Hiring the wrong employees can be very detrimental, particularly if the employee is in a leadership position. A poor hiring decision means that company resources are spent inefficiently and this can be particularly devastating for a small business.
Some of the costs are easy to calculate, whilst others are not as obvious. Paying a salary to someone who does not perform up to expectations is an obvious cost but the cost in other areas such as productivity and employee morale is indirect and harder to calculate.
Effect on employee morale
A poor hire can have a bad effect on employee morale. Employees could lose faith in a company for placing someone in a managerial position who didn’t deserve it, especially if the person is from outside of the company.
Employees may question why someone from within the company wasn’t appointed when the company hires a bad manager from outside. It is easy for them to become dissatisfied or disengaged. When the reputation of a company suffers due to low employee morale, this can be difficult to recover from.
When filling positions, it is important to analyze the skills required for the role and see whether it would be possible to promote an internal staff member. eSkill is a talent assessment platform that offers skills testing. This could help to determine the current skills of an employee and whether any gaps could be addressed by training.
Cost in productivity
Any staff involved in managing personality conflicts between new hires and existing staff will be less productive. Measuring the cost of this is almost impossible. It is difficult for employees to stay motivated and engaged when one team member requires too much attention and this can pull the whole team down.
The lack of cohesiveness in a team can severely affect productivity. When employees have to keep picking up the slack due to a bad hire, they can start feeling resentful.
Waste of time and resources
Recruiting employees is a costly and time-consuming process. When companies hire the wrong person, it means they have to work at getting them to fit in and it may never happen.
An employee who can’t perform up to expectations due to exaggerating qualifications during the hiring process will often require more training. Even after training, the person may decide to leave. The company then has to go through the whole process again of finding someone to fill the position.
When organizations consider the qualifications and skills of candidates, their personality profile and their cultural fit, they can greatly reduce their risks of wasting their time.
Sometimes overwhelming pressure to hire can blind a hiring manager to the shortcomings of a candidate and the feeling of negativity that permeates the company due to a bad hire can be hard to shake.
This can easily bleed into how other employees feel. Top performers in the company may leave if they feel this is the type of person the company is willing to bring on to work with them. When top talent leaves, it can result in other employees making a decision to leave too.
Poor customer experiences
Whilst there may be negative effects internally of a bad hire, the impact on customers can have a negative impact for years to come and ruin a company’s reputation.
A strong training and induction program can reduce the effects on customers but the bad attitude of an employee won’t be quickly forgotten by customers. Poor hires are unlikely to appreciate the importance of customer perceptions of a business and how important it is to get repeat customers.