Each year companies collectively lose millions of dollars due to poor hiring decisions. Whether you’re hiring a top-level executive or filling several entry-level retail positions at minimum pay, the cost of a bad hire to a company can be devastating to the bottom line. SayIt Communications calculated the Return of Investment (ROI) of a bad hire to be nearly -300%!
HR.com reported that the average cost to replace a salaried employee is $7,000. The cost goes up to $10,000 for a mid-level employee and soars to $40,000 for executive level employees. The cost can be so high at times that it prompted the following quote from Thomas John Watson Sr., former President of IBM, “Recently, I was asked if I was going to fire an employee who made a mistake that cost the company $600,000. No, I replied, I just spent $600,000 training him. Why would I want somebody to hire his experience?”
So, how do you ensure that you’re making the right decision when that qualified candidate walks through your door and shakes your hand? The following are five recommendations to help the hiring process be more effective and successful for your company.
- Don’t Rush Into It. One of the biggest mistakes a hiring manager can make is rushing to hire someone just for the sake of filling the position. For those managers that feel the clock ticking and know that productivity has halted until a position is filled, they may quickly choose from a few applicants without properly vetting each one. This can easily lead to a bad hire. Perhaps the applicant’s credentials and references weren’t checked in the haste to hire and soon after they’re on the job, the manager may notice that they lack the required skillset for the job. Or, the manager may find that this employee just doesn’t fit into the company environment and there is a clash of values. Whatever the reason, hiring under the duress of time can lead to costly mistakes.
- Don’t Wait too Long. On the other side of the coin are those managers that wait too long to make a hire. These are the managers that are spending time reviewing hundreds of resumes and can never seem to be satisfied with even one. Or there are those who find the perfect candidate but they’re not in a hurry to hire them so they sit on the resume. Then one day when they decide to offer the job to the applicant, they find that that person has already accepted another offer. Now that qualified person has been lost to another company, possibly even a competitor.
- Don’t Lowball on Salary. Staffing companies have found that offering a competitive compensation package can lead to employee retention. Remember a bad hire doesn’t necessarily mean that the person wasn’t right for the job. It can mean that you had a good employee, but they weren’t satisfied with the compensation so they took what they learned on the job and left. So, did the company really save any money in the long run by offering a low salary?
- Identify Required Skills. This is especially true for newly created positions within a company that have no prior guidelines. What do you want this person to be able to do the day they walk through the door for the first time? What are you willing to train them to do? Are they capable of absorbing that training? It is important to sit down with the management team to determine point-by-point what skills are absolutely required to be successful in the position.
- Run a Proper Background Check. Don’t do a google search and call it a background check. To find the best employee, utilize a consumer reporting agency (CRA) who can access the records to determine if the employee has been truthful during the application process. SB Checks offers the services needed to be sure you are making a safe hire including criminal background screening, educational verification and reference verification. Let the professionals at SB Checks help you determine if your top candidate is right for the job before you invest in weeks or months of training. Call (888) 725-2535 today to address your company’s needs.