I’ve written about the costs of leaving a job open for too long, especially in the animal health and veterinary professions. As costly as that choice can be, it often pales compared to the expense of making a bad hire and having to start over with recruiting and hiring.
According to the U.S. Department of Labor, a bad hire can cost a business 30% of the employee’s first-year earnings. And now you still must spend the money to hire the right person.
Salary.com says the average veterinarian’s salary was $104,380 as of mid-2023. (As an executive recruiter, I think the number is conservative. No candidate working with our firm has accepted a starting salary of less than $100,000 over the past 18 months.) Therefore, by way of illustration, if you make a bad hire in today’s market and apply the 30% rule, the decision will cost you at least $31,314.
The issue is about more than just money. It is also about the operational and cultural implications of mismatched or underperforming employees. Those bring with them hidden costs as well.
Here are some of the costs, hidden or otherwise, that can result from hiring the wrong person.
1. Recruitment
Investing time, advertising a position, reviewing applications, doing interviews and carrying out background checks require significant expenditures. When a candidate is hired but isn’t the right fit, the costs are wasted. The organization must invest more resources to find a suitable replacement, burdening the recruitment budget.
2. Training and Onboarding
Every new employee needs training and onboarding to bring the person up to speed on job responsibilities, company policies and procedures. All that work incurs additional costs. If the new hire fails to adapt or perform adequately, you might need to repeat the training or provide extra support, resulting in further expenses and a drain on productivity.
3. Productivity
A bad hire can hurt an organization’s overall productivity. Incompetence, lack of skills or a poor work ethic can lead to subpar performance and delays in completing tasks. Other team members might have to compensate for the underperforming employee, taking time away from fulfilling their responsibilities.
4. Employee Morale and Engagement
The presence of a bad hire can disrupt a team’s dynamics and diminish employee morale and engagement. When employees witness underperformance or someone not pulling their weight, frustration, demotivation and a sense of unfairness can ensue. High-performing employees might become disenchanted and feel undervalued and unappreciated, leading to lower job satisfaction and increased turnover risk.
5. Employee Turnover
The consequences of a bad hire can extend to more employee turnover. Disgruntled team members might quit for better opportunities elsewhere. High turnover carries with it the cost of recruiting, training and onboarding new employees. Moreover, the loss of experienced staff members can disrupt workflow, reduce productivity and lead to a loss of institutional knowledge.
6. Reputational Damage
A bad hire can harm an organization’s reputation. Internally, it can erode employee trust and confidence in the hiring process, raising skepticism about the company’s ability to make sound decisions. Externally, a bad hire can tarnish the organization’s image, especially if the individual interacts with clients, customers or business partners. Poor performance or unprofessional behavior also might lead to lost business opportunities and damaged relationships, ultimately affecting the bottom line.
7. Corrective Measures
Addressing the consequences of a bad hire sometimes requires costly repairs. This step might mean investing in performance improvement plans, providing additional coaching or training, or taking legal action in cases of severe misconduct or negligence. Those expenses, coupled with the time and effort spent monitoring and managing the underperforming employee, can further drain resources.
You can see how some employers can become afraid of making a bad hire and so intent on finding the perfect candidate that they draw out the recruiting and hiring process. The scenario also illustrates the difficulty for employers in today’s job market, especially those in the animal health and veterinary professions.
Employees are an organization’s most valuable assets. That’s why acquiring the right people for the right job costs so much.
When hiring managers think they can’t afford to do what’s necessary to hire the right person for a critical opening, the opposite is true: They can’t afford not to do it.
CHECKING THE BOXES
The Veterinary Hospital Managers Association asked its members, “What types of pre-employment tests do you use as part of your hiring process?” The top three answers were job knowledge, skills and personality.