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The criminal cost of mishiring

Recruiting is far from an exact science. It's a routine task for an HR professional to have to judge how well an applicant will work, often over a period of years, based on little more than an application form and a brief interview. Given the challenges involved, it's amazing how successful standard recruitment techniques can be, but this typical approach does have its pitfalls. In this article we look at what happens when recruitment goes wrong, and what can be done to help prevent it.

The phenomenon of 'mis-hiring' will be familiar to just about anybody involved in the recruitment process. A candidate who appears nearly perfect for a role on paper, and who interviews flawlessly, can suddenly turn out to be quite unsuitable once they're in place. Another classic example of the same kind of effect is the high performer who is rewarded with promotion, only to lose their effectiveness in a new position.

The symptoms of this kind of situation are manifold. A lack of motivation, or a failure to fit into an organisation's culture, can result in ineffectiveness, distraction or even conflict in the workplace. These kinds of conditions are often subtle and difficult to quantify, at least in their early stages, but their final effects can be long-lasting and profound.

While it is often difficult to precisely quantify the effect of a mis-hire to an organization, the effects can ultimately manifest themselves in a sharp drop in sales or in an obvious lack of productivity. Such losses can have a crippling effect on a business when the mis-hire is in a key position. Some examples of the negative effects that can arise from a situation like this are:

  • Personal Demotivation
    The results of a mis-hiring decision can often be as negative for the new hire as for the organisation. Perhaps they find themselves unchallenged by their new role, for example, or perhaps the challenges they meet seem too great for them to master. In many cases, the problem is simply due to a mismatch - the role needs a certain type of approach that the candidate simply cannot provide. Whatever the reasons, the result will normally be a sense of demotivation, and a consequent fall in productivity.
  • Loss of Team Focus
    A demotivated and unproductive individual is rarely an isolated issue. Effects like this will tend to spread, affecting co-workers and fellow team-members. At best, the result will be a distraction, misdirecting attention and effort towards the internal problem rather than actual objectives. At worst, a situation like this can develop into conflict and confrontation, reducing the effectiveness of entire groups within the organisation.
  • Client Dissatisfaction
    The effects of a negative attitude can expand out even beyond co-workers and colleagues. This is particularly true where the individual concerned is working in a customer-facing role, or communicating with clients as a regular part of their work. Their lack of motivation can carry a powerfully negative message about the organisation as a whole, undermining the perceptions of current and prospective clients alike.
  • Missed Potential
    The negative impact of a situation like this can be considerable, but it's also important to remember that a mis-hiring decision not only brings an unsuitable applicant into an organisation, but also potentially excludes a rather better candidate. A different decision might have placed a more productive individual - or even a star performer - in the same role. So, the impact on the organisation is not simply to introduce a negative influence, but to miss out on a potentially stronger applicant.

All of these operational questions are important ones, but just as important - from a commercial perspective - is the fact that this kind of situation can be very costly indeed. To take a concrete example, consider a new recruit whose decline in performance leads to their leaving after a few months. The costs they incur are far greater than just their salary for those few months. There will have been an initial recruitment cost (including advertising, administration and interviewing) and also a induction cost (from simple introduction to weeks of detailed training, depending on the role). There are even more costs in arranging for them to leave the organisation, and another round of recruitment to find a replacement. On top of all of these, there are hidden and unquantifiable costs related to the effects we've already discussed - how many potential customers were lost, for instance, or how did a negative attitude impact the performance of others?

The resulting costs of mis-hiring will vary from role to role, but you can get an idea of the typical impact from this graph, based on all the factors discussed above, and showing the results of an applicant leaving the organisation after three months. The actual figures will vary according to a number of factors - not least, the currency involved - but the general pattern is remarkably constant. For lower pay bands, the costs of correcting a mis-hire are bad enough, but in higher salary brackets, the costs start to escalate alarmingly. This effect is hardly surprising, given that recruitment costs are normally greater for higher-level staff. More importantly, a candidate at this level will normally have greater responsibility, so their range of impact on the organisation will be greater.

Graph to show the effects of mis-hiring

How does a situation like this come about? Mis-hiring is often characterised as a 'bad recruitment decision', but that can be an unfair description. In the main, recruitment decisions are relatively good decisions given what was known at the time. The symptoms of mis-hiring emerge later, not because of the quality of the decision, but because key information wasn't available when that decision was made.

This doesn't necessarily point to a failure in the recruitment process - indeed, in conventional recruitment procedures, there can be no way of anticipating a negative outcome like this. Nor, generally speaking, can the candidate themselves be held to blame - they have no more means of predicting the situation than the recruiter, and the results of a mis-hire can often be as unpleasant and counter-productive for them individually as for the organisation.

How can we approach a resolution of this situation? What's needed is an additional element to hiring practices to help anticipate points of conflict between a candidate's style and the needs of the organisation. This is one of the areas where Axiom specialises, and we've developed a range of tools, techniques and products to help identify the factors that can lead to mis-hiring.

Identifying problem areas is only one aspect of the process. There's a correspondingly positive aspect of being able to understand how an applicant's natural behaviour fits the needs of a role. As well as helping to avoid mis-hires, it can be equally productive in spotting behavioural styles that are well suited to a role's needs.

Of course, we're not suggesting that this is a universal solution - there's far more involved in a recruitment decision than just a person's behavioural style, and other techniques still have an important part to play. With the potential costs involved, though, you need every advantage you can find, and Axiom's profiling solutions can give you an important edge. If you want to find out more about how Axiom can help you to avoid the pitfalls of mis-hiring, as well as spot potential star performers, take a look at our Discus family of products. [Find out more]

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