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The Cost of a Bad Hire

How to skip the bad hire phase and identify top talent


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Whether we’re experiencing a strong or slow job market here in Colorado, the cost of a bad hire is always the same  ̶  steep.

According to several sources, including the U.S. Department of Labor, the cost of a bad hire can reach thousands to tens of thousands of dollars for just one employee. In my 25 years of experience working with companies to hire top talent, I agree. The cost of hiring a bad employee can be staggering. On the other hand, hiring the right employees can be a major boost to your business and affect the following three facets: culture, productivity and your bottom line.

Culture

Just like the saying “one bad apple can spoil the bunch,” one bad hire can have a big influence on a company’s culture  ̶  impacting morale, team dynamics and overall happiness of existing associates. When a new hire isn’t a fit or doesn’t contribute to the team, other employees tend to become disengaged or confused about the culture surrounding the company. When executives take the time to recruit people with the right fit, culture becomes the priority and makes it easier to attract other top talent moving forward.

Productivity

When a poor performer is brought to the team, it immediately impacts morale. And, when morale is down, productivity suffers. Whether the new employee lacks the proper skills or isn’t a cultural fit, other employees may need to pick up added responsibility, and group dynamics will likely shift until the new hire is removed or replaced. 

Productivity also suffers when the bad hire is let go and the team is down a player or must wait to onboard a new team member.  Quickly identifying the mis-hire and communicating with the team is key before there is additional turnover.

Bottom Line

When productivity is down, it can negatively impact your bottom line. From internal issues to poor customer experiences, a sub-par employee can translate to a loss of customers and loss of revenue. Companies also lose out on out-of-pocket costs such as advertising, recruitment fees and/or onboarding expenses to replace a bad hire, which puts added strain on a company’s bottom line and internal resources.

Bad hires not only have a negative impact on a company’s culture, productivity and bottom line, but it’s people as well. Hiring a person who is a true fit with the organization can tip the scales in a dramatically different direction. Focusing on hiring the right person for the job and for the organization, often goes beyond the resume. Here are a few tips to skip the bad hire phase and help identify top talent.

  • Involve your employees. Ask other team members to participate in the interview process to help vet candidates and provide honest feedback on potential new hires.
  • Start with the right fit.  The sole purpose of the initial interview should be to determine if the candidate has the right chemistry for your culture.
  • Go with your gut. Listen to your instinct and your employees. Avoid hiring full-time employees for short-term projects or “fires” that need to be put out.  Only hire people who you feel will contribute to the long-term vision of the company and help the team grow in the right direction. 
  • Be patient. Don’t rush the selection process. The cost of a bad hire far outweighs the time and effort to wait for the right person to move your organization forward and set you up for future hiring success.

It is very common for companies to not follow their gut instinct, rush the hiring process and not involve their team, because they felt desperate to just “get a body in” to put the fire out, with the mindset that “someone in the role is better than no one.” Instead, create a process, put intention into the process and no matter what, don’t cut corners and rush the hiring process.

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Steve Ziegler

Steve Ziegler is CEO and founder of Z3Talent, a talent acquisition firm partnering with high-potential growth companies to identify and recruit the people they need to fuel their growth. He has 25 years of experience as an entrepreneur and executive in the human capital industry. Reach Steve at steve@z3talent.com or 303.881.1771 or on LinkedIn.

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