IT Employment

How a bad hire affects a company

A bad hire is not a simple mistake for a company. Here's why companies make the mistake and what it costs them.

According to a new survey from Sologig.com, CareerBuilder's career site for contract workers and technology professionals, 70 percent of IT companies report having hired a tech employee who didn't work out; of these companies, 38 percent say the hire ended up costing them more than $50,000.

The survey, conducted among 179 U.S. IT employers between August 16 and September 8, 2011, bore out these results:

Why IT companies make bad hires

A rushed decision and insufficient talent intelligence were the top reasons IT employers gave for making a bad hire, but in many cases, it's hard to classify why the individual was a poor fit.

  • Needed to fill the job quickly -- 40 percent
  • Insufficient talent intelligence (knowledge on who target talent is) -- 28 percent
  • Not sure; sometimes you make a mistake -- 24 percent
  • Sourcing techniques need to be adjusted per open position -- 15 percent

Effects of a bad hire

The survey found that the price of a bad hire adds up in variety of direct and indirect ways. For example, nine percent of bad hires in the IT sector result in legal issues and ten percent result in fewer sales. The most common effects, according to employers who made a bad hire in the past year, are:

  • Lost time to recruit and train another worker -- 45 percent
  • Less productivity -- 45 percent
  • Cost to recruit and train another worker -- 41 percent
  • Employee morale negatively affected --41 percent
  • Negative impact on client relations -- 29 percent

Characteristics of a bad hire

When classifying what makes someone a bad hire, IT employers reported several behavioral and productivity-related issues:

  • Employee didn't work well with other employees -- 67 percent
  • Employee didn't produce the proper quality of work -- 66 percent
  • Employee had a negative attitude -- 58 percent
  • Employee didn't meet deadlines -- 55 percent
  • Customers complained about the employee -- 51 percent
  • Employee had immediate attendance problems -- 47 percent

About

Toni Bowers is Managing Editor of TechRepublic and is the award-winning blogger of the Career Management blog. She has edited newsletters, books, and web sites pertaining to software, IT career, and IT management issues.

7 comments
Bob Gately
Bob Gately

The best candidates, i.e., the most sought after candidates, may or may not be a good hire. - Competence is the King of job performance. - Talent is the Queen of job performance. - Potential is the Prince of job performance. - Education is the Princess of job performance. - Experience is the Court Jester of job performance. Competence and Talent rule job performance. There are many factors to consider when hiring talent but first we need to define talent unless "hiring talent" means "hiring employees." Everyone wants to hire for talent but if we can't answer the five questions below with specificity, we can't hire for talent. 1. How do you define talent? 2. How do you measure talent? 3. How do you know a candidates talent? 4. How do you know what talent is required for each job? 5. How do you match a candidates talent to the talent demanded by the job? Employers need to assess for: - Cultural Match - Skills Match - Job Match Some employers assess for all three. Read the following web page for a description of how to hire high-potential employees. http://www.corpu.com/weekly/article/hiring-high-potential-talent/

DougLubin
DougLubin

These findings serve as validation that organizations need to be constantly looking for talent and building a talent pipeline, so that when an opening does arise, they aren???t forced to fill it hastily. Instead, they have a community of professionals they already have screened as a good fit, both in terms of skills and culture, for the company. Also, after looking at the cost of hiring the wrong person, organizations might want to consider working with a recruitment process outsourcing firm (if they haven???t already) to handle the process for them. The cost of working with a provider is less significant than that of a bad hire, and with recruitment as their sole function, the likelihood of even having a bad hire decreases as well. http://blog.yoh.com for more

robartm
robartm

As in most decision spaces, there are a couple of key "hire" considerations not addressed in this article, which may covered in the referenced survey material generated by Sologig and without which begs the following observations 1. Was the option to contract-to-hire used? This approach avoids every problem mentioned by the author as extracted from the referenced Sologig survey; since the majority of company compensation & retention packages in the US reflect that employees are considered contractors .... 2. The #'s presented seem to have a very high correlation peak to "outsourced off-shored contract issues" in the US IT space over the last 6-7 years .... hhhhhmmmmm, is this really more reflective of the "quality" of the personnel involved in the "sourcing" decisions (of talent)? 3. Have you ever read the "60 Second Employee"?

melbert09
melbert09

Yes it can cost money in real terms, but it can all depend on the position the person held. Coming from the other side as the person who was hired but it was not a fit for me was due to the fact that the employer misrepresented the position that I took. Turned out to be a disaster politically but financially nothing major for the company. Left there after 6 weeks with a smile on my face. Not to say this is always the case Ive actually seen where a bad hire brought out the best in some other people trying to cover for them (silver lining I guess). Turned out a developer I hired was not the right fit and the other developer who I thought was more junior (was there prior to my arrival) actually proved that they were more skilled than I was told. Got rid of the bad hire and put the original person in charge, and things went great.

GSG
GSG

3 weeks into employment, police show up and arrest new hire? Someone messed up on the background check on that one.

Ryk
Ryk

This reminds me of an excerpt in a stored in Wired magazine, from Netscape founder Marc Andreesen (about his then-new company Loudcloud): But even as the talent and the clients keep rolling in, there's another lesson from Netscape that keeps Andreessen and Horowitz up at night: trying to get around the Law of Crappy People. "It scares the shit out of me," says Andreessen. "The law applies to every company that gets big," says Horowitz, "especially companies that get big fast, so we're a prime candidate. "All you have to do is hire one person who isn't very good," Horowitz continues. "The Law of Crappy People kicks in because the worst employee at any level becomes the de facto standard for that level. Your executives sit around the table. Some EVP wants to promote one of his or her directors to vice president. Or maybe they want to bring in someone new. Someone at the table says, 'That person isn't good enough,' to which the first person responds, 'Hey, you've got Joe Schmo, who is a bonehead. This guy is better than Joe.' So the guy who hired or promoted Joe Schmo shuts up." Andreessen says, "You will inevitably make a mistake. The minute you do, the quality degrades. A people hire B people, and B people hire C people. So the bad people breed like rabbits - they hire more people like themselves or worse. We saw it happen at Netscape when we ramped up early on."

paulfx1
paulfx1

Peter Gibbons: I wouldn't say I've been *missing* it, Bob. Dom Portwood: Hi, Peter. What's happening? We need to talk about your TPS reports. Peter Gibbons: Yeah. The coversheet. I know, I know. Uh, Bill talked to me about it. Dom Portwood: Yeah. Did you get that memo? http://www.imdb.com/title/tt0151804/quotes?qt=qt1497062

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