Here are three recent hiring conversations and interactions I had with business CEOs to reduce the high cost of bad hires. Three separate companies in three different industries but all three use the same failed hiring process. Place the ad, interview 3-5 candidates, find commonality with one and offer the position. As I mentioned in an earlier blog called, Bad Hires and Recruiting Challenges, this process will cost you money. In each case, within 8-12 months it became apparent the candidate did not work out. There are tools available to you in reducing the high cost of bad hires.
Company A: they were looking for an accountant and asked for my help. The job description written, we identified several characteristics the candidate needed to be successful in this position. For this hire, my focus was on detail orientation, concentration, task completion, time competency, planning, and affiliation. The candidate took the 20-minute assessment and scored 41 out of 100. After the assessment, I interviewed the candidate using behavioral based questions and found him uneasy answering standard accounting procedure questions. I recommended to the owner not to hire this candidate. He overrode my suggestion and proceeded to onboarding. Within four months the accountant failed to produce reasonable financial documents in excel. Soon after that, we learned he struggled with two software programs which he said he used and knew before hiring. The staff found him difficult to work with over the last month of employment and was terminated. Combined cost of salary and benefits: just under $12,000.
Company B: a high-tech company was looking for a sales person to sell services. The owner asked for my help in the selection process. The job description was written in a way to combine three different responsibilities into one. I asked the CEO (the hiring manager) if a person could reasonably succeed in this position with three different responsibilities. He assured me a person could. I was not involved in the interview process but was asked to conduct an assessment of this candidate. The behavioral traits I was looking for in addition to strong scores on all 19 competencies but I especially interested in questioning & qualifying, ambition & drive, control & close and problem-solving. These are central tendencies of any sales person. His score was 51 out of 100. I recommended not to hire this candidate. Although the CEO wanted to improve the hiring process, the urgency to fill this role overwhelmed him, so the candidate was hired. Once hired, the candidate caused significant disruption to the sales and marketing team. After six months, and not making one sales meeting, he was terminated. Note: his replacement lasted three weeks). Combined cost of salary and benefits for the first candidate: just under $36,000.
Company C: a business services company asked me to advise them on a hiring process for VP of sales. The candidate came from an industrial competitor. The hiring owner knew the rival company and “heard good things” about the candidate. Although I am against hiring any sales person from a competitor, I was asked to sit in on the interview and conduct the assessment. I was under-whelmed with the interview. His overall results on a leadership assessment were 55, barely passable. Out of the fifteen character traits, I wanted to see strong scores in accountability, leadership effectiveness, supervising, time management, coaching, and self-awareness to name a few. My recommendation to the owner was against this hire and to continue the VP search. He was hired and within one year had failed miserably. Combined cost of salary and benefits: just under $136,000.
When business owners and hiring managers consider all of the expenses associated with a bad hire, it is far greater than the above numbers. Consider the effect a bad hire has on the sales team, as with Company B. Another issue is the urgency effect which is pressure to make a quick hiring decision. I call this the opportunity cost of not taking the time to find a better candidate. If that is not enough, consider the hidden cost of the loss of trust, felt internally or worst, externally, if the candidate damages a customer’s relationship. Think about the length of time it will take to repair that damage. The amazing theme across all three above examples is hiring CEOs never consider all of these costs at the date of hire. More amazingly, they rarely consider changing their hiring process; they repeat this failed recruitment process costing the company unnecessary expense.
The fact remains, good employees are hard to find, and several CEOs have chosen not to utilize the resources available to them. With little costs, typically for one individual less than $300, (you can buy online hiring assessments), a hiring manager can gain insight into the candidate’s personality, tendencies, and the likelihood a prediction of success (or failure). Why not gain more insights before making the offer? Stop wasting your money on your hiring mistakes.
How about you?
Consider your past hiring program. Did it work?
Do you use pre-hire assessments?
Do you have any questions or comments for me below? I promise to reply within 12 hours.