It’s no secret that a bad hire can cost you a lot of money. On top of the expense to your company, there’s nothing more disappointing than realizing that your new rockstar hire turned out to be a dud.
What is the actual cost of a bad hire?
- According to the U.S. Department of Labor, the cost of a bad hire can reach up to 30% of the employee’s first-year earnings.
To put that number in relatable terms, let’s say you hire a Senior Executive Vice President with an average salary of $137,500 (based on PayScale). You stand to lose approximately $41,250 if you make the wrong hire.
There are a multitude of factors that impact the actual cost of a bad hire. Time spent interviewing, onboarding, training, etc.
What leads to a bad hire?
Sometimes you simply get played. A Human Resources Social Network study found that 50% of candidates misrepresent, and 30% blatantly lie on their resumes. Unfortunately, there will always be misrepresentation and lies on resumes.
Here are 5 ways to avoid a bad hire:
1. Due Diligence: When it comes to avoiding a bad hire, due diligence is of the utmost importance. It may seem like a no-brainer, but you’d be surprised how many companies avoid thoroughly vetting a potential new hire. During your interview process, make sure you overly scrutinize candidate resumes. Do this by contacting former managers and cross-checking references. It’s a tedious process, but it will end up saving your company a lot of money.
2. Write Strong Job Postings: We can’t overstate this one enough. Your job posting needs to be as specific as possible. What do you want? What are you offering? What’s your expectation? Not having a strong job posting leads to confusion and can ultimately result in an unqualified hire.
3. Don’t Hire a Brilliant Jerk: Yes, this is actually a thing. Netflix popularized the term “brilliant jerk” on their company culture page. Basically, a brilliant jerk is someone who is really good at what they do, but nobody likes them. They’re very tempting to hire, but it’s crucial to avoid hiring this type of person. They’ll kill your company culture and put you right back at the beginning of a search.
4. Look for Red Flags: One of the most recognizable red flags are resume gaps and short employment tenures. According to the Bureau of Labor Statistics, the median employee tenure for 25-34 year olds is 3.2 years. Workers in management, professional, and related occupations have the highest median tenure at 5.5 years. If you notice that a candidate has only worked in a job for three to six months, you’ll need to have definitive answers as to ‘why.’
5. Hire a Recruiting Firm: Outside of the obvious time savings, recruiters understand the market and will save you money in the long run. Recruiters are able to dedicate 100% of their time to your search, which results in your position being filled in less time. Last, but not least, a good recruiting firm will have access to a talented pool of passive and active candidates.
Real8 Group is an executive real estate search firm with over 75 years of combined experience sourcing and placing the most qualified candidates. If you’re interested in discussing a need, please contact us here.