The Top Three Causes of a Bad Hire — And How to Avoid Them
We all know hiring the wrong person for a role can place a strain on company resources, both financially and temporally. But what is the impact of this strain? It’s probably deeper than you think.
The first thing most people think of when they think of the cost of a bad hire is the financial burden. This burden is significant, with a CareerBuilder survey estimating that on average each bad hire costs a company approximately $20,000 AUD [1]. While this alone is enough to make your heads turn, it’s not all. Floridian research firm Brandon-hall identified other significant effects that making a bad hire can have on a company, including the impact on employee morale, incomplete projects, lowered productivity, and wasted time [2]. If you’re hiring seasonal staff, it’s important to understand that these effects don’t leave with the disruptive employee. Over time the company’s brand, culture and staff morale stand to be damaged due to management’s continued poor talent acquisition.
Sources: Statistics courtesy of Brandon Hall Group [3] and CareerBuilder [4]
It’s clear that making bad hires can place a significant dent on a company’s resources, yet these mistakes continue to occur. With a research report from Brandon-Hall finding that 95% of organisations admit to hiring at least one employee that turned out to be a bad fit every year [3].
These research findings make it clear that there are significant, lasting consequences for organisations who make bad hires. This makes gaining an understanding as to why organisations make these mistakes as well as how you can minimise your risk in the hiring process paramount to your company’s success.
Why do companies continue to hire the wrong people?
1) Inadequate background checks
The same CareerBuilder survey found that 43% of hiring managers admitted to making bad hires as a result of insufficient, or even non-existent background checks [6]. This means that hiring managers are too often making decisions based solely on an individual’s CV and cover letter. In 2017 HireRight found that up to 85% of job applicants actively lie on their resume — showing that reliance on these documents can have serious consequences for the business down the line [7].
Companies that take the time to assess a candidate and obtain qualitative data about the applicant are more likely to make well-informed decisions regarding talent acquisition.
However, traditional background-check services prove to be costly and time-consuming, focusing on areas like criminal history, confirmation of education and employment and drug screening. While these are helpful in the hiring process, checks like these don’t always give you an accurate portrayal of the applicant’s character that will enable you to evaluate their potential success within your company.
This lack of due diligence highlights a need for a service which allows you to gain a true insight into your applicant’s character and reputation.
Reputationaire allows companies to instantly access social verified information regarding an applicant’s experience, skills, and reputation from a variety of websites they already use. This process is more likely to return meaningful information that will allow your company to better understand your applicant’s character and experience, and more efficiently differentiate between candidates. Reputationaire is backed by blockchain data so you can trust that the information you receive is secure and unmodifiable.
2) Rushing into a hire
A 2012 study by the HR company CareerBuilder found that 30% of self-reported bad hires came as a result of the pressure to fill the role quickly [5]. This sense of urgency is often a result of the current staff taking on too many tasks, and in turn forcing hiring managers into a pressured situation where they are ill-equipped to adequately screen applicants in a timely manner. This sense of urgency often comes from a genuine place, however, a ‘quick-fix’ solution doesn’t always turn out that way. When managers rush into a bad hire the effects previously mentioned such as lost productivity, compromised quality of work, and negative impacts to culture and employee morale have the potential to leave the core team in a worse place than they were previously.
When rushed like this, hiring managers are ill-afforded the luxury to complete a thorough analysis of their candidates. With typical background check services being both expensive and time-consuming without a guarantee of returning valuable information companies need to find a faster and more effective way to vet their applicants.
With Reputationaire you can go beyond your applicant’s cover letter and resume, and gain instant insight into their verified reputation from a range of websites and communities they are actively involved in. This service can be completed faster than traditional background checks and is more likely to aid you in painting a clear picture of your applicant at a fraction of the time and cost of traditional background checks.
3) Focusing on Skills, Not Attitude
Far too often hiring managers are too heavily focused on applicant’s skills and experience, neglecting to take into account their attitude towards their work. When surveyed hiring managers stated that failure to also take into account the applicant’s attitude was a major factor in approximately 29% of all bad hires [8].
Most jobs require a healthy balance of both skills and attitude. One without the other will likely lead to limited success in a role. By focusing on hard skills, companies are failing to put stock into the attributes which are more likely to indicate the applicant’s success and acclimation within the company culture. Attributes such as reliability, trustworthiness, and adaptability are becoming increasingly in demand for companies as they look for employees who have a willing attitude and are ready to learn. These attributes prove hard to clearly communicate on a resume and for this reason are neglected in favour of verified skills and experience.
As well as these positive attributes, more and more companies are setting quotas for categories like inclusion and diversity. Reaching these targets is made challenging by focusing on the applicant’s resume and cover letter, with inherent biases being observed in the typical recruiting process, making it difficult to measure progress against these goals [9].
The best way to gain an understanding of your applicant’s attitude and character is to receive insights from people they’ve dealt with in the past who can vouch for these qualities. A survey by SkillShare found that most hiring managers surveyed believe: reference checks are an integral part to the recruitment process (70%), reference checks allow them to hire better candidates (63%), and reference checks allow them to avoid bad hires (59%) [10]. However, typical job applications feature between 2–4 professional references, while the applicant may have even more people who are willing to testify that they’re a reliable person who would excel in the role. When in a hurry to fill a position, many hiring managers won’t even consult with the applicant’s references before selecting candidates to interview.
