Hiring wrong is expensive: the financial impact of bad hires

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on reddit
Share on stumbleupon
Hiring wrong is expensive: the financial impact of bad hires

Table of Contents

In an increasingly competitive market, attract good professionals it is one of the biggest challenges for companies. A good contract can increase productivity and improve the environment, ensuring optimum results for the business. On the other hand, hiring wrong is expensive: expenses increase and those for the organization are huge.

This is very common in Brazil, where company turnover is high. With that in mind, we explain in this article everything you need to know to get hires right and avoid this type of problem.

Want to know more? Stay with us!

What are the costs of a bad hire?

One bad hiring occurs when the professional in question does not meet the expectations of the company. Among the most frequent reasons for this to happen is the lack of fit cultural: the employee is unable to adapt to the company's processes and routine, which impairs its performance.

Another very common situation is that the employee has a technical deficiency in the performance of their tasks. This indicates that the evaluation made during the selection process was insufficient to validate the professional's ability to assume the position.

Whatever the reason, hiring wrong is expensive and it has a huge negative impact on the organization's routine. Check below what are the losses that a mistake with this can bring to the business.

Direct costs

According to a study by Harvard Business Review, 80% of turnover in companies is due to hiring unsuitable professionals. When turnover is high, the costs of carrying out selection processes increase, as there is a frequent search for new candidates.

Beyond the hiring costsalso increase spending on layoffs. In Brazil, the loss is high, as the labor law provides for a series of charges and fines to terminate an employee.

A simple way to assess whether a contract was successful is to calculating ROI of the selection process. Put on the scale how much was spent to hire the employee and what was the return he brought to the company. If the rate is low, it is a sign that there were recruitment failures.

Indirect costs

The losses of a failed selection process go far beyond the costs of hiring and firing employees. There are also indirect costs, which are perceived in the day-to-day work. See some of them below:

1. Fall in productivity

When a new hire does not adapt to the job, the performance of the entire team is impaired. In this way, the productivity decreases, which causes a serious financial loss for the company.

2. Inefficient teamwork

This drop in productivity is directly related to a inefficient teamwork. To act efficiently, all team members must walk to the same direction. If one of the professionals disagrees with the rest, cooperation becomes much more difficult.

If the person in question is a Team leader, the situation becomes untenable. When this happens, employees are lost, with no one to turn to. Without trust, the manager cannot get the best out of his subordinates, let alone fulfill the department's goals.

3. Work overload

In high turnover companies, work teams are always lacking. After all, at least one of the vacancies is always open, waiting for the next candidate to be chosen to fill it.

This causes the quality of deliveries to decrease and employees to be permanently overloaded. If the team was complete for longer, the team would create more synergy and pass and achieve better results.

4. Training expenses

The high training expenses they are further proof that hiring wrong is expensive. Every time a new employee is hired, he needs time to adapt to the environment and learn the basic processes to fill the position.

All of this generates a financial cost, which will only return when the professional begins to present good results.

How to avoid bad hires?

Good practices of recruitment and people management are fundamental to avoid mistakes when hiring. Check below the main attitudes that HR must have in order to choose the candidates correctly.

Profile the ideal candidate

To hire well, you need to know what kind of professional the company is looking for. Make a list of the main qualities you look for in candidates. So you invite to the selection process only those who are more aligned with the expectations of the vacancy.

Understand more about the types of professional profiles >> 7 types of professional profile: Know the most common and know how to identify them.

Take behavioral tests

A very common mistake is to evaluate only the candidates' technical skills and experiences. However, the behavioral profile it is also essential for hit on hiring. Does the candidate have a cultural fit? Does it identify with the company's objectives? Do you have a good relationship with colleagues?

All of these questions can be answered through tthese behavioral and psychological. Observing the candidate's posture throughout the interviews is also important, as body language and the way he expresses himself says a lot about who he is.

In this post we explain a compilation of psychological tests >> How to use psychological tests in the selection of new talents?

Analysis of the curriculum

As for the curriculum, be careful when analyze past experiences. The professional having worked in the same role in another company does not mean much. After all, the move may have been unsuccessful.

Search for references, recommendations and try to hear details of the candidate's experiences in other jobs, especially if the vacancy is for a management position. The more information you have about the person, the greater the chances of getting it right.

See the essential tips for a good curriculum analysis >> How to analyze a resume: 4 tips for choosing the best professional.

Ensure the development of the new employee

Depending on the position, it is very difficult to find a candidate who has 100% of the skills required by the vacancy. In this case, it is necessary to ensure that the new contractor is properly developed to perform well on the job.

Investing in the incoming person is much cheaper than hiring a new one. However, this must be done early on. There is no use waiting for the professional to make a serious mistake and then trying to guide him.

Learn more tips in this post >> Hiring employees: tips for you to optimize!

Now that you know why hiring wrong is expensive, just put what you've learned into practice!

Plan your company's recruitment processes well and invite only the most suitable professionals to participate in the selection. So you get the hires right, reduce the turnover and reduce the costs of your business!

Did you like the post? Tell us in the comments which practices you use when hiring your company. We look forward to hearing your questions and opinions on the matter!



Leave a Replay

Why HR Consultants UK!

HR Consultant UK Offers HR advice for local businesses in the UK. Our HR Consultants Near Me Page will help you get in contact with local HR Consultancy.

Alternatively, view our list of cities covered by HR experts.  Its time to get all your HR issues solved! 

Enjoy the Blog!

Recent Posts

Follow Us

Sign up for our Newsletter

Click edit button to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit

Where do you need an HR Consultant?

United Kingdom or

Get local HR advice in the UK and USA?

So that we can get you through to the right HR Consultant, please let us know what your location is.

Book HR Consultants
Get Quotes From Local HR Consultants

Talk with a Local HR Consultant in the United Kingdom Or United States.