Avoid a Bad Hire

A bad candidate has both measurable and hidden costs.

There are two forces on the jobs horizon that are about to collide. Today and for the next 7 years, there are plenty of job openings, and according to a recently released poll, many people currently employed will be exploring those job openings. In many cases, this will create both a happy new employer and a happy new employee. However, some companies will hire the wrong employee and create an unforeseen ripple effect that can damage an organization, while the employee is working there and beyond. The cost of a bad hire has both measurable and hidden costs.

How can employers recognize a potential bad hire? That employee is currently working for your competitor and is looking to move on. A majority of employees plan to pursue new job opportunities in 2014, according to a recent poll by Right Management, with 83 percent of the almost 900 workers who participated in the online poll say they intend to actively seek a new position in 2014.

Several types of manufacturers are desperate to hire new employees. Consider the following facts from the U.S. Bureau of Labor Statistics and how they tie directly to manufacturing, and it’s not hard to imagine another company’s poor employee becoming your company’s next “star” recruit.

  • Manufacturing currently has more than 600,000 unfilled jobs.
  • Over the 2010-20 decade, 54.8 million total job openings are expected. While growth will lead to many openings, more than half — 61.6 percent — will come from the need to replace workers who retire or otherwise permanently leave an occupation.
  • In 4 out of 5 occupations, openings—because of replacement needs—exceed the number due to growth. Replacement needs are expected in every occupation, even in those fields that are declining.
  • Nonagriculture wage and salary employment, which accounts for more than nine in ten jobs in the economy, is projected to expand to 150.2 million by 2020, up from 130.4 million in 2010.
  • The “prime-age” working group (ages 25 to 54) is projected to drop to 63.7 percent of the 2020 labor force. The 16- to 24-year-old age group is projected to account for 11.2 percent of the labor force in 2020.
  • More than two-thirds of all job openings are expected to be in occupations that typically do not need post-secondary education for entry.

This landscape of new job seekers and many companies looking to fill open jobs will undoubtedly create many poor new hires for companies. 

Of these employers who said they made a bad hiring decision, which was 66 percent of survey respondents, 37 percent said the bad hire negatively affected employee morale. Another 18 percent said the bad hire negatively impacted client relationships. And 10 percent said the bad hire caused a decrease in sales. Here are the ramifications that most employers cannot put a dollar impact figure to.

The lowest paying jobs often earn a salary between $18,600 and $20,320. But a bad hire in one of these positions can cost a company an average of $25,000.

It’s a similar situation for the highest paying manufacturing jobs. Sales managers, prototype machinists, and plant managers earn an average salary somewhere between $110,000 and $130,000. A bad hire in those positions can cost employers anywhere from $152,000 to $220,000.

I am a big proponent of the following best hiring tips:

  • Hire slow, fire fast. A bad hire is the fault of the company, not the employee.
  • When possible, hire employees with the right attitude and aptitude, not necessarily industry experience.
  • Avoid the cult of personality syndrome of hiring the candidate you like the most. Have all second stage candidates meet with several people within your company
  • Have a measured and specific training program.
  • Remember, a probationary period is a honeymoon period. If the employee is not heading in the proper direction or is creating problems in your culture early on, move them on.