true-cost-of-a-bad-hire

What’s the true cost of hiring a Bad Apple? How a bad hire could impact your business and how to prevent it

You’ve most likely worked with one, perhaps you’ve hired one, but undoubtedly at some point in time, you have come across a ‘bad apple’ in business.

It may be due to an inability to communicate with customers, poor performance standards or a character trait which is corrosive to the team’s dynamic, but every manager or business owner will inadvertently come across a toxic worker during their career.

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Far Reaching Implications

Unfortunately, the financial costs of having a bad hire can be steep. In fact, according to the U.S Department of Labour, a bad hire may cost business owners up to 30 per cent of that employee’s first-year earnings. So, for many SME’s investing in the wrong person can be a financial risk to the entire business.

However, it’s the impact on morale and productivity that is much harder to quantify, yet has a  far-reaching impact on culture.

Negative behaviours and poor performance have an endemic effect in the workplace. People start carrying the weight of others and disengagement spreads. After a while, good people get fed up and leave. This has a profound impact on culture and can last well after the tenure of the ‘bad apple’. It can lower the bar for the company as a whole.   

To safeguard your business, here are some tips to help prevent a bad hire.

Be clear about your company culture from initial discussions to job description and all the way through the interview process

Your hires are reflective of your company and one key hire could make a world of difference in your day-to-day - either positively or negatively. To give them the best chance of success it's essential that candidates understand the responsibilities of the job and more importantly, the cultural fit required to thrive in the organisation. 

Cultural fit can be tested in different ways during the interview process. The online retailer Zappos has a Core Value of being humble. They test this in the interview process by having administrative assistants handle part of the interviewing, even for their C-Suite hires. If a candidate seems put off being interviewed by a lower-level employee, it's a good sign that they are not aligned with the Zappos culture.

Taking the time to understand the candidates values and character, and whether it aligns with your company culture will pay dividends in the future.

Tighten up your hiring and recruitment process

To eliminate the risk of hiring a bad apple, it’s important to implement a strict recruitment process. Many businesses hold multiple interviews as well as run stringent character reference checks. Ask your candidate’s referees about their ability to build and maintain relationships, rather than just their work ethic. 

Use your probationary period

A 3 to 6-month probationary period should give an employer an indication of performance and cohesion. While in the first three months, your new employee may still be finding their footing, if you notice any indicative red flags in performance or integration, this probationary period is the easiest time to let them go with little harm or cost to your business. Ensure you conduct an exit interview, allowing them to understand why you’ve terminated their employment and give them a fair opportunity to learn for their next role.

One bad apple can ruin the barrel so sometimes the only option is to cut them loose

Your company is only as good as the people you employ and, while firing someone may the hardest thing you have to do as a business owner, it is sometimes a necessary evil for your business, the rest of the team and the employee in question.

With an in-depth hiring process as well as clear cultural and performance expectations, you’ll help prevent a bad apple from destroying the whole barrel.

Getting your culture right is not just about today's performance it's about the long term value of the business. The people that share this journey are the driving force of it's success and sustainability.  


At Exit Advisory Group we help entrepreneurs maximise company value and exit at the top of their game.

We do this by giving business owners the tools and strategies to design more profitable, efficient and enjoyable businesses to own - that are also less dependent on them. When they choose to exit, they are in the best position to unlock the wealth in their business and be rewarded for their hard work.


www.exitadvisory.com.au

ask@exitadvisory.com.au

1300 133 540

Exit Planning | Maximising Company Value | Business Sales

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