What is the real cost of a bad hire?

Understanding the Lemons problem

A bad hire could cost you a staggering 30% to 170% of the annual salary of each vacant position, apart from loss of productivity and wasted time in training. In addition, time spent on hiring e.g. the process of finding candidates, interviewing them, and onboarding them could easily take longer than a few months. Such a timeframe takes into account gathering a sufficient ad-response, pre-screening candidates and arranging interview meetings, then carrying out reference checks, HMRC work history, risk assessment, DBS, and so on.

What's the real cost of a bad hire?

Time and expenses associated with onboarding and training new staff members
Time spent reviewing CV applications and interviewing candidates as well as recruitment advertising fees
Time and energy dealing with poor performances, wasting time over 121 meetings and addressing KPI issues
Drain on productivity from disrupted project and lack of service continuity
Impact on team morale and stress levels
Impact on customers and risk of a poor customer service
Risk of legal fees from unlawful termination or discrimination claims

What can you do to improve your odds?

Even though there’s no a 100% right or wrong answer for this question, below are few hints and tips that may be of a help to you in your hiring process.

Be more selective in the hiring decision process from the start. By being careful with who you employ, you can avoid poor hires and maintain company values.
Set clear expectations when first speaking to candidates can differentiate between quality candidates. In addition, make sure to go with your gut and not hire someone who you are getting a bad feeling about.
Remain unbiased to all candidates and stay alert for those who are too focused on things like remuneration, benefits and compensation rather than talking about what contributions and value they could bring in your team.
Prior to arranging interview meetings, ensure you ask those shortlisted to research your business, your values and eliminate those who make excuses early in the selection process or know very little about the job they apply for.
Have a list of questions ready for each candidate ensuring that you make notes of any inconsistencies and try to elicit information about what [appart from the basic wage/ benefits] attracted them for the role. If they say little or their response sounds ingenuine then this might be a lemon.
Ask questions in the interview concerned with possible solutions to a real problem you face in the d2d running of your business. This opens the floor nicely to the candidate and challenges their creativity and innovative thinking.