As the economy improves, it’s getting harder to attract and retain talent. When unemployment is low and candidates are scarce, organizations may make costly hiring mistakes to cope the urgent issue of empty seats. How expensive are the costs of bad hires?
Let’s take a look.
According to this article in Forbes, the price of a bad hire can vary, but it’s almost never cheap. Some examples:
- Zappos CEO Tony Hsieh said that bad hires have cost his company “well over $100 million.”
- The US Department of Labor prices a bad hire at 30% of the employee’s first-year earnings.
- Our own data tells us that the cost of a bad hire can range from $25,000 to $50,000.
- Other unquantified costs include lost productivity, training costs, fewer sales, more supervisor time and energy, employee stress, reputation hits, and more.
Don’t lower your standards, hire more effectively
A talent shortage is not the right time to lower your standards. It’s the right time to improve your process. To avoid the costs of bad hires and high turnover, update and refine your applicant intake process to cut through old and ineffective hiring habits.
A better applicant intake process
Based on solid research, today’s best practices in hiring improve results measurably for both the employer and the employee. If you’re not using the following elements in your hiring process, you’re missing opportunities to identify high performers who match your culture, your values, and your expectations.
- Set real goals and build them into the job description. What specific results should your trained employee be able to achieve in a certain time period in order to contribute to your business?
- Screening and testing. Statistically-proven testing products should be part of each candidate screening process.
- Interview for behaviors. Ask questions that let you foresee how a candidate will adapt, tolerate stress, empathize with and anticipate customer needs, work with your team, and generally produce for you.
- Ask for help if you need it. When talent is tight, a reputable and well-established third-party staffing and recruiting partner can save your business time, money, and energy.