The True Cost Of A Bad Hiring Processes Resulting In Bad Hires🧑💼
It’s not unknown that a bad hiring process can result in bad hires. However, more than accidentally hiring incompetent team members, this can actually leave a financial impact on your company. A bad hiring process can be expensive and inefficient. Today we’ll be looking at the true cost behind hiring the wrong people and what you need to know to avoid doing this again in the future.
A Bad Hiring Process And A Bad Hire Is Expensive
The tangible hiring costs of a bad hiring process and bad hire in your pricing team (i.e., the cost to fill and refill a position, on-boarding and initial training) cost you $60 – $70K for a single pricing analyst hire and $90 – 120K for a single price leadership hire.
However, it’s the soft costs of a bad hire that often rank above the monetary hiring costs and hit the bottom line: Hidden hiring costs like lost sales opportunities, interruptions to implementation and workflow, strained customer and employee relations, and disengaged and stressed out teams.
How? By undermining employee engagement – and underplaying the importance of the recruiting process.
Which candidates are most likely to be bad hires and add to your hiring costs?
When an employee fails, managers typically do not blame themselves. Managers will probably say the employee probably has a bad attitude, can’t set priorities, or won’t take direction.
But sometimes an employee’s poor performance can be blamed largely on the boss. You may be unknowingly triggering the set–up-to-fail syndrome, in which employees whom you (perhaps falsely) view as weak performers don’t meet your expectations. It’s on you, the manager, to reverse this dynamic.
A Bad Hiring Process is Costing your Company Money
The latest research reveals at least 1 in 5 people in a team are bad hires. Bad hires don’t necessarily mean incompetent workers, but those that are simply not suited for specific jobs. When you factor in the impacts of bad hires on productivity and morale, hiring costs add up considerably.
A bad hiring process can result in unnecessary concessions such as missed sales opportunities, lost customers, strained employee relations, workflow interruption, disengagement, incompetence, mistakes, lack of trust and credibility, stress and burnout.
Hiring costs rise further still when firms are working through a complex transformation or integrating price improvement software because the pricing teams are expected to deliver more complex pricing outcomes.
Screening people out and identifying characteristics of potentially bad hires early in the recruiting process has become difficult, yet more important than ever.
Over the past 5 years, applicant numbers have risen by 33% for pricing roles. While applicant figures for technical, niche or specialist pricing roles dropped 78% below the average, while 60% of pricing role applicants don’t meet basic requirements. On the other hand, highly automated recruiting is driving 2/3 of applicants away.
Eliminating a Bad Hiring Process
1. Start from the root cause of bad hires by creating consistent rubrics for proper evaluation. Pricing recruitment is half of the job to find the right mix of diversity and competence. So, communicate and cite specific skills and desired behaviour into your job description ads. Similarly, the interviewer or recruiter should know the details and skills that are required in the postition.
2. Prioritise behaviours first, second to characteristics. A way to check this is through a candidate’s responsiveness to feedback. This helps predict the person’s coachability and competence. Then, hone in on their skills like an ability to learn new technology or execute creative solutions.
For instance, it doesn’t hurt to look for charisma since sales team roles often interact with customers. Similarly, avoid digging up dirt. Instead, focus on the behaviours and skill to gauge a candidate’s competency related to the role.
3. Before hiring from external sources, consider the people within the company. Not only do internal promotions elevate a positive work environment. But it also decreases the chances of risking a vacant position for a bad hire.
It’s highly likely that you already know the skills, strengths, and weaknesses of those colleagues or employees who have been working with you. In fact, Professor Matthew Bidwell, who studies career and employment patterns, found that it takes about 3 years for external hires to perform as effectively as the internal staff.
4. Are your job ad posts gender neutral? It’s key that they must appeal to a wider talent pool. A 2011 research by Danielle Gaucher, Justin Friesen, and Aaron C. Kay showed that job ads that were written in a “masculine” tone were dramatically less appealing to women than men who read “feminine” job ads.
Male coded words included assertive, dominant, decisive, and determined. While female coded words were loyal, modest, considerate, and collaborative. So, crafting the job ads with the right words can definitely help narrow down fit candidates.
5. Include the salary range in the job ad as this saves time from discussions with candidates who won’t fit the compensation package. It should be clearly communicated during the initial screening too to avoid any confusion.
6. Lastly, don’t leave them hanging. Let candidates know about the next steps or if they didn’t make it, thank them for their time. Rejected candidates feel a bit of resentment for recruiters who didn’t provide actionable communication about their application – with 1 in 5 promising never to apply or buy from your business again.
