A general estimate for the cost of a wrong hire is typically proportional to the earnings of the individual being hired. But in reality, the costs may be higher in collateral damage such as company moral, lost opportunity, personnel lost due to the wrong hire, and bad decisions that were made, lost customers etc.
The cost of hiring the wrong candidate includes the time for the second candidate to get up to speed, any relocation and severance, the cost of poor productivity by the wrong candidate, etc. apart from the cost of HR, Placement Consultant, Advertisements and other support activities. Overall we could put these costs into tangible costs bucket and the issues mentioned in the first paragraph to the intangible costs bucket.
From Indian IT perspective the damage is more intangible than tangible. Two main areas to consider will be “employees lost due to this person as well as customers who were lost”. The cost of both of them is difficult to measure objectively but the impact to the firm is huge. Generally the impact will vary depending upon how many people are reporting to the person mentioned here. If he/she is a senior leader then we might very well be talking about loosing few good leaders and few customers!
The most shocking behavior here is the people who have hired these bad apples will try and justify their selection. Lots of freedom and a fairly long rope will be given to these hires to make sure they don’t fail. Even after there is clear evidence that they have done a wrong hire they ll prolong the eventual decision just to make sure they don’t get the blame.
Another funny thing about these kind of recruitments is just to make sure they don’t directly get accused, several senior executives will try and do a “group selection” strategy. Call everyone possible to interview the candidate and make sure they don’t reject the candidate! If the candidate is successful the executive who mooted the hire will get the credit. If there is a failure, the response will be “well everyone was involved what to do! sometimes it happens..”
In India, firing is not as easy as in US and companies go through a lengthy strategy to get rid of the wrong hire. They ll start with moving him around, bring a person between his boss and him, waiting patiently for the person to leave on his own (firing will send a bad signal to the recruitment market) etc.,. I had one experience where a great talker who had completed TOGAF certification (he didn’t know how to write a simple app – talk about certifications in India! – that’s for another day) and impressed during the interview hired in a hurry by a smart-ass manager.
When they found him useless they cleverly moved him to my team and I was willing to give it a try (what to do.. I was desperate for resources). That guy turned out to be a disaster and we went through hell before he left on his own (there was a huge celebration on that day) and I felt pity for the company that hired him.
Another incident I recall is, a great technical guy was hired as manager and a well performing team was put under him, due to his exceptional micro-management skills the whole team was gone in one year. Management never realized what had happened and happily rewarded the manager, moved him up and gave him more teams to destroy!
What steps could be taken for these?
HR Policy – Clear HR Policy to let go the wrong hires or rotate them to a position where he might do a better job. Doing a better background check might give some clues. Look for release date forwarded (I mean the current employer is happily releasing him) etc. If the hiring manager has a better peer network he might able to find out an opportunity for the wrong hire with in his peers.
Whatever the methodology cost of the bad hire is real and all we can do is minimize it!
- The Real Cost of Hiring the Wrong Employee
- The Real Cost Of Hiring The Wrong Employee
- Colossal Hiring Mistake