According to Forbes, the U.S. Department of Labor puts the cost of a bad hire at 30% of the hire’s annual salary. In his book, Topgrading, Dr. Bradford Smart estimates the cost of a mis-hire to be much higher than that of Forbes. On the other hand, McKinsey & Co. states that employing a top performer rather than an average performer means much higher productivity. In some studies, companies have found the top 10% of a team typically delivers 70% of the value and creates engaged clients.
Obviously, as it relates to the areas of diagnostics, genetics, genomics and oncology, there’s a ton to consider every time you fill a position, especially today. You must aim at getting the right person for the job with proven performance and talent mix with precision. So, let’s examine and eliminate the many mistakes you might make that will cause you to hire the wrong person.
1. Taking Too Long to Make the Hire
A search for the best candidate in the marketplace should include a sense of urgency. This is especially the case when the market for top talent is a candidate’s market and a candidate has the choice of several top job openings. Here’s a scenario:
A prime candidate is interviewing with four different companies, including yours. All four companies are interested in that candidate.
Now, ask yourself who has more options: the candidate or your company? The answer is obvious. Therefore, it’s imperative that once an A-level applicant has been presented, the hiring process should move along briskly. A sensible timeframe is between two and four weeks. If the process takes any longer the risk of losing that top person to another company rises dramatically.
2. Waiting for the Perfect Candidate
It’s a mistake to hold off on hiring a talented person because they don’t quite measure up to your ideal. You’re focused on finding the perfect person who checks every single requirement box. The problem here is this paragon might never come along, leaving the position open for a prolonged period of time. An overly cautious search for that “unicorn” employee means your team is required to pick up the slack. Increased workloads can lead to employee burnout and a high level of turnover, resulting in even more open positions.
To proceed, pinpoint the critical skills for the job and put the “nice-to-haves” on a secondary list. Focus on those candidates who are up to snuff with the basic skills and consider anything on your B list as icing on the cake.
Understand that you won’t really know what type of employee you have until they are working. You could have a candidate who knocked it out of the park in an interview but turned out to be a mediocre performer. On the other hand, someone who was a stretch for the job could turn out to be a terrific hire.
3. Moving Too Fast in the Hiring Process
In contrast to not moving quickly enough with respect to a top-level candidate in high demand, you might err by signing on new hires too quickly. Here’s an example:
Your company is expecting a huge increase in customer demand because of a new product launch. It’s estimated that ten new call center employees will be needed. The call center manager is pressuring you to hire quickly, so you cut out some regular hiring procedures.
Problems arise when five or six of the new hires don’t turn out to be very capable. Your company keeps them employed for ninety days and attempts to increase their proficiency. Unfortunately, three of them have to be let go, and then you are again scrambling to find replacements quickly. Taking your time in the hiring process can present a challenge when workers are needed ASAP. However, it’s time-consuming and expensive to keep hiring people who are just not up to the job.
4. Not Conducting Background Checks
Finding the right person for your job opening requires a considerable expenditure of time and resources. So, it only makes sense not to skip doing your due diligence. If you forego background checks and make a poorly informed hiring decision, potential problems could result from:
- False credentials – A Career Builder survey found that 75% of HR managers have received résumés containing incorrect or misleading information, e.g., inflated education details, bloated seniority levels, and stretched-out employment dates. Hiring someone with misrepresented credentials may mean that they don’t have the necessary experience to adequately do the job.
- Not Screening for Trustworthiness – The Association of Certified Fraud Examiners (ACFE) estimates that on average about five percent of annual revenues is lost to fraud. You should also consider potential theft in the form of cybercrime which is especially important if the prospective employee will have access to sensitive data. Do your best to be aware of such potential problems by examining work history gaps and reasons for leaving previous jobs.
- Negligent hiring – Negligent hiring is a legal term that is used when an employer is judged liable for the actions of an employee when the employer knew (or should have known) that said employee posed a risk.
- Unsafe Conditions for Employees and Customers – As an employer, you are under a legal obligation to create a safe workplace. Screening the background of a potential new hire is a crucial step toward reducing the risk of workplace violence. And drug screening can play an important role in reducing on-the-job injuries.
- Not Checking References – Many employers feel that checking references is a waste of time. After all, why would someone supply a referral from an individual who is likely to say something bad? However, here’s an article from the New York Times which discusses this question and the best ways to go about checking references.
To conclude, background checks should be part of your regular hiring process. Taking reasonable steps to keep your employees and customers safe is simply good business sense.
5. Having Only One Person Interview
It helps to get the impressions of more than one interviewer because different people tend to see different things in a candidate. Talking to other people about a prospect can help confirm your perceptions or prove you wrong. Let’s suppose the following:
You, as department head, interview someone for a vacancy. You really like this candidate – she’s well dressed, friendly, and answers all of your questions in a positive way. You don’t hesitate, and you sign her up.
However, wouldn’t it have been advisable to also have some other members of your team interview her? What if it turns out that she’s not quite as qualified as she made herself out to be and someone else may have picked up on that?
One way to cut down on hiring time is to conduct back-to-back interviews where the candidate meets with multiple team members on a one-on-one basis. You can also go for a panel interview where the prospect meets with a group of interviewers all at the same time. However, for panel interviews to work, they need to be well organized.
6. Not Paying Market Standards for People
One way to have a new hire leave after six months is because you aren’t paying them enough. You congratulated yourself on hiring someone below the market, but now you have to spend time and resources finding a replacement. Here are some reasons why you should hire at or above the market rate.
- Attract more high-quality applicants – Even if a salary range is not in the job description, once your company is reputed to pay well, you will receive more résumés, some of which will belong to great candidates.
- Improved employee retention – If your team members are satisfied with their salaries, they will be more content and less likely to start looking around for other jobs.
- Top talent gets into top gear faster – When you pay top dollars for the best people, you’ll find that they reach peak efficiency far quicker than less qualified employees.
- Quality is easier to manage – A really experienced new hire will require less management time, attention, and training.
- Keep a High-Quality Team – Lower performing employees recognize that it will be difficult for them to find a higher-paying job. They will tend to become adept at doing just enough to stay employed. So, while your top talent will leave for more lucrative positions, your second-tier employees will stay put and drag down your company performance.
To sum up, offering a below-market salary may mean a fantastic candidate turning down your offer. Then you may hire someone who turns out not to be the best fit for the job.
Unfortunately, there is no fail-safe formula for finding an ideal candidate. Every role is different, and most candidates will not have every attribute you’re looking for. Also, you’re often under pressure to fill an opening from a limited pool of applicants. Or, you may put off hiring because you don’t have enough candidates to compare. Although this will ensure that you won’t hire the wrong person, your job opening won’t get filled.
Possibly more challenging, post pandemic, is going to be the challenge of having too many decent candidates to choose from….The bottom line here is that no one is perfect when it comes to hiring. But doing your best to cut down on the mistakes described in this article will definitely improve your track record.
Want to learn more about hiring the best “A” players in the market? Check out our latest book to learn about ways we have helped our clients reduce mis-hires and engage only Top Tier Talent who will help you drive Peak Performance.
Helping clients build world class teams as a recruiting leader in Oncology, Genetics, Diagnostics and Life Sciences
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