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The unbelievable cost of bad hiring decisions

With the economic woes we have all experienced over the past years along with cut backs, layoffs, incessant downsizing and such; it may seem like a strange time to talk about hiring. However, as the economy turns for the better (there are small signs—have faith) businesses will be adding staff again to meet the growth that results when things start heading north.

I thought it would be good to remind us all how important it is to be very focused when recruiting and hiring employees. If you are like me, you have made a bad hiring decision or two and have suffered the consequences and expenses of making an employment mistake. Unfortunately, it is something most if not all managers and supervisors experience at some time during their careers. Let’s explore what we can do to lessen or prevent bad hires.

One thing before we start—a bad hire does not mean we hired a bad person. The majority of bad hires are the result of an individual being ill suited for the position either in knowledge, skills or behavioral necessities. For the most part, it is the old “square peg in the round hole” syndrome. Even though things don’t work out in a particular job does not mean the person cannot succeed elsewhere.

Bad hires—what happens?
The effects of bad hiring decisions can take several forms both during the time the individual is on board and after the person has departed for opportunities elsewhere. One effect is performance issues.

Typically, if the individual comes to the job without the necessary knowledge and/or skills and has to learn too much in too short of time frame, he or she will not be successful. This then puts a burden on others on the team or in the organization to “pick up the slack” by helping out. Short term while an individual is leaning the job, most of us will help out. However, if the learning doesn’t happen or takes longer than expected, resentment builds and morale of the team—even the entire organization—can suffer.

The “ripple effect” of poor performance by a person not up to the demands of the job is felt in many ways—lower productivity, financial drain and deteriorating customer relationships as resources are funneled into fixing the situation rather than other critical areas. 

An even more devastating effect occurs when the problem is the result of bad behavior. Behavioral problems, which account for approximately 70% of terminations, have emotional and cultural aspects in addition to the aspects mentioned previously--productivity, financial and customer service. Inappropriate behavior can take many forms ranging from very severe where crimes are committed (stealing, embezzling, etc.) to less severe but still very important by behaving in ways that are not right for the culture (lack of strong work ethic, not fitting into the team norms, being difficult to work with, aggressiveness, etc.). The emotional aftermath of some terminations based on behavioral problems can be very long lasting.

Where did we go wrong?
There are several reasons that contribute to making a bad hiring decision. Here are some that I have observed and experienced in and over forty-plus years' career.

First, and very common, the individual or the team making the hiring decisions doesn’t have a very good understanding of the position being filled. This happens because the company doesn’t have a good job description that explains the functions of the job as well as the qualifications, knowledge, skills and behavior, needed to be successful in fulfilling the functional requirements of the job.

Second, and this is related to the first reason, the wrong individuals are involved in the hiring process. Sometimes a senior manager takes it upon himself/herself to fill a position, yet is too far removed from the job to really understand what is needed.

Third, we set unrealistic time frames and end up hiring too quickly. When we do this important steps are missed such as adequately checking references or having a second or even third interview with the candidates in order to make certain we know the individuals well enough.

Fourth, we have a tendency to take people at face value and believe they are honest and forthright with their resumes and interview answers. Many, many people exaggerate their qualifications and prior experience in order to appear more favorably. Some experts think that as many as 40 to 50% of candidates are mildly or blatantly dishonest during the hiring process!

Finally, we have tendencies as human to make snap judgments and either see candidates as “those who can do no wrong” or “those who can do no right”. Both the ‘Halo effect’ where we are impressed by something early on and the ‘Horn effect’ (something turned us off early in the process) have been proven to be poor indicators of future success or failure.

Tips to ensure a better hire

Here are six tips I have found that can make your hiring process go better:

  1. Make sure you understand the job. Revisit the job description and make changes where needed. Involve those who interact with the position and seek their advice and counsel. The better you understand what is needed the better the process will unfold as you seek candidates and make a hiring decision.
  2. The team approach works best. If you can, involve a small team of individuals in the hiring process. I have found that several heads are better than one in avoiding the halo and horn effects. Team members will complement each other because they will come from different perspectives. Plus, the team will then be ready to help support the new person as he or she is learning the new job.
  3. Plan ahead and be realistic. Hiring a new person is one of the most important and long-term decisions in any organization. Think of it as analogous to picking a partner. Assume the person will likely be with the company for several years. Do not rush the process—it is too important and too costly to risk moving too fast.
  4. Make sure you have the right candidates. After advertising the position, if you don’t feel you have enough good candidates (at least three), advertise the position again. Being too hasty here can have long-term negative consequences
  5. Take your time—check references---do more than one interview. Reference checking is a necessary step to prevent performance, behavioral and legal problems. After you have checked references of the best candidates, bring them back for a second (maybe even a third) round of interviews. These steps in the hiring process are well worth the time and resources.
  6. Seek Consensus. The team needs to be involved in the decision either as the group that makes the decision or at a minimum gives advice and counsel to the manager. People tend to support decisions where they have had involvement. The opposite is true, also.

Have a great month—here’s to good hires in 2012 and beyond.

Sid Scott is president of Scott Consultants in Dubuque, Iowa. You may contact him by e-mailing