5 hidden costs bad hires make you pay

Imagine you had to take a pay cut every time a bad hire cost the company in some way.

You could go home without a paycheck.

How? Because I’ve identified 5 hidden costs that bad hires make you pay:

1. Money Cost

OK, this one is not that hidden.

Money is an obvious cost of every hire:

  • Posting job ads – $
  • Background checks – $$
  • Employee referral fee – $$
  • Recruitment agencies – $$$ 

When you make a bad hire, all this money will feel wasted. 

2. Time Cost 

Hiring can take as long as 6 months from when you start. Then there’s the time until you discover the hire isn’t working out.

That’s a lot of time in limbo. Let’s not forget that people in the business world often say, “Time is Money!”. 

3. Productivity Cost

Think of what would happen if you hire someone with a promising resume, give them big responsibilities and they fail to produce.

A bad hire’s low productivity risks the quality of certain work. Not only that, it can hurt overall productivity levels. 

Your job gets harder to make sure this doesn’t happen.

4. Emotional Cost

Bad hires can be incompetent, messing up even the smallest of tasks. Or they simply refuse to do what needs to be done.

Both issues can wreak havoc on your day-to-day emotions.  

5. Reputation Cost

Firing a bad hire early on sounds like the right call. But it could still cost your or your company’s reputation.

There are 3 ways this could pan out:

  1. Your employer’s brand could get tarnished on employer review sites like Glassdoor. “Toxic management. 1 star”.
  2. Their negative actions on the team could have a lasting impact on how your employees see you. 
  3. Other managers – including your boss – could see your making a bad hires as a sign of weakness.

Want to avoid these costs?

It’s key that you understand that bad hires happen because hiring is a game on chance. But you can take action to stack the odds in your favour.

Start off by thinking about how you can better focus your hiring.

Then look into how you can ask better interview questions

Take it a step further by looking into how hiring committees can give you a more rounded perspective on potential hires.

 

Can bad hires be caused by your mind?

Your mind can cause bad hires if you don’t think about how it influences your hiring decisions.

To control this risk, you need to make yourself aware and curb the influence of your unconscious biases.

Let’s unpack this idea.  

5 minutes to make a hiring decision?

I’ve known many managers who swear by their ability to make fast hiring decisions. I’ve been guilty of doing this in the early days. 

I often ask other managers if they do this and why.

Some respond with a confident response not unlike this: “‘I’d know if someone’s right for the job in a few minutes. This aint my first rodeo!”

That’s not enough time to process

A part of your mind is processing your experiences in the background.

This is your unconscious mind at play. It interprets what you see and feel, and links it your past experiences and personal values.

It’s always processing your experiences, but is most active in the first few moments of an interaction. 

What your brain processes in the first few minutes

When you first meet the job candidate, your unconscious mind is taking notes on:

  • The office environment
  • The candidates’ clothes, shoes, haircut, smile, posture, tone of voice
  • What your conscious mind is thinking of all this

It compares these notes to the ones it has saved from your past experiences in similar situations. 

Your conscious mind interprets what the job candidate is saying while weighing in the feedback from your unconscious mind.

If you end a conversation within a few minutes, your initial impression of the job candidate will weigh heavy on your decision.

That impression weighs even stronger if you ask questions that don’t require heavy lifting from the conscious mind.

For example, when you ask surface-level questions that verify facts on the resume in front of you.

The risk of initial impressions

The unconscious mind does not process any data on what the candidate is saying in response to your questions.

It does not know about your work or the questions you’re asking. It works on a primal level. It’s the epitome of superficial.

So if an otherwise good candidate doesn’t match your unconscious mind’s idea of good candidate, you could reject them. 

Experience the risk in this example

Imagine you’ve got 2 candidates to interview today:

  • Candidate 1 – poor culture fit, but stylish and confident speaker
  • Candidate 2 – good culture fit, but average style and modest tone

You only have 5 minutes to interview each candidate. Both have identical resumes. You don’t know upfront about each candidate’s level of culture fit.

Let’s assume your unconscious mind knows that you put high value on style and the ability to talk with gusto.

Which candidate will get higher weighting? Remember that the unconscious mind does not care about cognitive concepts like culture.

With a manager spending little time asking solid questions, Candidate 1 will appear to be the better suited candidate. Risky business.

