The 3 Most Common -- and Costly -- Hiring Mistakes The hiring process is a long and winding road. At any stage, a poor decision could result in a bad hire.
By Robert DelPonte Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Most organizations are intimately familiar with their cost-to-hire metrics. With the job market in many sectors the most competitive it has been in years, human resources and hiring professionals understand the urgency that such intense competition creates. They want to attract great candidates, smoothly and swiftly move them through the recruitment and onboarding processes, and make sure top talent feels at home from day one -- all without investing too much time or money.
But what happens if an organization hires the wrong candidate? Even worse, what happens if they hire a bad candidate? According to Career Builder, 75 percent of employers have reported hiring the wrong person for a position. Of those who had a bad hire affect their business in the last year, one bad hire cost them nearly $17,000 on average. Another report from the Society for Human Resource Management found that replacing supervisory, technical and management personnel can cost from 50 percent to several hundred percent of that person's annual salary.
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The hiring process is a long and winding road. At any stage, a poor decision could result in a bad hire. With so much on the line, there are three costly mistakes that an organization should avoid to make sure they're landing the best candidate possible.
Mistake 1: Providing a poor applicant experience
Job applicants are savvier than they've ever been. If they're confronted with an outdated Careers page and clunky online application -- or worse, a paper-based application -- they'll likely see right through a superficial representation of an employer brand.
Today's top talent expects a simple, intuitive applicant experience: Create an online profile, search and apply for jobs, and upload a resume quickly and easily. Social media integration and resume parsing should be in place to simplify the process for the candidate and reduce the amount of time spent entering basic data within an online application. On-screen confirmations and automatic emails should let candidates know that their applications have been received without HR staff needing to get involved. Mobile is no longer optional -- it's a must. And at any time throughout the application process, candidates want the ability to log into the system to update their profiles and check the status of jobs.
Organizations that have invested in optimizing the applicant experience report that the quality of their hires improved by more than 70 percent, per the research and analyst firm The Brandon Hall Group. Employees who've experienced such a positive application process will become ambassadors for your organization's brand efforts, an effect that can be seen clearly on sites like Glassdoor.com, which helps attract additional high-quality candidates.
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Mistake 2: Making decisions without all the data
There are two ways data can be hidden during the recruitment process. The first comes from the avalanche of applicants most organizations usually receive. Traditionally, and still today, many HR and hiring professionals end up with a huge stack of resumes. There are simply too many to review, and some may not even be complete. Prescreening tools can help to quickly narrow the pool of available candidates by eliminating those who do not meet minimum skills and job requirements.
The second way data is hidden during the recruitment process is that the person doing the hiring doesn't have a complete picture of what is happening within her organization. Sure, she understands the position that needs to be filled, the skills and requisites the candidate needs to meet, and how much he'll potentially be paid. However, at many organizations, HR data is siloed from workforce data, which is siloed from payroll data.
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Organizations should be able to use all of the information about their employees in order to make such a crucial decision. So while hiring managers may have a list of necessary skills to confirm, they don't have a complete picture of the ideal candidate. They have no way of knowing that the most productive candidates also share unexpected common traits, such as the proximity to the primary residence to their work location.
What if you could leverage information about your existing workforce to make better hiring decisions? Selecting candidates based on a complete analysis of your existing talent can significantly reduce the risk of a bad hire.
Mistake 3: Underestimating the importance of onboarding
Recruiting and hiring successful candidates is a time-consuming, resource-heavy, expensive process, yet new hire onboarding is not always treated with the same critical importance.
According to The Brandon Hall Group, organizations with a strong onboarding process improve new hire retention by 82 percent and productivity by over 70 percent. Excited candidates are hired and they become engaged employees on day one. On the flip side, companies with weak onboarding programs lose the confidence of their candidates and are more likely to see individuals seek out new employment within the first year. Imagine, after all the time and energy of hiring a great candidate she walks out the door?
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Onboarding shouldn't be a tricky proposition, yet often remains an intensively paper-driven process. Many new candidates are met with a stack of new hire paperwork to fill out by hand, ranging from I-9s to benefits enrollment to other corporate policy acknowledgements. HR then enters all of this information into an employee record by hand. Forms are bound to be lost, information could be keyed in to the system incorrectly and the probability of a morale-crushing mistake is higher than it should be.
Develop a meaningful and consistent onboarding strategy that reflects your employer brand and not only welcomes but also nurtures and engages your new talent. Track each component of a configurable onboarding process -- from beginning to end -- so that you can have confidence that applicants are poised to make the transition from new hire to productive employee.
Modernize hiring to avoid bad hires.
The Brandon Hall Group defines a bad hire as an employee who negatively impacts organizational productivity, performance, retention and culture. While replacing this individual results in lost compensation, wasted training resources, and needing to go through the recruitment process all over again, most organizations never consider the true cost a bad hire could be driven up in the form of missed business opportunities, loss of customers, weakened employer brand, productivity drops and perhaps the most important but toughest to measure -- reduced employee engagement amongst colleagues.
In too many organizations, recruiting remains stuck in the past, with inadequate processes in place for sourcing, tracking and evaluating best-fit candidates. In 2017, HR should revisit both its processes and its technology to develop a better strategy to manage the company's openings, candidates and reporting requirements. By modernizing each step of the process, HR will reduce its risk of making a bad hire.
