There's excitement and relief when you hire a new employee. No matter how long or short your search was, finding someone who fits the bill is great news. The company has more opportunities to succeed, and the coworkers who've been taking up the slack get some help. The first day on the job has potential for the worker and the business.
However, some new hires don't turn out to be as advertised. They may have looked great on paper, interviewed well, and come with good references, but something just isn't right. For business leaders, spotting a bad hire, and making a correction early on, is more important than filling seats. Too often, there's no point investing time and resources in a bad hire: you're better off cutting your losses and trying again.
How costly is a bad hire?
Bad hires are not only a hassle, they can be costly to your business.
According to CareerBuilder
, 71% of small businesses have made a bad hire, and it's been costly. Broken down, here's what small-to-medium businesses (SMBs) say bad hires have cost them:
- 17% say it costs them between $1,000 and $2,500
- 20% say between $2,500 and $5,000
- 11% say the cost to the company was between $5,000 and $10,000
These leaders cited the following as the top three factors in determining the cost of a bad hire:
- Lost productivity
- Poor work quality
- Lost time to recruit and train another worker
The US Department of Labor estimates
the average cost of a bad hiring decision is at least 30% of their projected first-year earnings. This includes the following:
- Resources used to recruit
- Time and expense of onboarding and training
- Time spent managing poor performance
- Lost productivity
For SMBs in particular, these costs are difficult to absorb. Therefore, it's essential to routinely assess new hires early on to ensure the hiring decision was the right decision.
Why are we making bad hires?
You may take comfort knowing you're not the only one hiring the wrong employees, but it's essential to learn from others' (and your own) mistakes.
The same CareerBuilder survey found some of the main reasons SMBs make bad hiring decisions:
- 36% knew they didn't have the skills but thought they could learn quickly
- 32% took a chance on someone nice
- 31% found the candidate lied about their qualifications
- 28% settled on the hire because they were having a hard time finding qualified candidates
- 28% focused on skills and not their attitude
- 25% ignored warning signs this might be a bad hire.
Another 10% admitted they didn't perform a thorough background on the applicant, which might have revealed reasons not to hire. When the market for candidates is tight, or you're pressured to hire, it's easier to make a wrong decision. In the long-term (or short-), it's usually better to keep looking and find the right person for the job and the company.
What makes a new hire a bad hire?
Here are a few common areas to let you know you've made a bad hire that needs to be corrected. Consider these are new employees, who typically would be on their best behavior early on. If they can't work productively now, they probably won't improve in the future.
If your new hire is disruptive, just not getting it, or not a team player, you want to address it early on.
They may be complaining, gossiping, or shirking their responsibilities, but they're easily spotted disrupting the workplace and productivity. You may notice an attitude issue: some tasks are beneath them. They avoid doing tasks by asking questions over and over — even though they have the answer — just to get someone else (in frustration) to do it for them.
They complain about the smallest things (or everything) or get angry or irritated when it isn't warranted. These workers are probably doing more harm than good. If a conversation doesn't correct the behavior(s), it's time to rethink your choice.
Coming in late early in employment could be a one-off. Traffic jams happen, busses run late. If tardiness is the norm rather than the exception, you may have a bad hire. Early on, policy violations are a big red flag for employers. If they can't follow the rules during the "honeymoon" period, imagine the rules they'll be violating once they feel comfortable and secure.
Assuming you've thoroughly outlined company policies (and assigned an employee handbook), they should know the rules and adhere to them. If they're not, you'll want to talk to them to make sure they understand the infraction is unacceptable. Don't just let it slide — you reinforce lousy behavior if you ignore it. Instead, let them know they have to be at work on time, shouldn't take a 2-hour lunch, or whatever the violation is, immediately. Then watch to make sure it doesn't happen again.
Just not getting it
There's a learning curve for every job, no matter how easy or complicated. Even the most complex duties and tasks can be broken down into parts, with training milestones set along the way. These milestones can be critically important to gauge whether you've made a bad hire. If the new employee hasn't mastered the first task (or portion of a task) by a reasonable date, they're not likely to master the next task or the next.
Before you let them go, make sure the trainer was competently explaining how to perform the task. Was the employee given ample opportunity and input to get it right independently? If you've exhausted every possible explanation why they're just not getting it, it's probably time to cut your losses.
Inflexibilty could be a sign of laziness or unwillingness to learn.
"At my old job, we did it this way…" could be a new way of looking at a task, or it could be complaining they don't want to do the work. If you hear a new staffer say, "that's not my job," when it comes to something trivial, you may have hired someone who isn't willing to chip in when needed and grow their skill set. It's proper to say it's not my job to perform skilled tasks they haven't been trained for: it's inflexible to say it when it comes to something minor or inconsequential.
You've made a bad hire; now what?
So you, like millions of other SMBs, have made a bad hire. What do you do about it?
This is where new hire probationary periods are so critical. For most organizations, the first 30 days are vital in assessing a new hire's skills, attitude, and potential. Let the new staffer know they're being hired with a probationary period, and they will be assessed before it ends to verify the continuation of service.
If you provide an offer letter (and you should) for the new hire, make sure the probationary period is outlined in the letter. If you are in an employment-at-will state, include employees may be separated with or without cause, including during the probationary period.
Another reason for short probation is unemployment benefits eligibility. In most states, an employee on your payroll for 30 days becomes your responsibility when it comes time to collect unemployment benefits. You may think it's not costing you in the short-term, but over time the more experience your company has with unemployment compensation (meaning the more people who collect after working for you), the higher your premiums will become.
Meet with the hiring manager before probation ends
Use the probationary period to your advantage. Mark your calendar to meet with the new hire's manager or with the new hire alone before probation ends. Review how things are going — do they have the right attitude, are they following the rules and being cooperative.?If you've had to speak with them on any of these issues, or others, consider whether moving forward is worthwhile. If not, it may be time to cut your losses.
Don't get yourself down about a bad hire
Every recruiter, manager and business owner has made bad hires — it comes with the territory. Candidates present better than they can perform, references are impossible to get, or the person you thought could learn quickly just isn't up to the task. There's no shame in admitting you've made a mistake and letting the new hire go — hopefully on to a job that better suits them. More significant problems arise (and continue) if you hold on to a new hire that's just not worth keeping.