Observe the procedures in your past successful hires. Set this as your template for recruitment but don’t keep recycling the same old interviews and screening processes without making adjustments to the ever-changing technology, behaviour, business trends and needs.
Left unchecked, the standard recruiting model produces large, unqualified candidate pools that drown out real talent and potential as recruiters screen large numbers of online applications and CVs using the wrong data.
What is the impact of bad hires on the pricing team?
Dysfunctional team behaviours are contagious and team morale often suffers significantly. The sales team ends up rejecting the pricing team’s advice, and pretty soon sales and pricing become uncooperative. Bad hire employeea may prove to have skills gaps, failing to admit their mistakes and delaying progress. A combination of poor skills, leadership, and a lack of teamwork ability makes them a serious liability.
It takes months (if not years) to re-build trust and credibility within cross-functioning teams. During this time, revenue opportunity and margin profits can still be affected esspecially if the right pricing team skills and practices aren’t yet implemented.
How to avoid growing hiring costs and toxicity?
With the right recruiting capability to support you, you can screen out bad hires early in the process. Start building analytical insight into the process to find and identify quality candidates before your competitors.
Specialist recruiting is a major contributor to a pricing team’s early performance and success in a newly integrated function. It requires a shift in mindset and a willingness to try a more scientific approach in hiring.
Managing Teams in the Workplace to Mitigate a Bad Hiring Process
It’s not all doom and gloom. In fact, there are ways to manage teams even after a bad hiring process.
1. By setting clear goals and objectives within teams and clear communication can boost team culture and performance. So, stay engaged and get to know the people that make up the organisation. Simply conducting weekly check-ins on workflow, health, if they need help, and how they’re generally doing keeps the trust and communication lines open.
2. Encourage a culture of coachability and accountability in the workplace. Not only does this boost confidence and reliability, but it creates a sense of integrity and responsibility. Similarly, it makes a huge difference to know which people have the right skills to delegate tasks to.
3. Give credit where it is due and praise the team’s hard work. This is part of the intrinsic and extrinsic motivations that employees set themselves out to achieve. In fact, incentives and rewarding individual or team efforts not only encourages a positive work environment. It pushes the team to do their best in a sales culture.
Struggling With A Bad Hiring Process? Consider Outsourcing To Pricing Companies
The Taylor Wells recruiting platform and workshop program is an agile recruiting tool. We enable you to screen out unsuitable candidates early on in the process. We also help you identify high-quality candidates ahead of your competitors.
Taylor Wells has a unique recruiting platform that brings together a qualified candidate pool. Our process ensures only the best candidates move along the recruitment funnel.
Many of our clients have tried to recruit pricing roles themselves in the past, albeit unsuccessfully. This results in the wrong team structure, role design, toxic sub-cultures due to bad hires. The value of external support with recruiting is the objectivity, expertise, and online platform we apply to quickly improve your pricing capability.
We have worked with some of the biggest brands in Australia. Our statistics show we have improved hiring outcomes by 30%, thereby improving pricing capability. Our approach is to build high-performing pricing teams that drive profitability within the first 6-12 months of our partnerships. We do this using a transformational 5 step recruiting, evaluation, and team integration process.
The return on investment is huge: Latest research shows high-performing individuals produce 25 times more than average performers.
In fact, Taylor Wells research shows pricing team skills make up one-third of overall organisational pricing competency scores. This means if you’re able to increase your pricing team’s competency by 30-50% by hiring the right people, you’ll see an extra 3-5% increase in margins. This is on average across your customer base in just 6-12 months.
We can help you find competent pricing hires that will help you solve complex commercial challenges in highly competitive and disrupted markets.
Bottomline – Reworking a Bad Hiring Process
Bad hires and underperforming teams can cost businesses billions of dollars every year. Companies need to streamline their processes to prevent high costs from poor hiring.
In case of a bad hiring process, there are still ways to mitigate the risks temporarily through managing teams in the workplace mentioned above. Ultimately, you need to re-examine and modify outdated hiring processes from the past. Especially if they don’t add success/best practices into the overall team performance.
For a comprehensive view on building a great pricing team to prevent loss in revenue,
Are you a business in need of help to align your pricing strategy, people and operations to deliver an immediate impact on profit?
If so, please call (+61) 2 9000 1115.
You can also email us at email@example.com if you have any further questions.
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