The price to pay for employing the wrong person for your business
Results from a new survey carried out by Irishjobs.ie report that almost two thirds of businesses have suffered a bad hiring decision which has cost them over €10,000. In the survey of 126 employers, 21% stated that employing the wrong person had caused a loss of revenue, while 86% had experienced reduced productivity.
Additional repercussions stated were poor team morale (56%), compromised work quality (48%) and workplace conflict (33%).
The most common reasons cited for bad hiring decisions is relying on referrals from friends or colleagues, and lack of a more suitable candidate. Orla Moran, General Manager of Irishjobs.ie recommends that employers enlist “diligent recruitment processes” to avoid making the wrong choice.
Taking on new team members is costly. There are the initial hiring costs from advertising, screening, interviewing and reference checking. The cost of this recruitment stage can be up to 30% of the final salary of the employee, which is why it might seem attractive to cut corners.
But when recruiting new staff members, expenses don’t end with the hiring decision. Onboarding costs, including training, management and initial supervision, begin to mount up after employment has been offered.
And once the employee is part of the team there are potentially additional consequences of a bad hire: lost productivity, lateness, no-shows and the effect on the morale of the rest of the team. These unseen damages can be catastrophic, with a potentially high cost to management reputation both within the current team and in repelling future candidates. Bad employees can also create a weakened company brand and significant disruption to operations.
In another recent survey about hiring carried out by recruitment firm Robert Half, employers cited candidates being dishonest on their CV as the reason for one third of bad hiring decisions. With 40% of employers opting to terminate employment and 39% for additional training for employees - both causing substantial financial consequences to the business – the true cost of hiring the wrong person extends beyond wasting a few thousand at the recruitment stage.
Matt Weston, UK Managing Director at Robert Half said, “Employers would benefit from reviewing their hiring policies to ensure they strike a balance between efficiency and rigour.”
Effective hiring processes are crucial to avoid making mistakes. Carrying out careful and thorough pre-employment screening can protect your business from significant complications and financial issues that might arise due to a bad hire.