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The Hidden Costs of a Hiring Mistake

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The Hidden Costs of a Hiring Mistake

The Australian public sector has a long-standing tradition of providing frank and fearless advice to the government of the day. This makes it exceedingly difficult to remove a poor performer. Once you choose someone like this, you can be stuck with them for a very long time. But if you’re a manager, there is nothing more important to your career success than hiring the right people.

Hiring: A Skill and An Art

Hiring the right person for the workplace is challenging. The problem you have is seeing behind the mask every job applicant wears to the interview. What you want to know is:

  • Can this person do the job?
  • Will this person do the job?
  • Will this person complement your existing team?
  • Does this person have some personality flaws that will lead to poor performance?
  • How will this job fit this candidate’s lifestyle?

Choosing the right person means you are attempting to predict the future. You can’t always project what the future challenges of that job will be.

Even the most thorough screening processes, such as choosing those who become astronauts, have had mistakes.

The art of hiring comes with experience. It helps a great deal if you’re good at reading other people.

When this is combined with training in learning to avoid basic mistakes, knowing what questions to ask and how to interpret the answers, then you have a much better chance of getting it right the first time.

What Does A Mistake Cost?

There is a range of direct costs that can be calculated. Among these are:

  • Time spent in drafting or refining a position description
  • Time and money spent on advertising
  • Time to sort through resumes
  • Initial interviews, either by phone or in person
  • Longer interviews, often with a panel of two or three people
  • Time spent checking references
  • Meetings to discuss the outcome of your findings and make a hiring decision

All of this is the time taken away from doing your usual job.

Check out: How Public Sector Leaders can build their Thought Leadership

The Hidden Costs

Many of the costs of hiring the wrong person cannot be described in dollar terms. They do lend themselves to being considered in discrete categories.

  • Additional Stress on the Manager

Consider the stress on the person who has to manage the problem employee. This is a situation where you go home at night worrying about what to do with this person. How will you motivate them? Can their problems be corrected?

  • The impact on your team

Hopefully, you have a group of people who get along together, can focus on the job and work cooperatively to meet the team goals. What happens if you hire the next workplace bully? Perhaps it is someone who is basically lazy and doesn’t carry their share of the workload. Or maybe it’s the person who will white ant you as the team’s leader.

All of these will be destructive to your team.

The chances are you’ve been working to build a culture in your team based on shared values. What effect will this person have on the culture you been trying to develop?

  • The Risk of Losing Your Best Staff

Good performers resent having to work with problem people. They don’t like having to do more than their share to pick up the slack left by others. These are the people who will find it easy to find another opportunity. Unless corrective action is taken, your best people will be at risk of leaving. The below average performers will stay because there will be less opportunities for them.

  • Impact on Your Reputation As a Manager

When a poor performer is hired the first people to notice will be there colleagues. This will lead to the inevitable hallway conversations. Usually these will be directed at the people who made the hiring decision. “How did they possibly hire this turkey?” is not uncommon.

Will this enhance your reputation as a manager? I think not.

  • The Reputation of Your Department

People know what area they want to work in. When there is a cohesive team who enjoy working together, led by a capable manager, the word gets around.

Similarly, people also form an impression about your team when they see poor performers getting hired. If you want to attract the best people, hiring mistakes certainly won’t help.

  • Potential Legal Liability

Unfortunately, Australia is becoming more litigious. Lawsuits against public service are increasingly common. These become a significant source of stress, additional time demands, and distraction from getting your job done

  • The Secret But Very Real Price: The Opportunity Cost

This is the most difficult to calculate cost, yet it is the most damaging one.

If you are saddled with a problem performer, the question that is the hardest to ask is: “Where would we be now if we hired a basically competent person who did the job without causing difficulty?”. The longer you’ve been carrying such a person, the greater the opportunity cost.

A problem performer can be like running a marathon on with a ball and chain attached to one leg. You might make it to the finish line, but it sure is going to be a painful race.

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A Potential Solution

It is possible to learn some of the fundamental techniques of making hiring decisions. There are lots of books around. Find one or two and study them.

There are workshops and courses given in any major city. Find them, and make it your business to attend.

Keep all your notes and files from every hiring decision you make. Whenever possible, follow up those people and find out how they performed. When there is a clear mistake, go back and do a “psychological autopsy”.

Look at the information you had to discover clues that could have predicted the problem. Ask yourself what information you wish you had had at the time you hire them, there is now come to light.

Dr Ken Byrne is a Corporate Psychologist who has been studying the art and science of selecting staff for more than 40 years. He is the author of Seeing Behind the Job Applicants Mask: Secrets of a Corporate Psychologist.

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For the last 40 years, Ken has specialized in serving as a second opinion to clients making a hiring or promotion decision. In Australia his advice has been sought by the ANZ Bank, Coles-Myer, The Walt Disney Company, Tattersalls, Optus, Telecom, Wrest Point Casino and a host of businesses in the SME market. For over twenty-five years he consulted to many Australian police departments and a range of other public safety agencies.

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