What is the impact of a bad hiring decision?

December 9th, 2014

Many small-business owners will be keeping an eye on their cash flow and expenses, including the costs that come with managing staff. After all, employees are going to be your biggest expense, making it important that you find the right ones for your business.

However, a recent study has revealed the range of different costs that a poor hiring decision can have on your business. The study by recruitment firm Robert Half revealed that poor hiring decisions will have the largest impact on employee morale, with 39 per cent of respondents suggesting this was the biggest impact on a business's success.

While staff morality was the biggest victim of a poor hiring decision, it wasn't the only area where recruiting the wrong person had an impact on business performance. Among respondents, 34 per cent reported a loss in overall productivity after making a bad hire. Only a quarter cited direct financial loss as the biggest impact of a poor recruitment process.

Paul McDonald, senior executive director for Robert Half, emphasised the range of negative consequences that come from a poor hire. 

"There are a number of reasons someone may not be a good match for a job - he or she may lack the requisite skills or be a poor personality fit, for example," said Mr McDonald.

"A poor hire can cause friction as other employees are left to take on extra work and fix projects that weren't done right the first time. Bad hiring decisions also can cause staff to question management's judgement and even lose faith in company leaders."

With poor hiring decisions having such a big impact on small organisations, having the right recruitment process is going to be essential. Developing a strong interview technique is important for any business owner, especially those that want to reduce the risk to their company's finances and morale.

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