The Incredibly High Cost of Making a Poor Hiring Decision
While each manager has his or her own rules for seeking out candidates, conducting interviews and hiring employees, there are certain mistakes that cannot be made during this search and hire process.
In addition to being stressful and troublesome, the cost of hiring the wrong employee can be financially detrimental to your company.
Did you know that an employee who is terminated a couple of years after being hired can cost your company hundreds of thousands of dollars?
The Numbers Don’t Lie
Investing in a candidate means you expect him or her to fulfill a list of duties or obligations that are set out in a contract. Training, orientation and other on-the-job setup tasks eat into productivity, but it is allowed for as an investment expense.
Many companies cite an average of $240,000 to onboard an employee.
When a candidate proves to be a wrong fit for a job after several months or a few years, the expenses add up even more. Often, the output of the employee will not even cover the initial investment expenses.
At the end of the day, a company faces expenses in excess of $840,000 that include hiring fees, overall compensation, severance pay, the cost of mistakes and disruptions, legal fees and more.
A few mistakes in a hiring process are inevitable over the course of a company’s lifetime. Many employees can maintain the illusion of performance and success, without actually being productive.
In addition to the financial cost of this process, the overall company morale may suffer and lead to decreased rates of productivity.
Think about this: every bad hire increases the likelihood that your core team will feel overworked and carry more of the load until the right candidate is placed. You could potentially lose your existing, productive employees by hiring a poor fit for your team.
According to the Harvard Business Review, poor hires account for almost 80% of turnover rates in business. So how do you make sure you hire the right candidate the first time?
Invest in an Online Sales Assessment
There are some key indicators of a potential candidate’s success in your business that arise from innate characteristics. The DriveTest® uses criteria of a candidate’s Need for Achievement, Competitiveness and Optimism.
These are indicators that cannot be faked and will increase the likelihood of finding a high-potential salesperson to interview. .
This test works by asking a potential candidate to choose statements based on how similar or dissimilar the statements are when compared with the candidate. For instance, a candidate will be asked to choose whether she is most or least likely to relate to different traits or preferences presented to her. All of the statements are positively framed to prevent bias during the assessment.
The assessment provides trainers and managers with information about the consistency of answers by the candidate as well as a ranking that is her total Drive score. The scoring is based on a scale from 1 to 5, with 5 being the most likely to succeed in a sales-oriented role.
Using an online sales assessment like The DriveTest® is a great starting place to determine the fit of a candidate within your team. Before you begin the in-person interview process, you will have an idea for the innate Drive of a candidate and the likelihood of their sales success.
While a lower score may not preclude you from interviewing a candidate, it will aid you in better placing that person within your team. Lower scoring individuals, or “farmers,” tend to do better in support roles, whereas higher scoring individuals, or “hunters,” will likely serve as rainmakers and drivers for your business.
Additional Ways to Improve Your Hiring Process
Once you have used the online sales assessment to evaluate the key performance indicators for your potential candidates, you can begin working on honing your interview skills.
Ask specific questions about the position for which they are applying.
Instead of asking general questions of your candidates, ask individuals who maintain a similar role about their skills, technical knowledge and other helpful traits. Knowing about the tasks your candidate will be responsible for ahead of time will allow the interviewer to build questions that will provide meaningful insight.
Go beyond the “tell me about a time when…” question.
It is an expected question during the interview and candidates may have prepared a response about their greatest challenge or failure. Probing further into a candidate’s responses may yield more insight into how a candidate will handle various situations. We suggest the “Fly on the Wall” question – here, the interviewer asks what they would have seen or heard from the candidate during a particular situation. It often yields a clear indication of how candidates will deal with pressure.
Add little tests along the way.
While being straightforward, courteous and having a conversation is an important aspect of successful interviews, there is nothing wrong with watching for key responses in your interaction. Ask other employees around the office if a candidate spoke to them, and, if so, how her demeanor appeared while not engaged in the interview.
Throw innocuous lifestyle questions into the interview.
See how well the candidate responds to this type of question. Candidates who do not view a question like this as relevant, or who do not completely answer the question, may be showing their inability to complete certain tasks in the future. It can also shed light onto their ability to adapt.
The interviewing process should never be left to one person alone.
Collaborative interviews can provide insight into a candidate’s personality from multiple points of view. Getting more people involved in the hiring process can actually relieve stress from the main hiring manager while evaluating the engagement of the candidate with numerous company employees. All aspects of your interaction with a candidate will inform you about the fit with your company’s culture.
Making an Offer to Your Salesperson
Once you have completed your collaborative hiring process, you have likely narrowed down a pool of candidates to one or two good fits for your company. After you are sold on a candidate’s ability to perform, get that person in the door.
Chances are that your top candidates will also be sought out by other companies. Finding the right candidate can be a rewarding experience for your company financially and boost morale within a team. Use these tips and tricks to start eliminating the incredibly high cost of future bad hires.