“Sometimes companies are so concerned with hiring very specific skill sets that they overlook the key success indicators,” says Laura Poisson, vice president of ClearRock, the executive coaching company. “When you get the wrong hire regardless of the reasons it’s not just a financial cost.”
When it comes to the risks companies face they fall into two categories. There are the obvious and controllable risks like not checking credentials and then there are the ambiguous ones like choosing a person that doesn’t fit with the culture. Both risks, however, can have the same outcome if left unchecked: a demoralized work force and time and energy wasted on an unhappy employee.
Forgo the background check at your own peril
Checking an applicant’s background and credentials seems like a no brainer, but according Jay Meschke president of CBIZ Human Capital Services, the executive recruiting consulting firm; it’s pretty common for companies to blow off that portion of the hiring screening process. Not everyone is trying to trick their potential employer but hire one person who lied about their credentials and it could put your business at risk from a liability standpoint. After all you don’t want to hire a financial planner who claims to be licensed only to find out after his mistakes costs your clients their life savings that he lied about that credential. “I don’t care if it’s licensing for insurance, accounting or legal,” says Meschke. “Those things are important. Any organization worth its salt will check a person’s credentials.”
Finding the right cultural fit will save money
Companies understandably want to hire someone with top notch skills but when they focus on that alone, it can put the entire business at risk. You want those can’t live without skills from a new hire, but you also want to bring someone on that will get along with the other employees and will support the mission of the company, whatever it might be. “The investment you are making is not just administrative” when you hire someone, says Poisson. There’s an investment in training the person, connecting him or her with the team, not to mention the impact if the person leaves quickly, she says. “Around 20% of a person’s salary is the financial cost of lost productivity,” says Poisson.
Losing top talent can have a demoralizing effect
Recruiting someone is half the battle but keeping them with your company is how you win the war. If someone leaves not only will it be a financial cost but it could have a negative impact on the entire workforce, particularly if that person was revered by the rest of the staff. “Assuming you get the best people the biggest risk is losing them because you are not motivating them or not having them work with people like them,” says Taso Du Val, co-founder and Chief Executive of Toptal, the online marketplace for developers and companies. Keeping top talent at your company, particularly if you are smaller than your competitors can be tough but the best way, says Du Val is to quickly hire others of your star’s caliber and let him or her help in the interviewing process.
Relocation blues can mean short tenures
Sometimes companies will go to great lengths to recruit top talent and that often means luring out of state workers or even people residing in different countries. Not only is there going to be a cost associated with relocation but there’s also the time and energy spent figuring out all the logistics of moving a family across the country or world. That cost may pay off but it can quickly backfire if your relocated employee doesn’t stay long enough for your company to get a return on its investment. “If a family moves from one locale to another and the family unit isn’t happy then the employee isn’t happy,” and he or she is more likely to have a short tenure at the company, says Meschke. It’s really important for companies to go to great lengths to make sure the relocation is going to work for all effected parties, he says.