How to overcome unconscious biases

Here are strategies to overcome the influence of your unconscious mind’s biases:

  • Be vigilant of unconscious bias. Before you start an interview, reaffirm the need to see past superficial issues. Seek rational explanations for statements like “She’s good” or “I like him”.
  • Bring in multiple perspectives. It’s much harder to be biased if you draw in data from multiple people who value different things. Think about setting up an effective hiring committee.
  • Spend more time in each interview. This gives the conscious mind more time to interpret the situation in a rational manner.
  • Fill this time wisely.  Ask solid interview questions, not filler conversation. This way, you’ll get more meaningful data for your conscious mind to interpret and add to your hiring decision. 

Here’s a visual summary of these strategies:

Combine all of these strategies in order to effectively combat bad hire risk from unconscious bias.

 

Is hiring hard because it’s a game of chance?

Popular manager thinking would have you think hiring is an exact science. But in reality, hiring is a game of chance. 

Have a look at this graph:

Job candidates end up on one of these 4 squares

That graph looks pretty complicated, right? A candidate’s dice can land anywhere on it. But it largely depends on you.

This is why it’s a game of chance

Every time you interview a candidate, at best, you are making an educated guess of how well they’ll fit into your team.

The less educated your decision, the greater your chance of making a bad hire. That’s what makes hiring so hard!

Your decision gets telegraphed on this graph as the right hiring choice or the wrong hiring choice.

The right hiring choice is your skill (and luck) at play

I’m sure you are eager to know what the right choices are. They are:

  • True Positive. You hired a good fit candidate who eventually became an A player in your team 
  • True Negative. You rightly rejected a bad fit candidate

Now the hard part: when you’ve made the wrong hiring choice.

According to Henry Ward, CEO of software company Carta, this is how the wrong hiring choice pans out:

A False Positive (FP) is when we hire somebody who doesn’t work out (i.e. we falsely believed they would be great). A False Negative (FN) is when we did not hire somebody who would have been great.

How to Hire, Henry Ward of Carta (via Medium)

What causes the wrong hiring choice?

What kind of candidate causes False Positives? A sweet talker or someone with a promising resume who convinces you that they are an A-player.

And what about False Negatives? For example, these can be true A-players who for some reason don’t interview well

How to make the right hiring choice

Here’s the beauty of hiring. Unlike most other games of chance, you can stack the hiring odds in your favour.

You can do this by carefully thinking about how to reduce False Positives and False Negatives.

The True Positives (and Negatives) will follow suit and naturally increase. 

 

3 mistakes that guarantee you’ll make bad hires

A bad hire might not perform to the level you expect. They might not gel with your team. There are 3 leading causes of bad hires.

I’ve listed these 3 mistakes in order. From the one you have the least control over to the one you have most control over. Here goes…

Mistake #3 – Your employer brand is weak

Do potential employees know what makes you a better employer than your competitors? Are you selling the job to them?

If not, the good fit candidates (who have options) might look right past you. Meanwhile, less able candidates will see your job as a low hanging fruit.

With fewer A- and B-players applying for the job, there’s a greater chance of you hiring a less able applicant. Big risk.

I recommend you start exploring this topic by first reading this practical employer branding guide on LinkedIn.

Mistake #2 – You base your hire on personality or hard skills 

Richard Branson recommends hiring people who are “fun, friendly, caring and love helping others.”

Apparently the “rest of the job can be taught.” Maybe yes, since he was talking about hiring customer-facing employees like flight attendants.

I can’t say that’s a winning recipe if you need to hire for a professional or technical role.

Something makes me think that a set level of proven skills are key.

You wouldn’t want Virgin Atlantic to hire for a pilot’s role solely on the condition that they’re fun. 

The other end of the spectrum is no better. I’ve known managers who hire someone with a promising resume only to regret it later.

They see the laundry list of skills, years of experience and marquee past employers and think they’ve found a winner.

Without verifying what the person actually did day-to-day with those skills in those years at those companies, you risk hiring a dud.

Mistake #1 – Your interviewing isn’t rock solid

Mistake #3 is an external factor. It’s about how outsiders see your company. You only have a degree of control over that. 

Mistake #2 is a mistake of false mindset. It’s indirect because you’re often not doing it consciously and takes time to evolve from. 

But Mistake #1 is something you do consciously and you have direct control over it. You own your interview process.   

Sadly, if you end up with low quality data on candidates, it’s on you. All this does it make your decision hard or worse, guesswork.

What causes you to have low quality candidate data?

