The Costs of Bad Hiring Decisions & How to Avoid Them “Carol A. Hacker”

Employee Selection
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The costs of bad hiring decisions can sneak up on an organization and ambush all of your good efforts as a manager to recruit and retain good people. It’s no secret that costs increase when the same errors are made repeatedly. Although we hope to learn from our mistakes, unfortunately that’s not always the case. When it comes to bad hiring decisions, the costs to replace a misfit can be astronomical!

For example, the U.S. Department of Labor estimates that the average cost of a bad choice has climbed to a whopping 30% of the first year’s potential earnings. Other experts agree but add that’s only the case if the bad decision is discovered and corrected during the first six months the new employee is on the job. If the mistake isn’t recognized and addressed until later, it could cost considerably more. Where do these costs come from?

  • Training a replacement
  • Classified advertising
  • The interviewer’s salary and benefits
  • Potential loss of customers
  • Lower productivity
  • Low morale
  • Recruitment agency fees
  • Possible unemployment compensation claim
  • Potential lawsuit
  • The aggravation and time associated with starting your job search over again

Given the expense, it makes sense to prevent the problems from happening. Bad choices are avoidable in every industry, but it takes some planning and practice to escape close encounters with the worst kind. Although this article doesn’t cover all of the aspects of selecting winning employees, it discusses three very important steps you can take in avoiding a bad hiring decision.

1. Know what the interview can and cannot measure.

Interviews don’t test job skills. They measure interpersonal skills. Performance is the real test. In the interview you can evaluate comprehension, determination, self-confidence, social skills, self-expression, sense of humor, and persuasiveness. If the candidates don’t have the qualities you’re looking for, chances are they’re not the right people for the job.

Have you ever gotten stuck with someone who shined during the interview but quickly tarnished once employed? Avoiding a loser is possible but it takes planning and good interviewing skills which takes practice.

For example, if you could find out during the interview if a candidate can do what he or she claims they can do, would that information be helpful? It’s one of the easiest things to find out about someone. This is how it’s done.

Start the interview with small talk and help the candidate feel comfortable. Ask several questions to clarify what’s on the resume or application. Ease into asking candidates to tell you, “A to Z; soup to nuts,” (in as much detail as they can) what would they do in order to, for example: prepare for a performance evaluation of an employee, use a spreadsheet to enter data, complete a detailed document, etc. If the individual has actually done what is claimed, it can be explained in step-by-step detail. Anyone who cannot provide specifics to back up his or her claim has not done the work, does not have the experience, and should be considered questionable. If you have any doubts, with additional follow up questions you can satisfy any concerns you may have.

2. Gather versus give information.

Talking too much is the number one mistake interviewers make. If you’re excited about your business and the employment opportunity, you may say too much too early in the interview. There’s a certain amount of information you must reveal, but don’t make the mistake of giving a description of what you’re looking for in a candidate. When you volunteer information, you run the risk of “influencing” what you get back. Start by asking questions from a list you’ve prepared in advance and stick to your list. When you’re done and satisfied with the information you’ve gathered, you may ask if the candidate has any questions.

When you have answered all of the questions the candidate may have, you should be prepared to make your sales pitch to the best candidate. Then, sell the organization and job opportunity. Just don’t oversell or make promises you can’t keep. Convincing someone that your organization will meet his or her career and/or financial needs has actually been taking place to some degree throughout the interview process by the way you act and the things you say. Sharp candidates look at every job possibility with a critical eye and evaluate each situation as they observe the interviewer and learn more about the opportunity. Even part-timers and entry-level workers have a choice. If you want them to choose you, keep in mind you’re selling your organization and an opportunity beginning with their first impression of you. Treat every candidate like your best customer.

3. Ask the right questions.

Start with open-ended questions, those which use the words “who?” “what?,” “when?,” “where?,” “how?,” or “why?” They’ll help you decide whether candidates can do what they claim they can do. Listen to cue words in the answers; these words lead to more open-ended questions. Avoid close-ended questions that can be answered with a simple “yes” or “no.”

Behavior-based questions are also important. They force the candidate to tell you what actually happened in the past, while hypothetical questions invite candidates to share only what they think sounds good to you. For example: “How would you handle a difficult co-worker?” In responding, a candidate would probably have an answer you’d like. However, if you asked the same question in the behavior-based format, it would be: “Tell me how you handled a difficult co-worker in the past.” In the second example, you’re asking the candidate to tell you what happened. You’re more likely to get a realistic answer. The past is a reliable predictor of the future.

Bear in mind the more recent the past, the better the predictor. Several sample behavior-based questions are:

  • Tell me about a time when you were criticized by your supervisor.
  • Give me two examples of decisions you had to make on your last job.
  • Tell me how you kept your supervisor advised of the status on your work.
  • This job will require you to spend a lot of time interacting with others—When have you had to work in this kind of environment and how did you feel about that?
  • Share with me something you’ve done that shows initiative.
  • Tell me about a time when you were asked to do a job that was not part of your job description.

Each question asks for specific information. The answers will provide clues to how the candidate works, thinks, interacts, handles responsibility, accepts criticism, and reacts when asked to complete an assignment that’s not a regular part of the job. Use these questions and others like them to get the information you need to make a sound decision.

The answers to each of these questions will provide additional information about the candidates. Even if they stumble or can’t seem to come up with an answer, don’t let them off the hook. You have the right to ask questions until you are satisfied with what they have to say. Just be sure that you don’t ask questions that might get you in legal hot water.

IN SUMMARY

We probably can all say that at least once in our careers we hired someone who should have never been hired in the first place. The responsibility of making hiring decisions isn’t easy, but by being aware of what it costs when you make a bad decision and putting extra effort up front, you’ll have an advantage.

Job candidates will in many cases, come well-prepared to meet the challenges that await them in the interview. Others will need your encouragement and understanding in order to feel comfortable enough with you to be honest. Good people are worth the effort it takes to find and compete for them. Take the necessary time to prepare for the interview and you can cut costs by avoiding unnecessary recruiting and regrettable choices

Carol Hacker is a human resource consultant, speaker, and trainer who ranks among the experts in the field of recruiting and retention issues. For more than two decades, she’s been a significant voice in front-line and corporate human resource management to small businesses as well as Fortune500 companies. She’s the author of the highly acclaimed books, Hiring Top Performers-350 Great Interview Questions For People Who Need People, The Costs of Bad Hiring Decisions & How to Avoid Them, The High Cost of Low Morale …and what to do about it, and 450 Low-Cost/No-Cost Strategies for recognizing, rewarding & retaining good people, Job Hunting in the 21st Century-Exploding the Myths, Exploring the Realities and 366 Surefire Ways to Let Your Employees Know They Count. Carol can be reached at 770-410-0517 or CarolAHacker@hotmail.com

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