Last month, we traveled down to Atlantic City for the Garden State Council SHRM Conference & Expo. Hundreds of human resource and recruiting professionals from the area attended the event, which included numerous sessions led by industry thought leaders. Though we wish we could have made it to all of the sessions, we learned quite a lot from the ones we did attend.
Lesson #1: A bad hire isn’t just an employee who quits or gets let go right away; those poor performers who don’t add any substantial value are the true bad hires, and organizations need a way to identify these individuals before they are brought onboard.
In a session titled “The Hidden Costs of a Bad Hire and How to Prevent Them,” Greg Moran, CEO of Chequed.com, discussed the dangers of bad hires and their effect on the entire organization. As he explained, most people would consider a bad hire as someone who is so mismatched for the position that they either quit or get fired shortly after starting. However, this thinking doesn’t account for who Moran refers to as the walking dead – employees who are not bad enough to get fired but would never be rehired.
To illustrate this point, Moran gave the hypothetical situation of a company hiring two new employees, neither of whom is perfect for the position. One realizes the job is not right for him and leaves shortly thereafter. The other employee remains on the job despite a continually diminishing performance. Most companies would describe the first employee as the bad hire, but the second one is far worse as he continues to impact the company negatively and ends up costing more in the long run. Although turnover is typically the main metric used to measure quality of hire, it fails to account for such “walking dead” employees who are more detrimental to the organization.
To further emphasize the effects of such bad hires, Moran shared the top five hidden costs that they represent:
- Increased turnover
- Negative performance impact on stakeholders
- Diminished recruitment brand
- Increased legal risk
- Negative impact on business goals
In order to identify the individuals likely to be bad hires and prevent these costs, employers should consider whether the candidate’s previous employers would rehire them. However, by asking the question as a simple yes or no question, they fail to get the necessary insight to make an informed hiring decision. Instead, it is much more effective to ask references to rate their likelihood of rehiring that person on a 1-5 scale. Any response less than a 5 should raise a red flag.
Moran’s session highlighted the fact that too many employers are unable to recognize the walking dead in their offices until it’s too late – long after they have already drained the organization of crucial resources and created a domino effect impacting all areas of the business. By asking the right questions of a candidate’s references up front, employers can make better informed decisions and avoid the hidden costs of a bad hire.