No one argues that hiring someone, in particular a senior leaders is a very important decision. While those in a rational state would generally agree that hiring a senior leader is important, most hiring managers have their own multitude of stories about their history of bad to very bad hiring decisions. In 2017, the CareerBuilder Survey surveyed that 74% of employers had a bad hire. One main culprit to this regular occurrence the decision process of "feel" for a candidate is involved. A common phrase by a hiring manager "I don't FEEL the candidate is right/I FEEL good about the candidate". Scientific research repeatedly indicate, "Feeling" is not a criteria and yet hiring managers lead their decision or cloak their decision on a feel. Unfortunately it's very subjective and open to the mood and circumstances of the interviewer. So there is a lot of "Feel" assessments made on candidates that lead to bad hires.
Considering bad hires are more the norm than an anomaly, how is the cost of a bad hire calculated? The U.S. Department of Labor has a formula that cost of a bad hiring is at least 30 percent of the individual’s first-year expected earnings. So if an organization hires a bad senior leader where they are making $200,000, the cost to the organization is roughly $60,000. I think however everyone knows the cost is much greater. Because some expenses are easy to quantify, and others are not.
Impact on business overall
Time and expenses associated with onboarding a senior hire (if the senior hire does not live in the city, the logistics alone can exceed $100K)
Time of key interviewer
Recruitment fees (+$60K)
Managing out the poor hire with Performance Plan for 3 months (+50K)
Negative impact on projects and lack of continuity of work
Impact on team morale/stress
So why the bad hire? The CareerBuilder survey indicated the following:
35 percent of interviewers acknowledged that the candidate didn’t have all the needed skills but felt they could learn quickly
32 percent took a chance on a nice person but did not say that was one of the their decisions criteria
30 percent felt pressured to fill the role quickly
29 percent focused on skills and not attitude.
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