Between recruitment, visa, downtime, loss of productivity and the negative effect on others, a bad hire can cost a company quite a hefty sum. In fact, the Society for Human Resource Management estimates that a bad hire can cost a business as much as five times an employee’s annual salary. While this may be true for the most senior positions, a more typical range is 40 to 200 per cent of the employee’s annual salary.
Assume you make a bad hiring decision. The employee’s monthly salary is Dh10,000, or Dh120,000 annually. If you lose that employee after six months either due to termination or resignation, it has cost your company anywhere between Dh48,000 and Dh240,000. At a monthly salary of Dh25,000 your loss can be Dh600,000, if not more. Even when you don’t lose the employee, a bad hire can cost as much as half his annual salary every year in terms of loss of productivity and negative impact on the workforce. So can you afford these numbers?
Recruitment in most organisations goes something like this:
The manager asks the human resource (HR) department for résumés for a position. HR forwards a number of “shortlisted” CVs to the manager, who then proceeds to interview these candidates, saying to them “tell me about yourself” and asking “what are your hobbies?” before picking a candidate. A job offer is made and three months down the line, the manager discovers that despite being an avid basketball player, the candidate is not a team player. This is a real example — contributed by a manager during a recruitment interviewing skills training session I was facilitating a few years ago
Here’s how recruitment should happen:
The manager profiles the ideal candidate in terms of years of experience, qualifications and essential competencies. For example, for an accountant, the manager might decide that (s)he needs someone with four years’ experience and a bachelor’s degree in finance. More importantly, this person needs to be a team player, have good analytical skills and the ability to work under pressure. The manager submits this profile along with an updated job description to the HR department. HR shortlists applicants based on this profile and then conducts preliminary interviews. While there are no hard and fast rules, I’ve found that depending on the position, four to 10 initial interviews are sufficient to produce a shortlist of at least two strong candidates.
Organisational fit is perhaps one of the most ignored elements in recruitment despite its importance in determining how a new employee will fare. Companies have cultures (certain ways of doing things) that are unique to them. It is HR’s role to determine whether a candidate can work effectively within the company’s culture at the initial stages of the recruitment process. If the candidate is not a good fit, there is no point in wasting the manager’s time.
The manager interviews for job fit. In other words, can the person successfully complete the job and work with the existing team and manager? Can the manager “manage” this person effectively? Unfortunately, most managers don’t know how to target their questions or how to use behavioural (or competency-based) interview questions. These focus on demonstrable examples of the behaviours necessary for the job. In the case of the accountant for example, the manager can ask: “give me an example of a time when you needed to work on a project with a team and were able to complete it on time”. Notice this asks for a specific example and not just “are you a good team player?” or “have you worked in a team?”
In addition, the manager should also assess whether the applicant is technically capable, but this is best accomplished using a test instead of wasting interview time.
Another often neglected area is reference-checking. While not always exact, the seasoned HR professional can always gauge whether the previous employers are enthusiastically recommending the candidate or are simply being “nice” by not saying anything negative. For more senior positions, using a combination of technical and psychometric assessments will also reduce the chances of making recruitment errors since these provide another source of data.
While we can’t fully eliminate recruitment errors, we can reduce the costs associated with bad hires significantly if we improve the recruitment process.
Can you afford not to?
Layla Halabi is a partner at Learnactive, a human resource and organisational development consultancy based in Dubai
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