The Real Impact Of A Bad Hire For Your Business
You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.
From the cost of recruitment and training to the disruption and impact on staff morale, the price of a bad hire has far reaching consequences for any business. In large companies, bad hires can have a significant financial impact, and in smaller companies, it can go as far as jeopardizing the future of the business if clients leave.
Through my many years in the industry, I have found that bad hires often occur when there is pressure to fill a positon quickly, and therefore corners are cut during the recruitment process. While there is always a risk when hiring a new employee, a comprehensive company-wide background screening policy can help to mitigate this risk by verifying the information that candidates provide before hiring, rather than finding out about issues afterwards.
Before recruiting for your next hire, I would suggest that all companies, regardless of their size, consider the impact of the following four areas on your business:
1. Decreased productivity
If a person described in a CV is not who the job applicant really is, they may not be able to do the job that you’re hiring them for. This could have a negative impact on productivity, as other staff may need to work harder to meet targets and deadlines, damaging group morale. Bad hires can drive the best team members away, often right into the hands of the competition, taking the skills, knowledge and expertise –that you have helped develop– with them. They can also lower the standards for the rest of the team.
2. Cultural imbalance
Having cracks in the culture, simply because other members don’t add value to the team, can impact the whole workforce. As well as ensuring that the new hires have the right experience and qualifications to meet the requirements of the role, assessing how they will fit in with your company’s culture and your colleagues should be at the top of your list of priorities when hiring.
The UAE is home to over 200 nationalities and offers great opportunities to meet and work with individuals from different cultural backgrounds, so you should be clear on the expectations of both sides from the start.
Bad hires, especially those who are client-facing, can damage relationships if customers are not treated well, and relationships are not easy to rebuild once trust has been broken. Companies have to ensure that employees representing their business can enhance or maintain its reputation and profitability, not harm it.
There is also internal reputation management that needs to be considered. When a company hires and then subsequently keeps a bad hire, colleagues can question the top-level management’s ability to make smart decisions. This can place a strain on the relationship between the management and the staff in a business.
4. Financial impact
Lastly, let’s not forget the money. A report from the Recruitment and Employment Confederation (REC) reveals that 33% believe that a hiring mistake costs their business nothing, when in reality, a bad hire with an annual salary of AED 213,734 can cost a business three times this (more than AED 671,735), due to the money wasted on training, lost productivity and increased staff turnover.
With the cost of hiring and developing new employees continuing to rise, to avoid wasting time, money, and resources, I recommend that you do your due diligence and screen your future employees before hiring them, in a way that is proportionate to their role.