The latest Labour Market Update from the Australian Government[1] provides hopeful reading for the candidate shortage which has dogged companies for the better part of two years.
It suggests that skills shortages are easing, recruitment difficulty is declining, and therefore the likelihood of filling an advertised role has slightly increased.
While this indicates improvement, we are noticing a lot of businesses are still finding it difficult to attract and select appropriate candidates for their job roles.
We have also noticed a trend across HR and Talent Acquisition where hiring managers are tempted to just hire whatever candidate they can to fill open job roles and are willing to sacrifice a rigorous recruitment process to achieve this.
The fear is if they don’t act quickly, or if they make the process too rigorous, candidates will jump ship and accept an offer from their competitors.
We can understand the temptation behind this. But what are the true effects of hiring whoever you can just to fill a role?
Hiring out of desperation increases the risk of a bad hire – it is estimated that 45% of bad hires are due to the lack of a proper recruitment process[2].
This is because the hiring manager will be less likely to do their due diligence – they will avoid using tools such as psychometric testing, reference checks, skills tests, and behavioural interview questions which have been proven time and time again to increase the success rate of selecting top performers.
What does this result in? Below are just some of the detrimental effects bad hires can have on your business.
- Negative Team Morale: in a survey conducted by the Society of Human Resource Management[3], across 2,100 C-level executives, over one-third of respondents found bad hires to ‘greatly affect’ team morale. And you can understand why – imagine if you had to regularly work with a team member who was incompetent or had a bad attitude, would you find it difficult to maintain strong morale? As a follow-on from this, it was noted that 60% of hiring managers reported bad hires not getting along with their co-workers.
- Reduced Leadership Capability: The same survey found supervisors spent an average 17% of their work time managing poor performers. Imagine the increases in performance, engagement, and leadership capability if that time was spent productively, instead of managing employees who shouldn’t be there in the first place.
- Increased Employee Turnover: because of the above two points, engagement drops and employees start looking elsewhere. A study by the Harvard Business Review[4] found 80% of employee turnover is due to bad hiring decisions.
- Decrease in client relations, reputation, and sales. Bad hires are unlikely to have the right skills to ensure you deliver outstanding results to your clients, build your company’s reputation, and boost sales capability. In a study conducted by the National Business Institute[5], 18% of respondents reported bad hires had a negative effect on client relations, and 10% noted a decrease in sales.
This is on top of the cost-related factors, such as the requirement to re-advertise when the bad hire doesn’t work out, the 6-months of paid wages during the probationary period, and the time cost of training and supporting an employee who did not work out, and who shouldn’t and wouldn’t have been hired in the first place had the recruitment process been properly managed!
Hopefully, after reading this article, you will avoid the costly mistake of rushing your recruitment process just to fill a role and will focus more on quality of hire, not expediency of hire.
Peoplogica have over 15 years experience assisting our clients in how to structure and boost the outcomes of their recruitment process by using validated psychological and skill-based assessments and providing consultancy services regarding targeted job advertisements, screening, interviews, and reference checks.
If you would like to ensure you maximise your chance of success in attracting and selecting top-performing candidates in a job market that is improving, yet still very tight, please get in touch with one of our team.
[1] https://www.jobsandskills.gov.au/reports/labour-market-update-may-2023
[2] https://www.forbes.com/sites/forbescoachescouncil/2019/10/16/how-good-is-your-hiring-process/?sh=3fcc9d0e27bc
[3] https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/morale-productivity-bad-hires.aspx#:~:text=A%20new%20survey%20suggests%20the,global%20staffing%20firm%20Robert%20Half.
[4] https://www.forbes.com/sites/forbescoachescouncil/2019/10/16/how-good-is-your-hiring-process/?sh=3fcc9d0e27bc
[5] https://www.nbrii.com/infographics/the-cost-of-a-bad-hire/
Written by Michael Mancinone
