When your engineering firm makes a bad hire, it’s like a bad apple that gets introduced to the bunch. Although it may only be one bad apple and seem harmless, it can quickly spoil the rest of the “bunch” or your team that you worked so hard to acquire and grow into a blossoming basket of productive employees.
The COVID-19 pandemic has made the risk of a bad apple in the workplace even worse.
Metaphors aside, a bad or wrong hire can jeopardize your company’s bottom line, drag down employee morale, and end up creating more problems into the future. COVID-19 has made it more difficult to find qualified workers due to less availability and ongoing uncertainty in the job market.
The Harvard Business Review points out that as much as 80% of employee turnover is due to poor hiring decisions. Another survey by CareerBuilder found that 74% of employer's surveyed said they have hired the wrong person for a position.
But why do bad hires happen, and how much can it cost your engineering firm?
When thinking about what a bad hire costs an employer, there are factors that are easy to measure and others that are difficult to quantify.
A lot of time and money goes into hiring a new employee. You can expect to spend resources on the following:
When it comes to resources that aren’t easily measured, you can’t forget about the time and energy it takes your staff to hire, train, and onboard a new employee. Hours of work can go into an employee before they begin adding value to your organization, so your team’s overall time and part of their pay can also go into hiring a new team member.
COVID-19 has made the wasted time of a bad hire even more detrimental because it usually takes longer to complete typical new hire tasks. It also leads to more stress on supervisors who have to oversee the hiring and training process from home, according to Tech Republic.
Unfortunately, employers end up spending more on training and hiring. While larger organizations may be able to absorb much of that cost, smaller firms may have a hard time bouncing back after making a bad hire, according to Core Matters.
The exact cost of hiring a bad worker varies from company to company, though studies and experts have attempted to calculate an exact cost of a bad hire.
Jörgen Sundberg, CEO of London-based Link Humans, an employer branding agency, estimates the recruiting, hiring, and onboarding process alone can cost as much as $240,000, according to the Society for Human Resource Management.
The U.S. Department of Labor estimates that the average cost of a bad hiring decision costs at least 30% of the employee’s first-year expected earnings.
However, according to Northwestern University, some of the costs associated with a bad hire are impossible to quantify in dollars.
Overall, the average cost to hire a new employee can be calculated by totaling the amount your engineering firm spends on recruitment annually divided by the total number of hires made that year, according to Workopolis.
This online tool can help you understand the rough cost of a bad hire and how it affects your firm’s bottom line.
If you realize you haven’t made the best hiring decisions, some managers are able to pivot and take steps to make the situation better.
According to hiring experts interviewed by iHire, some companies take the following steps for their bad hires:
Employers may have introductory probation periods for new employees that encourage them to build good habits and meet a certain level of productivity in their first few weeks or months on the job. If an employee doesn’t meet these goals, employers can choose to implement a performance improvement plan that includes specific benchmarks for an employee to meet or risk termination.
Larger organizations may be able to find an opening in another department or specialty that the employee is better suited for. While not all employers have this option, it can help reduce the cost and burden of starting from scratch.
Employees who are willing and show an aptitude to learn additional skills may simply need some training to get up to speed. Identify what skills an employee needs to improve and decide if the cost of offering additional training will be worth it to retain the employee.
Without clear communication from management, some underperforming employees may simply not understand what’s expected from them. Clear and honest feedback can help rectify most miscommunication and open up a discussion about ways to improve or adapt.
Sometimes it’s clear that an employee just isn’t going to work out, or your firm doesn’t have adequate resources to improve a bad hire. In this case prepare to have a difficult conversation and consider terminating the position and moving forward.
A bad hire can have negative overall effects on workplaces, which are already struggling due to COVID-19. In fact, two in three hiring managers surveyed said the negative impacts of a bad hire are more severe after the pandemic than they were before, according to Human Resources Director America.
A high-performing team can quickly lose steam if they need to take time to train an unskilled worker or fix their mistakes. This can cause work to pile up, unhappy clients, and less revenue for your company.
An underperforming or unliked coworker can drag the happiness of the entire team down. A drop in morale may not be detectable at first, but it can lead to a higher attrition rate and poor opinions about the organization if it goes on for too long.
If your team is constantly working to pick up the slack left by a bad hire, your firm can lose out on important work. With less resources free to take on additional tasks, you may find yourself unable to take on new clients or larger projects.
If a bad hire ends up making mistakes or poorly interacts with clients, it can jeopardize your entire firm’s reputation in the industry. This obviously means you’ll have to work harder to repair your reputation and attract future clients.
Even the most well-respected companies make bad hires. McKinsey & Company points to three reasons bad hires are made every day.
It can be difficult to build a measurable and complete picture of an employee’s aptitude, productivity, and value they bring to a company. Since these criteria aren’t perfect, bad hires are able to go undetected until they cause obvious problems within an organization.
Measuring an employee’s success in a position may be vague. Without objective deliverables or data, employees may not know what they should strive for in order to be considered a productive member of the team. Organizations without clear-cut guidelines or goals for employees may struggle with bad hires simply because managers do not know what to focus on.
For example, some engineers can be too analytical, causing their level of output to suffer because they focus on being correct over being productive.
Employers filter applicants in different ways. This inconsistent approach makes it difficult to compare prospective employees against one another to understand who the better fit would be. For example, years of experience may be weighed more at one firm while a good attitude and willingness to learn may be considered more favorable at another company.
Many hiring managers report they feel they don’t have enough time to thoroughly vet a job applicant before they need to make a hire. Plus, COVID-19 has forced many hiring managers to conduct remote interviews, which changes the way they usually meet and vet job candidates.
According to a CareerBuilder survey, 35% of employers who made a bad hire said they knew an applicant didn’t have all the needed skills but thought they could learn them quickly; 32% said they took a chance on a nice person; and 30% said they were pressured to fill the position quickly.
COVID-19 recovery has affected the supply of good engineering talent available in the marketplace, which means less people available to recruit.
In turn, this reduces the number of valuable candidates that will be productive team members. Now more than ever it’s imperative that the employee recruitment process, hiring systems, onboarding tools, and management strategies are up-to-date and effective for a modern workplace.
How to prevent hiring a bad engineer
With 82% of U.S. employers expected to make new hires in 2021, the chances of a bad hire are high. An experienced engineering recruitment agency can significantly reduce a firm’s risk of making a bad hire.
Engineering recruiters such as PHM Search have access to >90% of engineering talent pools using a proprietary Talent Engagement System (TES™) to not only find the right candidates, but also successfully recruit those that best fit an employer. Increasing outreach with as many qualified talent (not just the ones everyone else is looking at) can assure that you land a candidate that will minimize and mitigate a bad hire to even occur.
Making the right hire is critical for your engineering team’s success.
PHM has been finding the right engineers and technical in Canada and the USA since 2001.