Bad-Hire: what went wrong, costs, impact and preventing tips!

What is a bad-hire
A bad-hire is someone who does not work out in the role they were initially recruited for and leaves the organization – own decision or termination of the contract – within the first 12 months.

Onboarding costs
The costs of onboarding a new hire can become expensive. It is the average amount of money spent on each new hire brought into the organization and in many cases unknown or just not calculated properly. A deeper dive into this subject will bring you to external recruitment costs (executive search fee, recruitment technology, job placement, travel expenses, screening costs, signing bonuses, relocation compensation, etc.) and internal recruiting costs (salary of internal staff involved, training programs, time consuming procedures, productivity loss, referral bonuses, etc.). All added together and you know that this is serious business to take care of in a professional manner. The costs of hiring are known, but the costs of bad-hire are not!

Mistakes made in the recruitment process
95% of all companies admit that they made (yearly) mistakes in the hiring process. Recruiting is a serious profession and often underestimated. Many people think that a simple conversation and reviewing the cv only will do the job. We know from scientific research that more than 80% of the applicants lie on their resume. This combined with inadequate background checks, the rush in to hire and more focus on knowledge, experience and skills rather than attitude, character and talent is a well-known recipe for failure.

Costs and impact
Knowing that the costs of new hire are higher than you first imagined, having to re-recruit leads to extra costs that can amount to 40% of the full-time gross annual salary. In addition to these financial costs, the costs of loss of turnover and productivity must also be taken into account. And then there is the ‘invisible’ impact of reputation damage, poor employer branding and decreased employee morale.

How to prevent a bad-hire
1. Build the employer brand. Without a strong employer brand, you can’t reach the right people or influence them. Reputation is hardly manageable but extremely important.
2. Start a talent community. This makes it easier to reach the right people.
3. Use new technology. Use a combination of on- and offline approach, video content, web, mobile, social recruitment. Not only to share vacancies but to interact with your target group.
4. Standardize the recruitment process. Create a clear, uniform recruitment strategy that is known to all involved.
5. Look beyond the function requirements. There is more than only knowledge, skills and experience. How about talent, credibility, integrity, agility, attitude and drive.
6. Collect data. Active research to all available data from candidates and combine these. Compare LinkedIn with resume. Use public sources and data from accredited consultancies that have, for example, saved study data.
7. Assessment. Initiate an in-depth assessment, and not a quick scan, on time, being part of the selection process and not being held afterwards.
8. Improve the onboarding process. The retention is significantly higher if the onboarding process is in order.
9. Initiate supervision. Supervision is a proper method to reflect on employee and the work. And convert it into a learning experience which lead to better professional conduct.
Recruitment and executive search are a serious business that needs a professional approach. It is a profession, a serious profession!

Article written by Alfred Eilering, CFR Global Executive Search, The Netherlands Publicatie datum: 07 maart 2023
Alfred Eilering director
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