it would be?

And always come back to the idea of inclusive recruitment. How much was this considered in all the above stages? You could be missing out on the top talent before your search has even begun. 

No one’s immune to bad hires — once or twice

We’re only human, right? And so we all make a bad hire from time to time. 

By acting quickly, you can limit the impact on your organization and reinforce to existing staff that you take their concerns seriously. Taking the time to examine how a bad hire came about can provide valuable insights which will improve your hiring processes for the future.

That’s professional development in action!

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