Don’t Waste $240,000 On A Dud Employee. How Not To Hire Wrong.

This is a real-life example of what’s happening in HR-land (before my Crossover journey). Companies and key stakeholders will remain nameless to protect the guilty.

The cost of hiring can be massive. According to a blog by Society of Human Resource Management, it can cost up to $240,000 to hire and onboard an employee. Which means a dud new employee that’s will cost your organization up to $240,000. You may almost have to take out an overdraft to cover the costs.

I know from personal experience pre-Crossover how costly dud new hires can be. Thankfully the cost was nowhere near $240,000. 

In this instance the interview panel FINALLY landed a candidate in a critical role after a lengthy search. The entire panel breathed a sigh of relief that there would be no more wasted hours in interviews . 

Just eight weeks later, the candidate was gone. They couldn’t do the job or perhaps couldn’t be bothered. We were back to the drawing board with a P & L deficit of $30,000 and another vacant position.

It’s easy to blame situations like this on the current employment market. Candidates are being snapped up left, right and center by companies willing to pay a premium. We’re just needing to get bums on seats, trying to keep the business operational. 

From my personal experience pre-Crossover I now know it’s not a smart strategy. And organizations only have themselves to blame. Here’s the story of one of my dud hire experiences, and what I did to fix the problem.

How To Hire Wrong

Traditional recruitment goes like this: List job ads, short list candidates against set criteria, interview, repeat.  Don’t forget to shortlist a candidate who went to your school - they must be really great. 

Hundreds of applicants get whittled down to two apparently decent candidates and both interview very well. Obligatory reference checks are done (glowing of course), and an offer of employment goes to one. If you’re lucky the successful candidate won’t grow two heads between accepting and starting. Or even worse, accept another role and leave you in the lurch (which is happening quite frequently these days).

With an extensive CV and glowing references, you would expect new employees to make an impact immediately. But as most organizations know, this is not always the case. So why is the recruitment system broken when so many organizations follow the same process?

The $30,000 Dud

I will be honest. The above process was my modus operandi recruiting for 10 years, especially for in-person jobs. But it leaves you open to failure by a) not getting the best candidates and b) seeing if candidates can actually do the job. I have had new employees with a fork truck license that couldn’t operate a fork truck! Forehead, meet desk. I didn’t think to verify their skills by sticking them in the machine for an hour.

With the $30,000 dud, the team were lured by the false hope of a great CV and alleged achievements. Then the magic show that was the interview commenced, magic dust settling on the interview panel leaving them spellbound. “You’re hired! Can you start tomorrow?” Quick reference checks (which were glowing of course) and next minute the candidate was starting. 

On the first day they strutted in like John Travolta’s Saturday Night Fever opening credits.

A few days later the magic dust wore off and doubt crept into the supervisor's mind. Did the new employee really spend one hour trying to turn on the computer monitor and couldn’t figure it out? Basic onboarding tasks weren’t done, but the employee had managed to spend three hours on Tinder and Bumble. The list went on.

By this stage the magic dust was definitely not fairy dust. It was more like troll dust. The new employee was let go during probation, so back on the hiring merry-go-round we had to go. 

Counting The Cash

This is how $30,000 was wasted on the dud employee. It added up quite quickly over eight weeks. 

Costs included: 

• Job board and LinkedIn listings (two recruitment phases) - $8,000
• Onboarding costs (travel and other onboarding costs) - $1,000
• Salary with no return - $6,500
• Approximate costs for multiple staff involved in interviews, training and onboarding - $5,000
• Two recruitment agency fees - $9,500

The above costs are not just at the top end (as with the $240,000 example). A survey of 1,500 HR professionals  by Elmo Software found an organization’s average cost of hiring is approximately:

• $25,000 for an executive
• $16,000 for senior-level managers 
• $11,900 for mid-level managers
• $6,000 for entry level positions

When that cost is multiplied over hundreds of roles, that’s a lot of dough organizations fork out without any ROI. But when they get the employee right, it has a massive positive impact on ROI and profitability.

How I Fixed It

Once you know the system is broken (and expensive), the best thing is you can fix it. I discovered this when I found Crossover.

So I flipped the entire recruitment process on its head. I made a commitment to only spend time interviewing candidates I KNEW could do the job. It’s easy to set up work-based tests and skills verification before interviews to tick and flick applicants.

Even with in-person roles, skills verification and work based testing became an integral part of the interview process (even with fork truck licenses). The best thing was the lack of stress from worrying if a new employee could do the job. The overall impact on organizational productivity and bottom line was enormous. 

What I have learnt is you can’t stop employees from getting on Tinder, but you’re going to be up to $240,000  better off by recruiting correctly.