“The injection of fresh ideas and talent can be the boost many teams need to grow rapidly but when not careful, a dangerous hire can spell the downfall of a team as easily as it could assist them in their growth.”
Shirley Parsons Organisational Psychology Consultant Jordan Harlow explores the financial, social, cultural, and reputational impacts of employing the wrong hire.
Stagnation can be a deathly tumour to many companies, whether in the form of not growing their staff to demand or allowing their workforce to disengage and slowly lose performance. In this vein, hiring continues to be a large process and investment for many companies.
An extreme example of this was the hiring of John Rusnak in 1993. Rusnak was a currency trader hired to expand Allfirst bank’s currency trading from a minor hedging operation, into a larger forex venture. However, when he was hired, it was unknown how bullish and dishonest he was in the market.
Proceeding to incur losses of $691 million which went unknown to his superiors until he was requested to release capital and the house of cards fell apart, the bank thus ended up in multiple federal investigations, lost many investors and finally was sold to a larger bank.
While this may be an extreme example it is not uncommon. A similar example includes Enron, where the hiring of an aggressive and ethically questionable CEO made a $100 billion company go bankrupt in only a few years.
In this article we will focus on the impacts of a wrong hire both financially and socially, and then use our expertise to give tips that can help you avoid a wrong hire in the future.
While the previous examples were extreme cases, the costs of onboarding and training make the act of a wrong hire alone impactful.
According to Agency Central the average cost of taking on an employee on a salary of £25k is £30,165 (when taking into account the costs of the hiring process, and the loss of productivity during an average 28-week training programme). For middle manager positions earning £42k per year, the costs can be as high as £132k.
However, the financial impacts can be larger than just the costs of the hire alone. Productivity losses in teams in a wrong hire situation are broad. The focus and wasted time on a wrong hire means focus shifts from expanding existing talent towards the new hire in many cases. Then, the time costs of repairing mistakes, possibility of losing clients and the impact on morale can have a wider performance impact with long lasting effects.
In 2018 Winne et al. conducted a study on Belgian firms over a 10-year period and measured their productivity, turnover rate, and turn over volatility (how much the rate of turnover fluctuates). They discovered that small amounts of turnover were healthy to performance, showing a healthy flow of talent through a company. However as turnover numbers increased performance dropped.
The most important aspect however was volatility, as it mediated any potential gains in performance, and in the case of high turnover companies, it had catastrophic effects on their performance. Large walkouts or important positions leaving can drain the motivation of employees and the social impact can lead to a ‘revolving door’ effect. To this end the social and cultural impacts of an employee can be even more impactful than the direct monetary impact.
A company’s culture is the oil in its engine. Whilst a strong talent pool may be able to perform, culture is what keeps that performance healthy, aids with retention and in the end effects reputation.
In many situations when someone is hired without thorough consideration about how they would fit into or impact the culture of a team, the injection of a wrong hire can destabilase culture heavily.
For example, when an individual doesn’t fit well into a team with an established dynamic, it can have two main outcomes; the established dynamic loses cohesion and effects collaboration and conflict may increase, which will not only impact the morale of the team but could make the full integration of the new employee impossible.
An extension of this is that if the individual can’t keep up with the already existing team and fumbles objectives, it can damage the structure and clarity in a team. Which according to Google’s 2012 Aristotle project, is one of the 5 factors that influence high performing teams (as covered in one of my previous articles “What Aristotle taught Google about Communication”.
Damaged communications caused by a poor culture fit, obscured clarity and an eventual loss of psychological safety can all stem from conflicts in this style of scenario. And as following Google’s example, that is how a high performing team can quickly lose performance and motivation. If allowed to fester, the effects can also spread outside of its impact on a single team or unit, the collision of personality or the poor judgement of a person’s character can cause trouble closer to a company’s heart.
Cultural and reputational impacts.
If this collision of personalities is left unabated, the cultural damage to a company can be unprecedented. If an individual is brought in with disregard to the core values and shared vision of the company, especially in a managerial role, the overall view of said values and vision can be undermined.
