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Bad Hires Are 3X More Costly Than You Think

By Dana Borowka, MA

There is an old adage that one bad apple can spoil the whole bunch. A bad hire can be that bad apple for you.

Now contrast that to the famous words of anthropologist Margaret Mead: “Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.”

by Natalie Grainger

This is the power of good hires. Team members working together in thoughtful, committed ways to the company mission, core values and objectives can change your workplace world for the better.

When our team has conversations with C-level executives, better hiring is on their minds. Research backs this up.

“Labor shortages are driving talent retention and recruitment to the top of the CEO agenda in 2022,” concluded The Conference Board in its 2022 “C-Suite Outlook,” it’s 23rd annual survey. The report reflects the views of 1,614 C-suite executives, including 917 CEOs globally.

The Conference Board report details the external stress points business leaders face and the impact of these stressors on growth strategies. It includes views on the benefits and risks of hybrid work models, and the struggles to find and keep good employees.

Finding good employees is noticeably harder these days. Research from Glassdoor says attracting the right job candidates is the most difficult task for 76% of hiring managers. A common woe is that the best hires are snapped up in the first ten days of actively being available on the market. This adds up to a hiring process that lasts 36 days, on average.

True Cost of Bad Hires

Bad hires can cost your company more than you think. CareerBuilder reports that 74% of employers say they have hired the wrong person for the job.

According to the U.S. Department of Labor, the average cost of a bad hire is up to 30% of the employee’s first-year earnings.

by FIN

When you examine the true costs broken down by hiring, retention, and pay, you might conclude the researchers at the Labor Department might be lowballing the true cost. Our team extrapolates the real cost might equal at least projected first-year earnings and maybe more.

Here’s why: Poor hires can result in lost productivity and expenses in hiring, recruiting, and training replacements. That can quickly add up.

Robert Half International reports in Fortune Insiders that managers assert lost salary isn’t the only money they lose by hiring the wrong person. Managers must also spend 17% of their time monitoring underperforming employees. In a typical workweek, that time suck equates to nearly a full day of wasted time.

A Harvard Business Review column by David K. Williams and Mary Michele Scott noted “that of nearly 2,700 employers surveyed, 41% estimate a single bad hire cost $25,000. A quarter of respondents estimate a bad choice has cost $50,000 or more.”

Not to mention the demoralizing impact on other employees.

by Tim Mossholder

” A hire that is going the wrong direction is bad for everybody involved,” writes Williams and Scott. “A dismissal is bad for the morale of the entire team. It’s even worse for the morale and future of the person you fire, who faces one of the most stressful events in human experience.”

Here are just some of the ways your company can suffer: lost productivity, loss of focus, poor execution, training costs, legal fees, damaged employee morale, damaged reputation in the marketplace, and lost manager supervision time.

Research by Gallup estimates that actively disengaged employees in the United States cost businesses anywhere from $450 billion to $550 billion in lost productivity each year.

Plus, the number of bad hires is staggering. Think of how many new hires fail to meet expectations.

“Over 50% of newly hired employees fail to meet expectations,” says recruiting expert Barry Deutsch of Impact Hiring Solutions. “Most hiring managers don’t make a significant change by firing the person, putting a PIP together, or having a deep developmental program to improve performance or behavior. They just accept partially competent people, or take those elements off the plate that the employee can’t do – and the manager does it by allowing the monkey to be transferred onto their back.”

Deutsch says that is the definition of dysfunctional.

How To Avoid Bad Hires

Deutsch, coauthor of the book, You’re Not The Person I Hired, offers several suggestions for avoiding bad hires.

“One of the most powerful interview techniques for measuring success is to probe for the ability to continuously learn and adapt it to their job and expectations,” says Deutsch. “Do you probe for deep and continuous learning from the professionals and managers you’re looking to hire?”

According to Deutsch, the interview, when conducted with focused structured questions that correlate to job expectations, can be a very reliable predictor of future success.

“Unfortunately, most hiring managers don’t define the expectations so the interview questions are in doubt,” adds Deutsch “Secondly, the biggest mistake is that most hiring managers have never been trained how to conduct an accurate interview – so they are just winging it based on their life experiences. No wonder, the studies show that interview accuracy is basically as effective as rolling dice.”

Deutsch believes a proper interview process includes in-depth work style and personality assessments. As with any business decision, having the right information is critical. Work style and personality assessment testing can help reduce bad hires in three main ways:

by Bernd Dittrich

Identify potential red flags. An in-depth work style and personality assessment can discover issues that are sometimes overlooked during the interviewing process and can quantify an intuition or feeling the interviewer may have about a particular candidate. It can be used to identify potential red flags concerning behavioral issues, help understand how to manage individuals for greater work performance and compare interpersonal dynamics of teams, departments, and candidates.