Having a weak (list of random questions) all the way to non-existent (“It’s a conversation”) interview structure.

It’s critical that you work out the key traits that make your employees successful and seek these in your new hire.

Here’s a simple fix: write at least 5 questions that compare the candidate to how your top performers go about doing the work.

Ask each and every job candidate. That way you’ll truly know if the person in front of you will work the way your team does.

 

Is it risky to hire people with promising resumes?

This might seem like a rhetorical question, but it’s not. My first thought to this question was, “What’s wrong with hiring a strong resume?”

Well, after a little thinking, I noticed the problem. Hiring managers risk being biased toward people with promising resumes.

Here’s the issue I have with that: people with such resumes might not actually live up to the hype on paper.

We risk valuing the “good resume candidate” more than a better fit candidate with an average looking resume.

So it’s risky if you hire someone solely for the quality of their resume.

A story can explain this best

We needed to hire during a tough time

I recently helped a fellow manager at my employer with the task of shortlisting candidates for a critical role.

Let’s call this manager Dirk. A key staff member left Dirk’s team right as our company approached a busy period.

I was on vacation at the time, but I had to help because I knew how swamped he was. I offered to review resumes and qualify candidates.

After culling what felt like 99% of the resumes we received, I forwarded a handful to Dirk for his thoughts.

Surprise! Someone got hired fast

The next email took me by surprise. It went to the affect of, “I’ve made a verbal offer. Who in HR do I ask to draft the written offer?”

“Wow, that was quick. I only emailed the resumes yesterday,” I thought.

How could this be?

After I got back from vacation, I learned that Dirk phone offered the job to a candidate after a 5 minute call. Yes, 5 minutes.

“Did you hire this… Morgan for his resume?,” I queried Dirk, “OK, he’s racked in a lot of years, but is he right for us?”

Dirk retorted, “Look at his resume! He’s gotta be good. He couldn’t have lasted for 15 years in our industry by being ordinary.”

I didn’t say any more and left Dirk to complete his new hire.

And then came trouble…

Fast forward a few months. Dirk came to my desk a little pale in the face. He asked for my opinion on how to get rid of Morgan.

I wasn’t exactly gobsmacked by this revelation, but still, I needed to probe the issue properly.

It turned out that months had passed and Morgan was still not showing any results. This despite Dirk rolling the red carpet for Morgan.

Morgan was given special access to mentoring from our company’s senior contributors on top of HR’s standard onboarding program.

So I had a casual talk with Morgan.

This is how Morgan ended that conversation, “I know I’ve got 15 years experience, but I expected a little more support. Dirk kind of expects me to do things on my own most of the time. I thought this’d be a team effort.”

His words neatly summed up the problem for me. Morgan’s idea of support was our idea of heavy supervision.

That’s what he was used to, but our work culture valued the opposite. We expected people to operate – for the most part – on their own.

Could this built-up pressure get released?

Then I spoke with Dirk’s other employees. I learned that he was rubbing off the wrong way on them too.

He constantly asked banal questions. They had to triple check his work. He dropped the ball on some important tasks.

All this was making both Dirk and me very, very worried. Why me? Because problems in Dirk’s team had potential to ripple onto my team’s work.

But a few days after my conversation with Morgan, he emailed Dirk his notice. He wrote this at the end: “This job isn’t for me”. We agreed.

Dirk could not believe his luck. He still thinks my casual talk with Morgan was the catalyst for him quitting. I can be very useful sometimes!

Moral of the story

This is one example of how a resume can show great promise, but doesn’t translate to greatness in reality.

We need to really understand how the job candidate would behave in our work environment. A resume can’t do that for us.

That’s why we need to look beyond what the resume tells us to understand if the job candidate is the right fit for us.

It’s a balancing act

The ideal world you would take the high road and not fall for a pumped up resume. The real world you needs to think it through.

A lot of old-school managers value resumes as indicators of ability. Going against the grain can risk your standing in the company.

Consider your decision by putting on the lens of influential company insiders and pondering:

How would your boss and other managers interpret your hiring someone with a less impressive resume than other candidates?

It’s hard to put on a solid defence to this question in the beginning. Best to err on cautious side until you’ve had a few hiring wins.

Give the resume quality some weight in your hiring decision.

That’s besides all the other facets of hiring like testing for culture fit, interest in the work and hard skills.   

By doing this, you are sprinkling a little of what others value into your hiring process. Makes it palatable for them.

