Chronic business implications of a wrong hire

With increasing mobility, increased awareness of job opportunities and increasing employee attrition across the country, the pressure on recruiters has never been greater to sift through the hopefuls to identify the promising.

 While the availability and accessibility to a diverse pool of candidates has increased, so have the stringent conditions that recruiters face before hiring. Hiring a candidate is no longer a straightforward task with additional qualitative measures imposed to satisfy, and caveats to consider apart from competency.

From a recruiters perspective, there needs to be an understanding of the profile and the Key Result Area (KRA) for the job, and then working on a plan that would help them understand a prospective candidate better. With the advent of easy access to information, it has become extremely tedious for recruiters to scan through information available for candidates in different social networking sites like LinkedIn, Facebook and Twitter, among others.

 There is a growing expense incurred to human resources professionals, who spend on searching for the right candidate. The cost to recruit a new candidate includes advertising, recruitment agency fees, scrutinising multiple applications, multiple rounds of interviews, travel and accommodation, training and orientation. According to Society for Human Resource Management (SHRM), the cost of a bad hire to an organisation is five times the bad hire’s annual salary. The extent of expenditure on a bad hire depends of the following:

The higher the position, the higher the hiring cost of training; The longer the unsuitable employee is associated with the organisation, the more expensive the mistake.

The cost of a bad hire

Background verification helps in providing employees with a safe work environment. While conducting background screening, companies conduct criminal and financial checks. This enables recruiters to know about any criminal offence that may have been committed by prospective candidates in the past. Based on an India-specific First Advantage screening report for 2016, criminal history and financial-related discrepancies can pose greater legal, compliance, reputational and security risks than other types of discrepancies. According to the Q1 2016 Trends report 23.8% of discrepancy was related to criminal history, database and reference checks.

A bad hire not only effects the safety and security of the company but productivity of a company that can lead to significant loss in business and tarnish the image of a company as well. Some costs are often difficult to quantify, such as low confidence of customers with the company, loss of existing business or loss of potential business. In addition, the culture that an unfavorable candidate can bring to the company can have an adverse lasting effect. Almost every company suffers from some degree of damage due to bad hires.

Defining and minimising a bad hire

A bad hire is context specific, a competent person in a certain industry might be a poor match for another setting. Some of the factors that lead to a less than ideal or bad hire are:

Uncertainty of the requirements for a particular positionUrgency to fill the vacancyInsufficient talent intelligenceInefficiently done research on the candidate

Lack of referral checks

Prevention is better than cure. In addition, loss of manpower, finance and business is causal enough to put in better hiring mechanisms in place for organisations to avoid bad hires. When hiring, recruiters should pay heed to the following:

Understand what skills a position demandsNot neglect qualities such as leadership qualities, team player and good interpersonal skills

Communicate the requirements of a position, so the candidate knows exactly is expected out of him/her.

Make optimal usage of social networking site and available resources for background screening

With globalisation, companies are looking to the growing markets in the Indian subcontinent to expand their businesses. The desire to get a good job in a top multinational company with an excellent remuneration package is so high that candidates are often tempted to forge their CVs. Background screening ensures the risks are mitigated when it comes to individuals with forged credentials who may otherwise take the jobs of better qualified applicants. Background screening helps widen the scope of opportunities for deserving candidates. 

Background screening as a business strategy

To protect the company maintain its competitiveness and boost its productivity, an effective background screening programme is an essential part of hiring strategy. Conducting a screening programme requires compliance with the various — and often changing — regulatory environment of the local region, something which many employers may be uncomfortable doing.

In order to ensure a reliable and compliant screening programme, companies can leverage from an alliance with a background screening partner experienced in the dynamic regulatory environment. The right provider should be up-to-date on the latest legislation governing the background screening process, helping ensure the company continually hires the right talent while checking their credentials in a safe and legally compliant manner.

(The author is Managing Director — India, First Advantage)