The Surprising Cost of Hiring Bad Employees

At some point, every business owner experiences a moment where they realize they’ve hired a bad employee. Whether they’re rude to customers, don’t show up on time or have a negative attitude, a bad hire has a ripple effect in business.

In a given year, 69 percent of employers are adversely affected by a bad hire, according to a survey by CareerBuilder. And those adverse effects are costly. How costly? The actual numbers may surprise you.

Here’s a look at the surprising cost of hiring bad employees, why it happens and how to avoid poor hiring decisions in the future.

The actual cost of hiring bad employees

If you had to guess how much a bad hire costs a business, what would you guess? Forty-one percent of owners that dealt with a bad hire say it cost them at least $25,000, and 25 percent of owners say a bad hire costs them $50,000. Is that more than you guessed? We thought so.

What factors into these costs? A bad employee hurts productivity, can cost you sales and potentially damage customer relationships. Once you fire this employee you have to recruit, hire and train someone new – all of which cost time and money.

Curious just how much a bad hire costs your business? Use this calculator to figure out your losses.

Why bad hires happen

Most business owners say they’re a good judge of character, and trust their instincts to select good applicants. If that’s the case, why do bad hires happen? A survey from CareerBuilder shows the biggest catalyst behind a bad hire is the need to fill a job quickly.

An open position can take a toll on your company, so it’s natural to move quickly to fill it. But, business experts say hiring a bad employee is actually worse than leaving the position open. Given the costs mentioned above, there’s no financial upside to hiring an employee for the sake of filling a position immediately.

Of course, there are other reasons that owners end up hiring a rotten apple. Here’s a look at the entire list of reasons from the CareerBuilder survey:

  • Need to fill the job quickly: 43%
  • Insufficient talent intelligence: 22%
  • Sourcing techniques need to be adjusted: 13%
  • Fewer recruiters needed to review applicants: 10%
  • Failure to check references: 9%
  • Lack of strong employment brand: 8%

How to avoid hiring the wrong person

Considering the damage that a bad hire can have, let’s talk about ways to avoid making the mistake in the first place.

  • Create a job ad that specifies skills needed

Be specific in your advertising. You want to attract candidates that have tailored skills so they are immediately effective on the job.

  • Generate a list of interview questions that pertain to the position

Don’t just ask generic questions during the interview; ask questions that pertain to the job at hand.

  • Gather feedback from current employees

Ask your current employees what kind of person they want to work with, and incorporate those qualities into your search. In some cases, hiring managers are too far up the chain to understand what kind of person is the best fit.

  • Google the candidate

Run a quick Google search on the candidate and see what comes up. You should also look at social media accounts and see what kind of posts this person makes. If they’re ranting about their incompetent boss or the stress of having to work late, it’s a major red flag.

  • Do a second interview

Conducting a second interview is time consuming, but after sifting through resumes and talking with a handful of finalists, you can forget who’s who. The second interview can reveal more character traits and help you pinpoint the right candidate.

  • Call references

Yes, the references listed on a resume are going to provide glowing reports, but a savvy owner makes a few more inquiries. For example, call the last place that the candidate worked and ask to speak with a manager or supervisor that knew the candidate.

If the candidate listed volunteer work, call the organization and ask a few questions. If the candidate recently graduated, call the department chair at the school for the inside scoop.

Wrap up

Business owners are always under pressure, especially when it comes to staffing issues. You want to hire the right candidate, but a lot of time and energy goes into finding that person. In the long run, taking more time to find long-term employees will keep turnover down, and maybe more importantly, save you a bunch of money.

Lisa Furgison
About the Author
Lisa Furgison

Lisa is a writer at FiveStars, a freelance journalist, and co-owner of a media company, McEwen's Media.

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