At the same time, it gives you room to be the ideal world you of not just hiring a promising resume.

 

Can fear of bad hires make you reject good people?

It makes perfect sense to be on guard for potential bad hires. After all, a bad hire can bring down your team’s performance.

I’ve seen managers try to control this risk by asking tough interview questions.

They ask “curveball questions” designed to really test the job candidate. Think brain teasers and personality-focused questions.

Here are examples of curveball questions

How many golf balls can fit in a 747? (Wait, calculating… calculating…)

What is your spirit animal? (Gives me the feels)

What is your greatest weakness? (Quite the classic)

Before you start writing these down, let me tell you something…

There’s a problem with relying too heavily on responses to such questions for your interview data.

These questions can make you reject good candidates

Google this query if you’re curious: ‘How to answer tough interview questions’. There’s so much advice out there.

Job candidates have a lot of advice to choose from to thwart your curveball interview questions

You might think, “I don’t see the harm in an interviewee putting in such an effort to prepare for the interview.”

But this exact thing might increase your risk of bad hires rather than cutting it. Here’s how:

  • You risk downplaying people who are a good fit for the role, but didn’t get coaching for handling such questions
  • Worse, you risk overvaluing bad fits who just happened to have prepared for your curveball questions 

“Nah, that won’t happen to me”

At this point, you might be thinking, “But I’ll be hiring someone I think is good. So what’s the big deal if I reject some good people?”

There are two issues with relying on curveball questions. When:

  1. More bad fits answer the curveball questions better than good fit candidates – increases probability of bad hire
  2. A bad fit candidate answers the question in a way that amuses or impresses you on a personal level – risk of bias

Let’s see this issue through example responses

Imagine you’re interviewing 3 candidates with these initials: TM, BD, CP. You don’t know who’s the best fit for the job.

One is the perfect fit, one is so-so and one is a complete dud.

Shall we see how they respond to two of your curveball Qs?

Curveball Q1 – Which is your spirit animal?

Candidate TM
“My spirit animal? Maybe a tiger? Haven’t really thought about this kind of thing.”
Candidate BD
“My spirit animal would be a duck. Calm above water, working hard beneath the surface.”
Candidate CP
“I think I’d channel a bonobo. They’re very extroverted and social attuned; just like me.”

TM tanked this question. BD edged above CP for describing what seems like a strong personal quality.  

Curveball Q2 – What is your greatest weakness?

Candidate TM
“I sometimes work more than I should for my own well-being.”

Candidate BD
“I can get really absorbed in a task, to the point I won’t stop ’til it’s done.”
Candidate CP
“I am obsessed with  perfecting my skills. Past coworkers have gotten envious.”

TM sounds like a killjoy. BD gave a fairly canned answer compared to CP’s more unique take on perfecting skills.

So TM seems like the dud here, right? What if I told you that in reality:

  • TM is the most skilled and best culture fit for your team
  • BD has average skills, but is too inward-focused to be a team player
  • CP has average skills too, but likes to play workplace politics

These curveball questions made the best candidate seem like a reject while making worse fits seem better. 

How we can we solve this issue?

Let’s say you want to hire someone who will work well with your team. You need to identify how they’d work in such situations.

Jason Fried, CEO of Basecamp, advocates using paid trials and “show me, not tell me” interviews to evaluate candidates.

You might not have the time or logistics needed to do this. So do the next best thing: ask behavior-focused questions.

More than a single question, it’s a drill-in questioning technique that digs into key details of a past situation.

Here’s an example of drill-in questioning:

  • Recall a time when you had to work in a team
  • What was your role in that situation?
  • How did you perceive your role?
  • Who were the main people on the team?
  • Who was responsible for coordinating the work?
  • What issues came up along the way?
  • How did the team work to resolve these?
  • What was your contribution to making this happen?
  • What do you think could have increase the team’s success?

Here’s the pattern for this technique:

  1. Start with a statement that sets the scene, “Recall a time…”
  2. Then get a background like “Your role”, “Who else was there”
  3. Now, dig a little deeper “What issues came up?”
  4. Finally, focus on working out how the candidate contributed

Yes, this technique needs a little more thinking on your part than picking a canned brain-teaser or personality question.

But it will give you more concrete interview data.

Less bad fits would be able to make it all the way through these questions without showing a mismatch with your needs.

The inverse would work for good candidates. Less chance of inadvertently canning them vs. weak answers to less concrete questions.