Optimize employees’ work performance. An in-depth work style and personality assessment can provide extensive information on an individual’s ability to work with their job responsibilities, team dynamics and company culture. Additionally, the assessment can show effective strategies to gain optimal performance from that individual within their particular work environment. It can also be employed to quickly identify the most effective management style for a new employee or predict how team members are likely to interact.

Ensure you have the right people in the right positions: Additionally, in-depth work style and personality assessments can be utilized in rehires, or situations which call for employees to re-apply for their current jobs, as in the case of a corporate merger or restructuring. An in-depth work style and personality assessment can also ensure that your company continues to have the right people in the right positions and distribute assets and talents effectively.

How does Deutsch define a good hire?

“I would define quality of hire as a candidate who hits or exceeds your specific quantifiable outcomes at the 90-day or six-month timeframe with a set of behaviors and style that is consistent with your organizational culture and values,” says Deutsch.

by Jackalope West

Assessments and professional feedback is not just for the Fortune 500 companies, but can help organizations of all sizes with avoiding bad hires.
Lighthouse Consulting Services, LLC helps a variety of companies avoid bad hires through in-depth work style and personality assessments and professional interpretation of the results. Not only does this help avoid bad hires, but these assessments also help companies get the most out of new hires from day one. These assessments are tremendous productivity tools for managers who want high-performing teams.

In addition, Lighthouse Consulting Services, LLC provides 360-degree feedback surveys. Be warned: The amount and level of training of those providing the 360-degree feedback can impact the level of accuracy of the feedback.

Without guidance from a trained professional, bias may distort the value of the feedback. To get the full benefit, leaders need to be debriefed on the 360-degree survey results by trained professionals such as those who are part of the Lighthouse Consulting team.

Bottom line: When professionally conducted and interpreted, the results assessments help produce can be significant. But without a trained professional to help interpret the assessments, the value of their results is severely diminished.

by Kyler Boone

When you are open to having a conversation about how our in-depth work style and personality assessments could help your team, please contact us at 310-453-6556, extension 403.

Permission is needed from Lighthouse Consulting Services, LLC to reproduce any portion provided in this article. © 2023

Dana Borowka, MA, CEO of Lighthouse Consulting Services, LLC and his organization constantly remain focused on their mission statement – “To bring effective insight to your business”. They do this through the use of in-depth work style & personality assessments to raise the hiring bar so companies select the right people to reduce hiring and management errors. LCS can test in 19 different languages, provide domestic and international interpersonal coaching and offer a variety of workshops – team building, interpersonal communication, stress & time management, sales & customer service training and negotiation skills as well as our full-service Business Consulting Division. Dana has over 30 years of business consulting experience and is a nationally renowned speaker, radio and TV personality on many topics. He is the co-author of the books, “Cracking the Personality Code”, “Cracking the Business Code” and “Cracking the High-Performance Team Code”. To order the books, please visit www.lighthouseconsulting.com.

If you would like additional information on this topic or others, please contact your Human Resources department or Lighthouse Consulting Services LLC, Santa Monica, CA, (310) 453-6556, dana@lighthouseconsulting.com & our website: www.lighthouseconsulting.com.

Lighthouse Consulting Services, LLC provides a variety of services, including in-depth work style & personality assessments for new hires & staff development. LCS can test in 19 different languages, provide domestic and international interpersonal coaching and offer a variety of workshops – team building, interpersonal communication, stress & time management, sales & customer service training and negotiation skills as well as our full-service Business Consulting Division.

Five Biggest Mis-Hiring Mistakes

By Dana Borowka, MA

Ready. Aim. Mis-hire.

Unfortunately, that is a common problem for many companies. That mis-hire can have a big negative impact on your company’s bottom line. Worse, it could hurt work force morale.

Each mis-hire decision can cost your company well over two to three times the individual’s salary, according to author Barry Deutsch of Impact Hiring Solutions. This figure may be a conservative estimate because of factors like training, evaluation, termination, re-initiating the hiring process, and lost opportunity costs.

There is also an emotional factor involved in a mis-hire. Not only can it cause stress and anxiety for both management and employees, but it also takes away focus from your company’s primary goals.

