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How to Avoid the Hidden Costs of a Failed Hire


Wed Jan 25 2017

How to Avoid the Hidden Costs of a Failed Hire

Ouch. You just spent all that time recruiting a fantastic new employee, and now you discover she’s not so fantastic, after all. In fact, she’s on the way out the door. And where does that leave you? With a failed hire on your hands. 

If you've ever been responsible for a failed hire before, then you know firsthand that it causes much more than a bureaucratic headache. According to U.S. Department of Labor estimates, a failed hire costs around 30 percent of the individual's annual earnings. Other sources put the cost much higher. 


And it’s not just the financial beating you take. A failed hire can erode your team's productivity, lower morale, and waste dozens of hours of managers' precious time. 

Where Did We Go Wrong?  

To determine the leading causes of a failed hire, Robert Half Finance & Accounting surveyed more than 1,400 chief financial officers. The study found that besides poor performance, failed hires result most often from: 

  • mismatched skill sets (38 percent) 

  • unclear performance expectations (27 percent) 

  • personality conflicts (20 percent) 

  • a failure to fit into the corporate culture (15 percent). 

Hire Right, Hire Once 

Given the costs of a failed hire, even the busiest manager must devote the time and attention it takes to avoid all four of the pitfalls above. Fortunately, there are a number of things you can do to reduce the risk: 

  • Don't recycle old job descriptions. Don't simply copy and paste from an old boilerplate. Job roles are constantly evolving, and your job descriptions need to evolve accordingly. Ensure that they accurately communicate the skills and experience you currently need, the level of performance you expect, and the corporate culture you promote. 

  • Don't forget soft skills. Technical expertise might wow you, but don't underestimate the softer skills that make for a great employee, such as organization, communication, and leadership. More than a third of failed hires result from personality conflicts or a poor fit with the culture. Make sure that your new hire can work (and play) well with others. 

  • Check those references. Busy managers can short-change the potentially awkward process of calling references. Yet a quick conversation with a former manager can give you vital information about a candidate's ability to fit with your particular team. Ask about the candidate’s work styles, strengths, and areas for improvement.  

  • Consider getting outside help. By tapping the extensive networks of a specialized recruiting firm, you can gain instant access to a far larger talent pool. A recruiter can also help hiring managers determine whether a candidate has the appropriate hard and soft skills. And most staffing firms also conduct independent skills testing, providing added assurance. 

Culture Counts

Given the fierce competition for talent, candidates can afford to concentrate only on the employers that fit their own work styles and personal values. So when busy managers overlook the question of culture, they may miss out on the best candidates—and end up with a failed hire on their hands. 

So how do you know if a candidate will fit into your corporate culture? Clearly, it’s more of an art than a science, but there a few concrete steps that are bound to help: 

  • The job description. Emphasize the company's culture in the job description, so everyone is clear from the outset on what the work environment and expectations are like.  

  • The interview. Ask questions that yield clues about the candidate's values and how he works with others. And don't just listen for the right answers. 

  • Future colleagues. Seek input from the people who know your culture best: your own employees. Consider asking them to meet with top candidates, and then provide feedback afterward. 

When you write an accurate job description that emphasizes your organization’s mission, culture, and career growth opportunities, you can attract the kind of top performers that fit your firm’s real-world needs.

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