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Employer protecting their business from bad hires

How to Protect Yourself Against Bad Hires

In our multi-part risk management series, we’ve looked at the kinds of HR-related risks that can affect business operations and walked through creating a risk management plan and a way to monitor those risks. Today, we’re going to look at a specific kind of risk: bad hires.

Bad hires are the bane of hiring managers everywhere. They are also ubiquitous. According to a study from Brandon Hall Group, commissioned by Glassdoor, 95% of employers admit to having made bad hires in the past.

What does this mean? A bad hire is any employee who fails to live up to expectations. The causes can vary – bad attitude, inadequate skills or expertise, poor work ethic, and more – but the result is always the same: lost productivity and performance and often conflict and tension in the workplace.

No problem, right? Just hire someone else!

If you take that attitude, you’re not alone. One study out of the U.K. found that one-third of employers believe that a bad hire costs their organization nothing.

Unfortunately, that is simply not true. Bad hires inevitably mean that the organization has wasted money on training/onboarding and lost productivity. Then, there’s the cost of finding a replacement and, in the meantime, even more lost productivity. It’s worse if the bad hire was in management or otherwise affected other people’s work; in that case, more than one person’s performance will have suffered.

It gets even worse. Risks can compound after making a bad hire. Employers can face increased turnover from other employees; legal problems if the hire engages in bad behavior like harassment or discrimination; operational risks if the hire is not fully competent in their role; damage to reputation if the hire’s incompetency or bad behavior affects customers or becomes public knowledge; etc.

A bad hire is a very bad risk, and the best way to deal with this risk is to prevent it.

Improve interviewing and recruitment processes, get better at writing job descriptions, recruit through the right channels, use recruitment experts, do proper due diligence on job candidates, and take the time to do recruitment right. Unfortunately, there’s evidence that many businesses don’t do these things. A CareerBuilder survey found that 43% of employers have made a bad hire “because they felt they needed to hire someone quickly.” In other cases, they may have lacked hiring competencies: 22% said they lacked the skills to interview effectively, for example.

Recruitment is as complex and challenging as it is critical to employers, and the best way for business owners to reduce related risks is to ensure recruiters and hiring managers have the in-depth skills and best-in-class tools they need to excel. If that’s not available in-house, look for recruitment experts, tools, or resources elsewhere.

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.