Reputationaire compiles your applicant’s reputation across a range of socially verified sources. This process offers you insight beyond the applicant’s hard skills and experience, allowing you to see what people they’ve worked with say about their interpersonal skills, attitude, and character, helping build diversity, protect your culture, and become a more inclusive organisation.
How can you make sure to hire the right person?
So we understand that more than ever hiring managers feel pressure to fill jobs quickly, resulting in failure to efficiently screen candidates. As we shift away from traditional career and employment norms, individuals are accumulating verified reputation from a range of sources.
This shift isn’t better represented by any statistic than the fact that as it stands, 25% of the world’s workforce currently work as freelancers. As the ‘gig economy’ continues to rise, it’s estimated that this number will rise to 40% within the next ten years [11]. As we continue to work in dynamic environments where our reputation is scattered, hiring managers jobs are made more difficult. As discussed, managers are already in a hurry to make a hire and there’s no way they can manually scan all these websites and services for every individual applicant’s reputation.
This is where Reputationaire comes in. Reputationaire allows your business access to applicant’s socially verified ratings from all over the internet. This process allows you to thoroughly screen what a number of people have to say about the character of your applicant, rather than relying solely on one or two references from previous workplaces.
Reputationaire is a fast and efficient way to gain a qualitative insight into the applicant’s skills and personality, enabling you to make a well-informed decision as to how the applicant will adapt to the company culture. This comes at a far lower cost than dealing with external background check agencies, and Reputationaire is committed to empowering individuals to own their data and reputation.
Reputationaire seeks to eliminate long-standing biases present in recruitment processes, seeking to identify your ‘diamond in the rough’ candidate that may have been overlooked in your traditional hiring process. By democratizing individual’s reputation we’re enabling you to gain a true insight into your applicants that you never thought possible.
Reputationaire utilises a secure blockchain datastore, so you can trust that all received information is accurate, secure and unmodifiable.
Contact us today to see how we can empower your company to access your applicant’s verified reputation:
https://reputationaire.com/organisations.
Written by Kurt Joyce. Kurt is a marketer and copywriter based in Tasmania, Australia, specialising in organisational culture and trust.
Do you work for an organisation looking to better identify quality candidates? If so — check out our services — we’d love to hear from you.
References
[1] Goldberg, B. (2018). 75% Of Employers Have Hired the Wrong Person, Here’s How to Prevent That. Retrieved from: https://resources.careerbuilder.com/news-research/prevent-hiring-the-wrong-person
[2] Frye, L. (2018). The Cost of a Bad Hire Can Be Astronomical. Retrieved from: https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/cost-of-bad-hires.asp
[3] Brandon Hall Group (2018). Avoiding the Negative Impact of a ‘Bad Hire’ — Brandon Hall Group. Retrieved from: http://www.brandonhall.com/blogs/eliminate-the-cost-of-a-bad-hire-it-might-be-easier-than-you-think/
[4] Resources.careerbuilder.com. (2018). 75% Of Employers Have Hired the Wrong Person, Here’s How to Prevent That. Retrieved from: https://resources.careerbuilder.com/news-research/prevent-hiring-the-wrong-person
[5] Press Room | Career Builder. (2018). Nearly Three in Four Employers Affected by a Bad Hire, According to a Recent CareerBuilder Survey. Retrieved from: http://press.careerbuilder.com/2017-12-07-Nearly-Three-in-Four-Employers-Affected-by-a-Bad-Hire-According-to-a-Recent-CareerBuilder-Survey
[6] Spiek, S. (2018). 43% of Employers Have Made a Bad Hire Due to Lack of (Or Insufficient) Background Check. Retrieved from: https://resources.careerbuilder.com/news-research/bad-hire-due-to-insufficient-background-check
[7] HireRight Inc. (2018). 2018 Employment Screening Benchmark Report. Retrieved from: https://www.hireright.com/resources/view/2018-employment-screening-benchmark-report
[8] Press Room | Career Builder. (2018). Nearly Three in Four Employers Affected by a Bad Hire, According to a Recent CareerBuilder Survey. Retrieved from: http://press.careerbuilder.com/2017-12-07-Nearly-Three-in-Four-Employers-Affected-by-a-Bad-Hire-According-to-a-Recent-CareerBuilder-Survey
[9] HBS Working Knowledge. (2018). Minorities Who ‘Whiten’ Job Resumes Get More Interviews. Retrieved from: https://hbswk.hbs.edu/item/minorities-who-whiten-job-resumes-get-more-interviews
[10] Resources.careerbuilder.com. (2018). 75% Of Employers Have Hired the Wrong Person, Here’s How to Prevent That. Retrieved from: https://resources.careerbuilder.com/news-research/prevent-hiring-the-wrong-person
[11] Advancedconsult.files.wordpress.com. (2018). Retrieved from: https://advancedconsult.files.wordpress.com/2017/05/example-3.pdf
