The Guide to the Cost of Hiring the Wrong Worker

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Hiring a new employee can be a demanding task. You can spend hours advertising an open position, days reading through CVs, and weeks interviewing person after person before you even get to your shortlist. 

And once you finally pick your new hire, oftentimes you’re left with someone who isn’t quite the right fit.

The implications of a mis-hire stretch a lot further than you first realise. As expected, there are losses across productivity and finances, but there are also major losses to your staff morale and company reputation to consider.

It’s important to closely monitor these areas in your company and how they change with each new hire. But getting it right isn’t impossible; there are a few key ways to make sure your next hire is the right fit.

 

The Productivity Costs of Mis-Hires

For many businesses, productivity costs can be the largest and farthest-reaching consequence of a mis-hire.

In fact, a survey by CareerBuilder shows that due to poor hires, productivity levels went down by 39%.

Even for employees that already come with a particular set of skills, training is a costly affair that requires both a financial investment and substantial time investment. Putting in the effort to train the wrong hire doesn’t just put you right back where you started — you will be forced to start again to find the right hire.

Similarly, figuring out that you’ve hired the wrong person isn’t something that happens immediately. Often, there are warning signs, but it can take a significant amount of time before you realise. Training and managing someone who isn’t the right fit can lead to missed deadlines and costly overruns, which ultimately lead to a damaged brand reputation.

 

The Financial Burden of Mis-Hires

A survey by The Australian says the cost of hiring an employee is roughly 1.5 times their annual salary, but a bad hire will cost you 2.5 times their salary.

Essentially, every minute that you spend trying to train an employee that isn’t going to work out is a minute that you don’t get to spend on actively running your business. 

The same is true for the rest of your workforce. The time they spend on picking up the slack represents effort and attention they could have placed elsewhere. In terms of workplace safety, mis-hires who lack the skills for your job site are far more likely to make costly or dangerous mistakes than others.

If a mis-hire causes an accident that gets people injured, you could be subject to criminal and civil liability. These accidents will also have a negative effect on your business’s insurance rates. Even after that employee leaves, you’re still looking at higher premiums that can chip away dramatically at already thin margins.

 

The Effect of Mis-Hires on Morale

Poor hires impact team morale through increased tension. This harms the employees’ view of the company and the leadership team.

Similarly, workplaces with low morale are typically filled with disengaged employees. In fact, according to the experts at The Engagement Institute, disengaged workers cost businesses a combined $450 to $500 billion in lost productivity alone.

On the other hand, a study from Dynamic Signal revealed that employees who are able to exercise their strengths on a daily basis are 8% more productive than average and are six times more likely to be engaged. Moreover, teams with high levels of employee engagement are 21% more productive than average. 

Essentially, mis-hires have the capacity to push out high-quality hires that are a benefit to your business. Whether they were on the fence or otherwise happy, they may start to look for new opportunities.

 

The Reputation Costs of Mis-Hires

One mis-hire can easily damage your business’s relationship not only with external parties, like partner companies, but it can disintegrate your existing customer relationships as well.

Customers or clients are only going to stay around for as long as the work quality they’ve grown accustomed to is present or increasing. Once gone, even strong relationships become tested and may resolve in ways you cannot anticipate.

The internal consequences are just as severe. If you make a poor judgement call with an employee or if you get a reputation for regularly bringing the wrong people into the fold, eventually you’re going to have a hard time attracting top skilled workers when it does come time to fill new positions. 

 

Key Things You Need to Consider to Hire the Right People

Now, you no doubt understand that the consequences of getting the hiring process wrong are difficult and costly to overcome. Luckily, hiring the right people is more straightforward than you might expect. You just have to keep a few key things in mind.

 

Know the Job Requirements

Most businesses will have the best chance at success by collaborating with their hiring manager to build a clear understanding of job requirements. Communication and collaboration are a must during this time. You need to communicate what an ideal candidate actually looks like, including what licenses and skills they need, to ensure you’re hiring the right talent. 

Engage in Best Practices

Make sure they have everything they need to succeed. Do they have the right skills? Do they have the right credentials? Are they licensed? Are they competent? Do they have experience with the role you’re looking to fill? Can they show you their previous work records?

It’s Not Just about Skills

It’s important that you understand an applicant’s exact skill set, their competency and their credentials before you make your shortlist of candidates. But never forget that the right person is also a team fit. You need to know what they can do, if they have the right attitude and whether they will be considered an asset to the team and the business.

Take Your Time

Finally, don’t rush the process. Yes, everyone wants to be able to find the perfect candidate as quickly as possible. But oftentimes, it’s a lot more nuanced than that. You’re not just trying to meet your current needs. You’re looking for someone who is a good fit for your culture and who can continue to provide value to your business over the next few years. That is not something that is going to happen overnight.

 

Invitation to CredShare

Creating a CredShare™ account helps avoid hiring mistakes. You’ll never have to worry about hiring the wrong worker as you can find all potential employees credentials and licenses on CredShare! 

You can also store and upload all the licences, documents and files you need for your organisation, to display all measures of success and capabilities that only increase your brand’s reputation.

Sign up as an organisation today to take control of your workforce (or potential employees) today.