You’ve found the perfect candidate: they have an impressive degree, multiple professional certificates to their name and they shone in the interview. Confident in your new hire, you go ahead and send the offer letter.
But, what happens when the new hire you’d put on a pedestal comes crashing down? Making a bad hire is every recruiter’s worst nightmare; but unfortunately, it’s fairly commonplace in the world of HR – last year, it was cited by CareerBuilder that 75% of employers had been negatively affected by a bad hire.
Calculating The Costs of a Bad Hire
It’s hard to quantify the cost of every bad hire, as varies between companies and industries. Plus, how bad is bad? Making the wrong hire for a non-client facing, low-risk role such as an administrative professional is an entirely different ball game to making a bad hire within neurosurgery. When there are so many different levels of ‘bad’ the exact cost of the wrong hire doesn’t follow a one-size-fits-all formula.
However, the best place to start is to consider the employee’s salary as this is an outgoing that isn’t delivering a return on the investment. However, this is just the tip of the iceberg – other costly factors which need to be considered are:
– Legal Fees
– Loss of Productivity
– Crisis Management
The negative impact of making a bad hire also goes well beyond monetary impact. The ripple effect is contagious, both inside and outside of the organisation. Within the company, employee morale is usually affected as a result of employees losing trust in higher management – particularly if their role or workload is made more challenging as a result of a bad hire. Reduced levels of productivity throughout the team can come into play as a result.
Outside of your organisation, the wrong hire can cost the company clients and affect any current relationships your team has worked hard to build. This, alongside reputational damage, can add significantly to the cost of a bad hire – which is now way beyond a month or two of that employee’s salary.
These factors make it difficult to quantify the exact cost of a bad hire, however, it’s clear that there’s huge potential for the wrong hiring decision to become very expensive, very quickly.
Separating The Good From The Bad
HR and recruitment professionals always strive to make the best possible hire. However, it can be difficult to gauge if a candidate will be a good fit purely based on information presented throughout the interview process – particularly if there are found to be inaccuracies in these details.
A misrepresentation of any information on a candidates CV or professional profiles makes an HR manager’s role fairly impossible without the assistance of external resources and background checks. Adding to the difficulty of an HR manager’s role is that the instances of fabricated information on CVs and job applications are high.
Using the aforementioned study by CareerBuilder, which found that 75% of hiring managers have made the wrong hire – the cause of this is as follows:
– 33% of candidates lied about qualifications
– 35% of candidates did not have the required skills
– 10% of employers did not conduct a complete background check
This survey is not isolated, another recent study by the HR Social Network reported that over 50% of candidates misrepresent themselves in their CV. With the rise of diploma mills, falsified CVs and misrepresentation of skills, it’s clear that HR managers face huge challenges when it comes to making the best hire for the business.
Reducing The Risk Of Making A Bad Hire
In order to prevent the eye-watering costs of making a bad hire, hiring managers can safeguard their company as well as their own peace of mind by implementing detailed background checks. These should be done ahead of contracts being signed and should cover background research and verification into formal education, skills and former references in order to gauge if the employee would be a good fit for the role and the company.
“The secret of my success is that we have gone to exceptional lengths to hire the best people in the world.” – Steve Jobs
It’s no surprise that HR tools have evolved rapidly over recent years, in line with new technology breakthroughs. TrueProfile.io utilises cutting-edge blockchain technology to help you verify each applicant’s professional documents, qualifications and career history – safeguarding your company from any potential bad hires.
To find out more about how TrueProfile.io works, visit our dedicated Business Partners area or email email@example.com.