A blow to the foundational core of culture, like this, will have knock on effects to the overall work environment, core motivation and the internal reputation of the company at large. The implications of this for employee retention and attraction cannot go untouched. If a section is known to hire poorly or has a manager known to be a poor individual to work with, information such as this often spreads casually or online quickly. Making it harder to convince people to join the team or in the worst situations push away good talent from remaining with the company or requesting to move sector due to culture rather than genuine desire. For the former this means you will stifle the development and performance of your best colleagues.
Once news like this spreads, reputational damage follows, and brand image will slowly falter. Brand image not being upheld internally means that customers will gradually have a lower perception of the company at large.
As stated by Wall and Berry 2007, employee behaviour is the largest influencer of customer perception of brand quality, acting as a factor even more important than the actual presentation of a brand itself. If effected, it can influence the loss of business opportunities and potentially lead to increasingly difficulty in attracting high performing talent in the future.
Disengagement and the cultural decay that can occur from poor talent integration can be mitigated at the hiring stage and there are techniques and tips you can keep in mind or integrate into your hiring process to make it easier.
Tips to avoid a wrong hire.
Firstly, whilst it may not be impossible to avoid a wrong hire, it can be a learning experience in finding out more about how your business functions. The most important step prior to beginning the recruiting process is to come up with two main points:
1. Define your company culture and core values.
If you have a team already in mind, what is the culture and dynamic of that team? This is crucial to making sure you can make a correct behaviour and personality fit.
2. What is the exact clear function and expectation of the role.
Define what you expect in the first 6 months. Don’t expect the world (unless that is what the role is calling for) as the first 6 months are a dating period before the marriage that is probation finishing. This clarity assists in onboarding but also in the drafting of the job description itself.
When these have been achieved, you can finally begin the next steps into prepping for the recruiting process itself. Firstly, don’t leave the hiring to one person. Involve multiple stakeholders. Through a diverse hiring committee, you have more of a chance of noticing a red flag and it also increases the engagement of onboarding the individual into your team.
You can now prep the screening process. Using the cultural awareness, you will want to have a personality or cultural fit assessment prepared. While interviews may give you an initial insight into a candidate, having an in-depth process to dig deeper helps avoid the dreaded fake smiles that can trick people in the interview stage.
Here at Shirley Parsons, we use MAPP (Motivation, Aspiration, Personality, Progression)to create profiles using our bespoke HSEQ personality profiling tool. MAPP creates reports that cover many elements usually hidden in a normal process, in order to make the best cultural fit. We also go one step further and every candidate has a 1-2-1 session with an organisational psychologist to discover insights into their results and work style.
When it comes to screening candidates, it’s also important to have a rigorous screening style, and you should be prepared to check on the background of a reference. According to a study by Timesjobs (2017), they found that 20-30% of references in CVs are falsified.
During the screening process, have multiple people reviewing CVS and applications. Through this process communicate your expectations to them clearly, to avoid someone heading into a much larger role than they were expecting and experience quick burn out.
The most important thing to keep in mind through this period is to never be afraid to question, you are making an important investment. If something feels off, talk to co-workers or external partners for their thoughts, and never be afraid to question the candidate themselves.
Keeping these ideals in mind will assist you in avoiding the dreaded wrong hire, however when it does happen never forget to learn from your mistakes and continuously improve your processes.
Wrong hires can be catastrophic to a company especially when allowed to fester internally. Financially and socially a single bad apple can ruin the batch. When it does happen, it is important to ensure you handle the issue quickly and with tact, to make the healing process as quick and painless as possible.
It may seem daunting, however if you take the time to create a comprehensive process in your recruitment this can be mitigated.
‘Wrong hires can be hard to avoid but by doing your best to really get to understand a candidate on a deeper level, you can not only avoid it but also integrate and retain the right candidates you do.’
How we can help you at Shirley Parsons.
At Shirley Parsons, we pride ourselves as experts at finding the right fit for the right role.
Our talent consultancy team, who crafted and implement MAPP, use modern organisational psychology theory to assist teams in finding the right candidates for them. From personality profiling and skills appraisal to engagement and safety culture surveying, we offer the tools and expertise to help teams grow and thrive.