Every hiring decision is important, especially in smaller companies, where recruiting and hiring workers often requires a significant investment of management’s time – and where one “bad apple” can have a ripple effect on overall productivity and company culture.
According to both Glassdoor and the Institute for Research on Labor and Employment at the University of California at Berkely, the average cost to hire a new employee is $4,000. By some estimates, the wrong hire can cost a company as much as 2.5 times the position’s salary. Those aren’t the only losses, either. Harvard Business Review estimates 80% of turnover is due to bad hiring decisions. So, obviously, it’s in a company’s best interest to net a stellar new worker every time it fills an open position.
Yet, bad hires happen all the time. A CareerBuilder survey showed nearly three in four employers have hired the wrong person.
7 Reasons Companies Hire the Wrong Employees (and How to Avoid It)
Below are seven reasons small businesses may make poor hiring decisions. By avoiding these pitfalls, your company improves its chances of finding the right workers and saving money in the long run.
Desperation. When small businesses are growing fast, get a big customer order with a tight deadline or face some other urgent need that requires extra hands almost immediately, there’s often a temptation to simply get people into open slots now, even if they don’t meet all the company’s requirements. Beware: Mediocrity will not serve your company well in the long run.
To avoid desperation hiring, make it a habit to network regularly, keeping a list of and reaching out to qualified candidates when relevant roles open. Ask your employees for recommendations, too. People who already are performing well in your organization are likely to know others who would do the same.
Lack of Specifics. Employers often start the hiring process without first figuring out the essentials of the job and writing a detailed job description. Before posting an open position, think about your ideal employee’s skills, experiences, attitude and character traits. Decide which skills are absolute and which others a top-quality employee could quickly learn.
When those decisions are made, write a detailed job description that clearly explains responsibilities and helps candidates visualize what it would be like to work for your company. If the job has specific criteria, such as being able to lift a certain weight or working evenings, include them in the job description.
Advertising in the Wrong Places. From LinkedIn to Monster to industry association job boards, there are lots of places to market openings in your organization. But if that’s not where your ideal candidate would look for a position, you’re wasting time and money. Take time to understand how your top performers found your company. Talk to industry colleagues who have hired for similar positions and find out how they recruited their best workers. Then make sure you’re posting your job ads where the top qualifiers are likely to find them.
Bear in mind that your ideal candidates may already be working for you or may not be looking for a job at all. Consider reaching out to these individuals as part of your recruiting efforts.
Discounting Attitude. A landmark Leadership IQ study revealed that 46% of new hires bust within 18 months – and that technical skills account for only 11% of those failures. In fact, motivational problems, lack of willingness to be teachable and other attitudinal issues were the reasons for new hires’ quick departures 89% of the time.
Unfortunately, many small businesses’ hiring practices still center only on assessing technical competency without considering job and organizational fit. As you screen resumes, recognize that a pattern of job-hopping may reveal someone who tends to be discontent at work. It’s not a hard-and-fast indicator, but it’s worth being aware of if you intend to interview the applicant.
In interviews, ask questions designed to discern the candidate’s attitudes, such as:
- What wasn’t working for you or your employer that caused you to leave your previous positions?
- Tell me about a time you had a conflict with a colleague. How did you handle that?
- How do you react when someone asks you to do something at work that you consider very hard to do?
- What have you done in the past when a supervisor or colleague has pointed out a mistake you’ve made?
- If we were to ask peers at your last couple of jobs what it’s like to work with you, what would they say? How would your former supervisors answer that question?
- Describe the workplace that would be perfect for you.
Hiring Too Fast or Too Slowly. Making snap decisions on an early candidate before casting the net widely gets a warm body in a seat fast, but also ups the risk your new hire won’t be what you hoped. On the other hand, dragging out the process increases the chances your preferred candidate will tire of waiting and accept a position somewhere else. A well-planned hiring process that doesn’t cut corners is the only way to identify high-quality employees. It can and should move at a steady pace while still ensuring a broad range of candidates are screened and carefully interviewed.
Relying on Untrained Interviewers. Good interviewers aren’t born; they’re trained. Team members who will interview candidates need to understand how to avoid illegal questions and unconscious bias. Training also should teach them how to follow a defined process that allows candidates to be evaluated fairly and equally, including asking certain competency and attitude questions of all interviewees.
Training further prepares interviewers to provide a great candidate experience and anticipate and respond appropriately to questions interviewees may ask about the work environment, company culture or a typical day in the job. Remember that candidates are evaluating whether they want to work for your company. So, if each one leaves with a positive impression, your top choice will be more inclined to accept your offer.
Skipping Reference Checks. According to the Monster Future of Work: 2021 Outlook survey, 66% of recruiters agreed candidates exaggerate skills and competencies on their resumes. Research also suggests about 50% of resumes contain outright lies. Background and reference checks help you uncover and weed out any resume cheaters that may be among your group of preferred candidates.
The recruiting and hiring process is time-consuming and costly – but getting it right makes the investment worthwhile. Knowing the reasons companies often hire the wrong person and steering away from those pitfalls is makes sure your next new employee is the one who not only fits the job, but also enhances your organization’s culture.