How much time would you say goes into hiring a typical employee?
And I want you to include the time you spent on EVERY step of the process.
The time you spent writing up the job ad, sending it out through all of those job boards, sifting through resumes and cover letters, responding back to the ones you liked to schedule an interview, going over the interviews to find the best candidate, then having to train said candidate, etc.
Point is, your company spends a lot of time and money to ensure that you’re hiring the best possible individual for the position. So when you come to find out that the person you entrusted to handle the position isn’t able to get the job done, you rightfully feel a bit agitated.
How much does a bad hire cost exactly?
Although it’s tough to put an exact numerical value on the time and effort wasted on a bad hire, the U.S Department of Labor estimates that the average cost is about 30% of the employee’s first-year earnings.
So if that bad hire were to make $50,000, then that represents a $15,000 loss for the company. I know that the above equation may be hard to look at but it’s important to understand exactly how a bad hire is hurting your company in monetary terms.
If that wasn’t enough, check out these two facts about bad hires from Mindflash that are sure to hit home:
- 41% of companies said that a bad hire in the past year has cost them at least $25,000
- 25% of companies said that a bad hire in the past year has cost them at least $50,000
How long does it take to fill a position?
Now that you have a better understanding of how much money a bad hire costs your company, let’s get into the time that was also wasted. I know that we touched on this a bit earlier with the time used to create a job ad, going through resumes, interviewing candidates, etc. but it’s helpful to know the exact amount of time that could have been used on other tasks.
According to a recruitment survey by SHRM, the average time it takes to fill a position is about 41 days. So along with the financial loss, your company also lost around 41 days of work & productivity due to a bad hire.
Take a look at these facts, also from Mindflash, regarding the lost time, productivity, and the negative effect on employee morale:
- 41% lost worker productivity
- 40% lost time due to recruiting and training another worker
- 36% experienced a negative impact on employee morale
- 22% experienced a negative impact on client solutions
What can companies do to avoid bad hires?
Now that you’re better aware of how exactly a bad hire is hurting your company in exact monetary terms and wasted time, it’s time to focus our attention on the solutions available so companies can avoid this issue in the future.
Because if companies are serious about the issue of bad hires, then it is important that they make the necessary investments on tools that can remedy the issue.
Knowing that the average time it takes to fill a position is around 41 days, you’re going to want to cut down on that time as much as possible.
Thanks to video interviews, you can finally speed up your recruiting process to find quality candidates in a fraction of the time.
One of the ways you can use video interviewing is by first pre-recording a video with the questions that you want to be answered by your candidates. You then send that video off to all of your candidates for them to record their responses at their convenience, completely eliminating the time-consuming process of having to play phone tag to figure out a time for an interview.
Video interviews also have the added benefit of cutting out the biases that may cloud your judgment during the interview process by ensuring that every candidate is receiving and answering the exact same questions.
Applicant Tracking Systems
Applicant tracking systems work by going through all of the resumes that were sent in for the position and picking out the most relevant ones by keyword selection.
Employee Assessment Tools
Another avenue of lowering the chances of you onboarding a bad hire is by utilizing online employee assessment tools that work to gain a better understanding of what each employee is actually capable of.
As hiring professionals, it’s our job to ensure that our organization’s recruiting is operating at top efficiency. That means that you’re picking the most qualified candidates for the positions available.
So when you are faced with the realization that you have onboarded a bad hire, it’s important that you learn from the experience and understand the processes necessary to ensure that it doesn’t happen again.