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Why cutting down hiring costs doesn’t make it cheap

man with hiring costs headache employer problemsThe harsh reality of hiring costs– we upset ourselves without even knowing it!

Sometimes we make bad hires because we don’t have the necessary expertise or resources to
ensure robust hiring practices.

I can tell you that there is, in fact, ONE simple reason why bad hires occur.

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The reason that we make bad hires is quite simple. It is because we make a compromise. Sometimes we settle for less and don’t ensure we hire the best. (We strive to lower hiring costs, yet end up incurring more.)

We don’t make bad hires intentionally. So let’s look at reasons why it may happen:
 There’s time pressure to fill the vacant position.
 We focus on skills but forget to focus on the person’s attitude.
 We tend to ask the wrong questions instead of the right questions.
 Focusing too much on “nice to have” qualities rather than the “must haves.”
 Hiring bias, such as being seduced into hiring someone we like or someone that “looks” good
 Having the wrong people making or influencing the hiring decisions
 We may bypass or compromise on important checks, for example, reference checks and personality tests.

The solution is to not Compromise – and ensure we minimise the possible causes. We can do this by:
 Having a mindset of securing the best candidate (not the first)
 Reducing pressure to hire quickly
 Hiring for attitude first and skills second
 Focus on getting the “must haves” right before the “nice to haves”
 Ensuring we have the right people involved in the hiring process
 Making hiring a group decision, eg involve key members that will work with the candidate
 Using behavioural based interviewing techniques
 Using robust checks (eg reference checks and personality tests etc)

By doing these things you will experience a higher percentage of successful hires and a reduction in the frequency and expensive hiring costs of a bad hire. For more information on hiring right, contact Neil at 1300Hired. [/read]

 

5 things that make a bad hire expensive

In another article, I have listed the 6 telltale signs an employee can turn into a bad hire any time during his/her tenure. It is imperative to establish how and HOW MUCH our poor hiring decision becomes a liability more than an asset.

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Bad Hire: The (Not-S0) Secret costs that strip away Profit

The problem in making a poor hiring decision is the overall cost to your business. The expense is not just in the out of pockets costs, but also in:

  • loss of team morale,
  • lost time,
  • downtime,
  • management time,
  • and loss of team productivity in covering the gaps.

bad hire employee sleeping at workThe cost of making a bad hire has been estimated at anywhere from 30% of annual salary and up to $50,000. Here are the 5 big costs:

  1. Impact of the rest of your team. They have to pick up the slack, cover mistakes and tolerate any bad behaviour. Morale suffers and your top performers may leave
  2. Impact on Customers. Not fulfilling job responsibilities, taking shortcuts or upsetting customers generally. Your brand and reputation can suffer, and worse, customers may leave.
  3. Performance management. A bad hire drains management time and focus on what could be spent on coaching and developing your good performers. Dealing with complaints from staff and customers also takes up management time.
  4. Business reputation. If a business has a habit of making bad hires, this will adversely affect the reputation of the business and the manager involved. It also adversely impacts the reputation of your leadership
  5. Cost of replacement. This involves recruiting and training costs, management time, loss of productivity and impact of the team both during and after a bad hire leaves.

For more information on how to make better hires and to minimise the occurrence of a bad hire, please contact Neil at 1300Hired.

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