Expensive, unloved employees: How to avoid bad hires
The start of the year traditionally brings movement into the company. Employees leave, others have to fill the gap, and new employees have to be found and trained at the same time. And the question always arises: How do we ensure that the next person really fits in with us? That they won’t leave for new shores at the next full moon or turn of the year?
Not everything that makes employees change jobs is in the company’s control. But a lot. Above all, they can do a lot to avoid expensive bad hires. And to always know what employees are concerned about and what they want. It’s time-consuming, but it’s worth it. A look at the costs that a bad hire can entail clearly shows this. For employees without a management position, these can run into tens of thousands of euros. For managers, companies quickly end up with costs in the mid six-figure range.
How do these costs come about?
Let’s assume a Chief Sales Officer (who we will also have on board from February – shoutout to Jan). The salary range for such a position is between €8,000 and €20,000 gross per month, depending on the region and company size.
In order to find this person, costs arise for job advertisements. Possibly headhunters (whose fees are based on the profile sought, so are correspondingly high for managers), job interviews, contract preparation and the equipment of the workplace.
This is followed by the familiarization phase. During which neither the new employee nor their team can perform to their full potential. Agreements take longer, processes have to be explained and familiarized. And both sides need time to get used to each other. According to studies, the break-even point, at which the costs and benefits of the new employee equalize, is reached after six months at the earliest. It can take up to two years to reach full productivity. Provided the new colleague fits in well with the team.
If the recruitment is successful, the cost of the new hire is already around the same amount as the employee’s annual salary.
And suddenly everyone realizes: he’s no good at all.
The new colleague’s performance falls far short of expectations, communication with colleagues doesn’t work, the tone is harsh, the team is demotivated, sick leave increases. At this point at the latest, companies can start to add up the costs that arise because the other team members feel uncomfortable, insecure or frustrated. If there is a lack of psychological safety in the team, which is largely based on good leadership, new ideas fail to materialize. Employees are sick more often and those who are there are increasingly stressed because they not only have to take on the tasks of their absent colleagues. But also have to compensate for the lack of leadership from the new colleague. In the worst case scenario, employees leave the company while the incompetent manager remains on board.
The effects go even further: customer satisfaction and the company’s image can also suffer massively as a result of poor hiring. Here too, studies show that the costs can run into the tens of thousands.
Trying to sit it out can also be costly for companies. In a survey, 30% of companies stated that they had held on to employees for between three and six months. Even though they clearly did not fit into the team. With all the negative (and expensive) consequences for the rest of the team, motivation and productivity.
If companies then reach the point of letting go of the unpleasant employee (or promoting them, as in elephant graveyard), further costs arise – for compensation payments, further and, in case of doubt, even higher salary payments (in the case of promotion) and the permanently disrupted team dynamic (here too: this can be permanently impaired in the case of promotion). At the same time, the search for a candidate starts all over again – with the costs mentioned above.
Phew.
If companies don’t have a huge ‘bad hire budget’, they need ways and means to avoid expensive bad hires at all costs. What can these be?
Personality first, skills second: Skills can be learnt, personality is there. AI-based diagnostics can be used to identify and cluster the key personality traits for the company. Without the need for time-consuming assessment centers.
Thoroughly test high potentials too: Years of management experience, top performance on paper and the right first impression. However, this should not stop HR from taking a close look at people with management ambitions in particular. A personality analysis provides insights that go far beyond first impressions and makes desired behavior visible as such. It is also worth talking to former colleagues and superiors about how they worked together.
Know your own bias and minimize it: There are more than 13 types of bias that influence our decisions in favor of or against a person. Anyone involved in the selection of candidates should be aware of those prejudices – and consciously try to overcome them. Technology can also help here. And provide an objective assessment of the person before the next step in the application process.
13 + 1 Bias in Recruiting: How to Recognize and Overcome Them to Find Truly Suitable Candidates
Year 2 Post-GPT: How My Year Was Shaped and Why Work Must Remain Human
