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Strategies for HCM Professionals

Five Strategies to Avoid a Bad Hire

All business or HR leaders understand the importance of effective recruitment, hiring and retention; and that hiring the right employee is a long, detailed process. While many hires work out, there is the risk of hiring an unsuitable employee who just isn’t right for your company, particularly when your business is experiencing rapid growth. That bad hire can hurt your company financially but it can also damage the reputation, productivity and morale of your company and employees.

When it comes to a bad hire, there are both tangible and intangible costs, says Deborah LaMere, Ceridian’s Vice President of Employee Experience, and Tracy Bruckschen, Director, Talent Acquisition for Allianz Life Insurance Company of North America.

In terms of financial costs, a bad hire can cost hundreds of thousands of dollars.

“You have to take into consideration the actual costs,” says LaMere. “There are the hours put into recruiting for the position, the hours lost by the position being vacant, and other people taking on more responsibility as the position remains open, thereby lowering productivity. Plus, there’s the training and ramping up when the position is filled. All this could cost $300,000 to $750,000.”

The US Department of Labor estimates that a bad hire could cost up to 30% of a new hire’s salary. Depending on the role, that can be a sizable amount of money.

The financial impact of a bad hire is substantial, especially for a small business, but LaMere and Bruckschen says that the true impact isn’t financial, it’s cultural.

“A bad hire is more about reputation,” says Bruckschen. “You can’t put a dollar amount on the impact it has on morale, team culture or department culture.”

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Here are five strategies LaMere and Bruckschen recommend to minimize erroneous hiring decisions.

Live your culture to ensure the right talent stays

LaMere says companies should keep in mind that while companies are interviewing candidates, candidates are also interviewing the companies. “It’s important to ensure that there’s an alignment where the company is representing itself clearly and credibly to that person.” That means companies have to “walk the talk,” says LaMere. If the company boasts about its great culture, then it has to live it.

“If you’re telling this story about your great culture but on the first day a new employee hasn’t met their manager? In the first two weeks a new hire is making a decision, ‘am I going to stay?’ and if you don’t have them on day one, they’re out the door.”

Write better job descriptions

How often have we seen job descriptions that read like a Scrabble board – a jumble of words that don’t provide a great amount of insight into the actual job and its daily responsibilities? Bruckschen says many companies confuse the job description with the job criteria. A poor or inaccurate job description can discourage the right candidates from applying for the role. Instead of publishing the same old job description on LinkedIn, involve the people who have hands-on experience with the role to update the description. That way you get an accurate idea of what is really required for the role.

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Look for a balance of hard and soft skills

Bruckshen says some organizations place too much emphasis on skill sets that can be trained and not enough on soft skills, while others focus on soft skills versus the needed skill set. Both extremes can lead to a bad hire, so when looking for an ideal candidate, Bruckschen says managers need to take a strategic approach. Look for candidates with the skills to get up and running, but with the soft skills that would help them fit your company’s culture.

Include different stakeholders in the interview process

Most interviewing processes follow a traditional path. The candidate is screened via a phone interview, then they meet the HR manager, then their potential manager and if that manager likes them, they get a job offer.

LaMere says there is a lost opportunity during the hiring process to get more well-rounded feedback on the candidate. “Hiring managers do make the ultimate decision but they should consider the input of other interviewers.”

She says that the hiring process should be either a panel or separate interviewers who can then debrief each other providing different perspectives. The group makes the hiring decision instead of just the hiring manager.

Don’t take shortcuts

People are a company’s most important asset, and finding the right person to join a company and a team takes time. There are costs involved, but taking hiring shortcuts can lead to increased costs, lowered productivity, decreased morale and higher turnover. Take the time to develop a comprehensive hiring strategy and leverage the experience of your employees to find the right person.

Watch the free webinar to learn more about tools and strategies to retain top performers.

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