Your Cost of a Bad Hire is Still Too High. Here’s Why.

Have you added up the cost of a bad hire at your company? Chances are, it is higher than you think. If you’re going to run the math, there’s a lot more to consider than an individual’s salary. Be sure to include costs related to recruiting, hiring, and onboarding. And the opportunity costs of failing to hire an excellent team member, such as lost productivity.

Look at what happens when you hire a business developer who exceeds his or her annual sales quota. Revenue gain can exceed your compensation costs by a large margin. When you make a bad hire, the opposite is true. In fact, it’s worse. Lost revenue piles up quickly. Then you’re staring at the additional cost of going back into the job market to hire again.

As we’ve said before, mis-hires are silent killers within most organizations.

Fortunately, there are several ways to build up your immunities. First, know what makes your company culture unique. Remember that job titles and descriptions don’t always spell out the keys to a new hire’s success. Pay attention to the ideal roles that your job candidates are seeking. Lastly, make sure your top candidate is truly a great fit for the role before making an offer.

A little time early in the recruiting process can prevent a hiring decision that you might come to regret.

Understanding company culture

Because we have long-standing relationships with many of our employers, we can recognize certain hiring behaviors. We know from experience which companies are likely to recruit a Stanford MBA into a role on a management track. How? Because this is what some companies do every time.

You’re never going to change someone’s mind about who they are or how business is done. If we’re hiring for an organization that expects quantifiable metrics to support all decisions, the new hire must be ready to work this way.

Industry experience goes a long way. A leadership change can have a big effect on company culture. So can a strategic shift in business goals. When you’ve worked in the industry long enough, you pick up on all sorts of patterns and cues. You gain insight about companies and the executives who run them. You build a network of professionals who can share their own observations. Sometimes, you get the sense that you understand people’s tendencies better than they do.

Keys to success

There’s only so much you can learn from a job description about what it takes to make a great hire. Here’s an example. A Project Manager is a critical role for any project developer, someone who manages the installation crew from day to day. Any job description will likely state that job candidates should have relevant experience. They should be able to advance projects from engineering and design to construction and commissioning. They should also be able to communicate effectively with customers, permit inspectors, and utility personnel.

Some great hires will check all the boxes. Unfortunately, some bad hires will, too.

What you’ll never see in a job description is that you may be dealing with a confrontational permit inspector, and you’ll need to cite building codes word for word to get projects approved. Or that the installation crew responds best to a collaborative, democratic management style.

Job candidates will not always pick up on differences in culture from one company to the next. There are good reasons why job descriptions do not always spell out the key metrics for success. But make sure your hiring manager understands them and uses them to navigate the recruiting process.

Think about ways to identify great hires and potentially bad hires during the recruiting process.

Candidates’ ideal roles

By the same token, there’s only so much an employer can learn from a job candidate’s resume. We all know resumes and answers to interview questions reflect a job candidate’s best shot at gaining a job offer. That doesn’t mean job candidates are equally well suited for all companies and all roles.

If you know that your next project manager will have to contend with a salty inspector in the permitting office, find out how job candidates would handle the situation. Consider ruling out candidates who would struggle or might seem in over their heads.

Likewise, if you know your installers expect that management will value their input, think twice about recruiting someone with an autocratic leadership style. The best candidate on paper may not be the best match for your organization.

Someone who understands the ideal role that your job candidate is seeking can cut through the noise in the recruiting process and reduce the chance of an unsuccessful hire.

Avoid the cost of a bad hire

Not long ago, we wrote about the differences between qualified candidates and job fit candidates. Both have the required skills and experience. However, not all qualified candidates match up with a company’s culture or a newly created role within the company. In recruiting, focus from the start on finding job fit candidates.

The work is mostly done if you’ve already taken time to consider what’s different about your company. Don’t settle for descriptions that apply to lots of companies, like ‘we are driven by a commitment to quality and customer success.’ Instead, think about how people interact and the leadership qualities that get rewarded.

Use the same mindset when evaluating job candidates. Ask yourself, do I have a clear sense of how these individuals will adjust to our company’s way of doing things? Without taking risk, there is no reward. But take care to assess the risks and mitigate them as best as possible.

Once you understand the company culture and a job candidate’s ideal roles, it’s easy to recognize when you have a match. And you can proceed with confidence knowing the cost of a bad hire and taking steps to avoid it.

Any questions?

Get in touch with one of Peak Demand’s experienced solar and energy storage job recruiters by emailing info@inpeakdemand.com or calling (916) 565-2700.

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