Businesses rely on their employees to be successful. Hiring the right people is imperative, and there are many repercussions when recruiting and selection systems fail. More than just losing money from lack of productivity, hiring the wrong people negatively affects many aspects of daily business and productivity. There are many ways that bad hiring decisions can hurt your company.
When the wrong person for the position is hired, it typically results in having to refill the position again. Time, money and energy are lost during this downtime, as well as additional recruiting and training costs. It hurts a company to have an open position in several ways, including loss of productivity, frustration of continuous retraining and inability to progress with company initiatives. Bad hires may also result in good employees leaving the company, creating an even greater turnover problem.
It costs between 50 and 175 per cent of the position's annual salary for staff replacements, according to the Corporate Advisory Board of Washington, D.C. These costs may include job posting fees, training fees (especially if training is conducted off-site) and paying the "wrong" employee's salary before employment officially ends. If that person was a salesperson or account manager, the company may lose revenue for sales not made or clients lost. If the business is small or a start-up, hiring the wrong person may bring down the entire company.
A wrong hire due to an ineffective recruitment and selection process can hurt the morale and productivity of good employees. If the employee was in upper management, good employees may reconsider their tenure. If it was a lower-level employee, then fellow workers having to take up that person's slack may feel overworked and underappreciated. Also, bad hires often engender negative attitudes in the workplace.
Good employees may lose confidence in their management team in the face of consistently poor hiring decisions. Managers may lose confidence in their own abilities if they cannot train or motivate the bad hire, or if they were involved in hiring. Managers and small business owners must also wrestle with terminating the employee and dealing with feelings of guilt and stress.