Small Business: The High Cost of a Bad Hire
A survey of corporate chief financial officers finds that businesses can pay dearly for hiring the wrong person — and not always with lost money.
In a new report, staffing firm Robert Half discovered that what CFOs really fear from a bad hire are losses in productivity and overall morale.
In fact, lower staff morale was the #1 answer when CFOs were polled on the subject, with 39% of polled CFOs saying this was the worst penalty for making a bad hire. This was followed by lost productivity (34%) and monetary cost (25%).
Most of the time, the cost of a bad hire rises in proportion to the importance of the position. When a “mission critical” employee is a bad fit for an important job, the entire organization can suffer.
Paul McDonald, senior executive director for Robert Half said that there are a number of reasons someone may not be a good match for a job. “He or she may lack the requisite skills or be a poor personality fit, for example,” he said in a statement.
McDonald said that businesses should not place too much faith in interviews and reference checks, since these methods are not fail-safe. Not surprisingly, he recommends making use of professional recruiters.
However, just because Robert Half is in the staffing business doesn’t make McDonald’s advice bad. A recruiter can add real value to the process by providing bosses with an objective, third party view. Recruiters also have a good view of the labor market in a given category, giving hiring companies a sense of “who’s out there.”
Perhaps the best advice for companies is to start the recruiting process early. Many times, companies put this off too long, and find themselves scrambling to fill an important vacancy. This can lead to bad decision-making.
In recent months, labor markets have tightened in many areas of the business world, so giving yourself enough time to find the right person for the job is even more important that it was a few years ago.
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