The key to a company’s success has a lot to do with its hiring decisions, according to management guru Jim Collins.
“Get the right people on the bus, the wrong people off the bus, and get the right people in the right seats” – Jim Collins
Well, that may not come as a surprise. But consider this, as much as good hiring decisions can make a company successful, bad hiring decisions can break a company. Zappos CEO Tony Hsieh once estimated that bad hires had cost the company a staggering figure of more than $100 million.
Just why is no hire better than a bad hire? Let us break down the costs for you here.
Consider the advertising costs, in-house-recruiters’ salaries, 3rd party recruiter fees, travel expenses, as well as other perks such as sign-on bonuses and employee referral bonuses.
This doesn’t include the opportunity costs in terms of time spent. According to Glassdoor, each corporate job ad attracts 250 resumes on average. Of those, only 4 to 6 applicants will be called to an interview, and ultimately, only one will receive an offer. Some companies will have multiple rounds of interview which may consist of group discussions, aptitude tests etc. There is time investments not just on HR’s and candidate’s parts but also senior executives who sit in for the interview. After the hire joins the company, resources are also allocated for initial paperwork, IT equipment, and training.
You may recognise these signs, indicating that you’ve made a bad hire. But by the time you take action to remedy the situation, the damages are likely already done. This could be due to poor performance of the bad hire, which could cost you happy customers and impact your bottom line, or the effect the bad hire has on your good employees (see below).
We’ve all encountered that one colleague who would complain about everything, from office coffee, where they’re seated to even lunch options around the office. Worse still if they also spread this negativity through the office, affecting other staff.
Also, when a bad hire doesn’t pull his weight, good employees get burnt out making up for it. Good employees might eventually decide to leave, especially if the bad hire happens to be placed in a key position. You may end up losing even more in terms of lost revenue and company culture.
