What does it cost to hire the wrong candidate?

Cost of hiring wrong candidate

When you hire the wrong candidate, it can add up to be a costly error for you and your company.

Hiring new staff is a challenge for a business at the best of times, but when there’s a positive outcome and a new, valuable team member it can be a worthwhile journey with great rewards.

In this article however we are investigating what happens when you hire the wrong person? What is the cost to the business and how could it have been prevented?

We look at the most common mistakes we’ve seen and break down what the costs look like to the Hiring Manager and their business. We believe there are ways to minimise this from happening again so we’ll also share our insider tips for prevention.

Most common mistakes when hiring:

You didn’t clearly define the job role

A clear and concise job description is imperative. You need to brief the recruitment agency and/or candidate on what the actual role responsibilities are. There needs to be full transparency on paper of what objectives this candidate will have in their day to day role. The role can evolve and play to a candidate's strengths, but this description is part of the contract you are both agreeing to. You do also need to have a candid conversation with said candidate and or recruiter on the “soft” attributes that are needed to fit into this position and what the role is like on a day to day basis. The more transparency, the more the expectations are. So no one gets any unpleasant surprises after signing on the dotted line.

The interview didn’t give you the information you needed

You need to prepare for your interviews and know what your objectives are. Know what you need to know about the candidates you are meeting. Understand what you are looking for in the right candidate for this position. Have consistent questions so you can benchmark every candidate you meet with. (TIP: Use your recruiter here to make sure they can delve to a deeper level of really getting to know each candidate - what motivates them, what their skills are, etc).

The hiring process took too long

This is a common mistake that is easily avoidable. If you are using a recruiter, you should only need to meet with one, two or at most three candidates. They will do the screening for you, so you are only meeting with people who can truly do the job. Keep the interview process going and don’t lose momentum. A good candidate won’t be on the market for long and if you like them, there’s a high probability that your competitor likes them too.

You couldn’t attract the right talent

We are currently in a candidate driven market. Good candidates are snapped up quickly. So you need to be attracting the right candidates to your role. Make sure you can brief your recruiter on the benefits of your company and the role. You need to be able to sell why working with your business and/or team is the best choice.

You and your recruiter also need to be thinking outside of the square to attract the right talent. The recruitment space has changed and along with using a recruiter to tap into passive candidates who might not actively be looking for a new role, you also need to be looking at social networks and other online platforms to be promoting your new role.

The remuneration isn’t correct

This can work both ways. Too much or too little can be all it takes to attract the wrong candidate to the position. Use your recruiter for guidance. Look at salary surveys for your industry and the role. Do your research.

Wrong culture for candidate

It isn’t always about a candidate having 100% the perfect skillset. Hiring a candidate who needs a little upskilling but fits in with the team and company is often a better option.

You didn’t get team input/buy in

How do you know if this candidate will fit in with the team? You don’t. Not until they meet. Get the team’s buy in. Invite them to sit in on the tail-end of the second interview. Give your current employees a voice. Let them share with the potential candidate what it is like to work for you and your company. Take on board the feedback your current staff have on said candidate after the interview.

What are the costs involved?

When you hire the wrong candidate there are multiple levels of costs involved. Put in to Google “what is the cost of a bad hire” and you will get plenty of numbers spat back at you. The truth is, the costs will vary business to business. But you need to be aware that there is a few layers of costs and you need to keep these in mind before you make your next job offer.

Direct Costs

These are the most obvious costs involved in hiring a candidate. The job ads on Seek, Career One, Indeed, etc, is the one no one forgets. There is also the fee to the recruitment agency (although this often has a guarantee period you are still at risk of wearing this cost if the hire goes bad quickly after the probation period ends). There is also your own time that needs to be considered. What is your hourly rate to your business and how many hours does it take you to run the recruitment process, liaise with the agency, interview, onboard the new candidate, etc. Of course you’ve also go the candidate salary and anyone else’s time and hourly rate who is involved in the recruitment journey.

Cost of Empty Seat

What is it costing your business to have an empty seat. You’ve got the potential revenue that this person could be making but you’ve also got to consider the team morale and the workload that is shifted to other people while this position is vacant. In theory, the quicker that seat is filled the better. However, don’t underestimate the cost of a bad seed planted within the team. If you do hire the wrong candidate, there is the risk of bad vibes spreading amongst the team, which can be a challenge to unravel.

What can you do to hire the right candidate?

Gut instinct

Don’t underestimate your gut instinct. You need to be able to establish a rapport with the candidate in the interview process. From here, you can put a little weight on your gut and certainly listen to any alarm bells!!

Nail the interview

To ensure you are getting the right candidate, you need to nail your interviews. Preparation is key here. It’s not just about asking the right questions. You also need to bring the right people in to meet and interview with you. You also need to know how to sell the role and company to the candidate you want. Just because you want to hire them, don’t assume they want to work for you.

Reference checks

So so so important! Either you or your agency needs to know what you need to find out about the candidate you want to hire. Try to extract any information that would raise any red flags or concerns. Equally, this is also an opportunity to find out how to best manage this candidate and get the most out of them as an employee.

Have clear job description

Know the job and know what you need. There is no point hiring a square peg and trying to squeeze them through a round hole. The more you understand and know the job, the better you are equipped to brief the agency or candidate on the role. The less surprises, the better!!

A good recruiter will be able to help you through your recruitment process. Work with them and tap into their experience. A good recruiter will also back themselves by offering a reasonable guarantee on any placements they make. Because let’s face it, no matter how prepared you are, from time to time, there are just some parts of working with people that you can never predict. Ultimately, everyone wants to avoid hiring the wrong candidate. With the above tips, we hope it can reduce your chances.

#recruitment #recruiting #hiring #candidate #costofrecruitment

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