According to research by Deutsch, co-author of the best-selling book You’re Not The Person I Hired, here are the five biggest mis-hiring mistakes to avoid:

Mis-Hiring Mistake #1. Not taking the time to define success. Not defining success up front is almost a guarantee of a mis-hire. Defining success is the number one issue behind problems with hiring, performance management, and engagement. Defining success up front dictates where you go to find the candidate, it provides 80 percent of your interview questions, and it lays out performance expectations that you can use in interviewing.

Mis-Hiring Mistake #2. No formal hiring process. If there is one key to overcoming most of the mis-hiring mistakes that managers make, it is by developing a rigorous and disciplined hiring process. This kind of process has two major components: a detailed step-by-step process, and written forms and questions prepared in advance. Although each hiring experience may have its unique aspects, most follow a consistent process. Best-practice information on hiring found in many books and websites can form the basis of your step-by-step process. But once you settle on a process after trial-and-error, it needs to be written down in the form of a checklist or procedure so that each hire follows a complete course of action.

Mis-Hiring Mistake #3. Not shaking the bushes hard enough to uncover the best candidates. Most companies post generic job descriptions on generic job boards and pray the best person drops into their lap. Sometimes, you might do a little superficial networking. The tactic of posting the job usually brings the bottom third of the candidate pool to your doorstep – all the worse candidates. Sometimes you get lucky. There is an old adage that goes: “Even a blind squirrel can find a nut sometimes.” It’s tough to build high performing teams based on luck and hope. Running generic ads on generic job boards shows up a small microcosm of the candidate pool – those who are unemployed, or desperate to leave their current organization. If you want to fill your funnel with outstanding talent, you have to work at compelling the best to come forward by writing compelling marketing statements to replace the disgusting use of job descriptions, networking, referrals, and direct sourcing using tools like LinkedIn.

Mis-Hiring Mistake #4. Ignoring character and values. Have you heard the expression, “People are usually hired for experience and fired for character.” With today’s emphasis on resume screening and superficial interviews, about the only information a hiring supervisor can glean from a candidate are the facts of past experience and skills. Talent, skills and experience are important, but after the hiring is done, real people show up with their own values, morals, and motivations.

Mis-Hiring Mistake #5. Failing to use in-depth work style and personality assessment. You must have an interview process designed to validate, verify, and vet whether the candidate can achieve your desired results, and whether they will be a good fit for your culture and values. That includes assessments. As with any business decision, having the right information is critical. Work style and personality assessment testing can provide insight into potential hires, as well as your current workforce, in three main ways:

1. Identify potential red flags. A personality assessment can discover issues that are sometimes overlooked during the interviewing process and can quantify an intuition or feeling the interviewer may have about a particular candidate. It can be used to identify potential red flags concerning behavioral issues, help understand how to manage individuals for greater work performance and compare interpersonal dynamics of teams, departments and candidates.

2. Learn how to optimize employees’ work performance. A personality assessment can provide extensive information on an individual’s ability to work with their job responsibilities, team dynamics and company culture. Additionally, the assessment can show effective strategies to gain optimal performance from that individual within their particular work environment. It can also be employed to quickly identify the most effective management style for a new employee or predict how team members are likely to interact.

3. Ensure you have the right people in the right positions: Additionally, personality assessments can be utilized in rehires, or situations which call for employees to re-apply for their current jobs, as in the case of a corporate merger or restructuring. A personality assessment can also ensure that your company continues to have the right people in the right positions and distribute assets and talents effectively.

Legal Guidelines For Assessing Recruits

A frequent question from companies and organizations concerns the legal guidelines in administering assessments to potential employees. Industry regulations can vary and the best option is to consult with your company’s trade association along with reading through the EEOC guidelines by visiting Additional information can be found online at the EEOC website, in the Disability-Related Inquiries and Medical Examinations of Employees section: http://www.eeoc.gov/policy/docs/guidance-inquiries.html#2. The EEOC is the end all of end-alls. So, no matter what people say, always go by what the EEOC has outlined.

As a general rule if your company uses an assessment, any test or set of hiring questions must be administered to all of the final candidates in order to assure that discrimination is not present.

The Bottom Line

An in-depth work style and personality assessment is only one component needed for a successful recruitment and hiring program. It can provide valuable information for critical personnel decisions. Combined with an effective recruitment program and skilled interview techniques, it can benefit your company as a whole, in addition to your individual employees. Armed with accurate and quantifiable data from an in-depth personality assessment, the interview process becomes much more reliable. Ultimately, this only adds to your organization’s bottom line, allowing more effective management of your existing workforce and limiting the potential for wrong hiring decisions.

For more information, please visit our website, www.lighthouseconsulting.com to sign up for our Open Line webinars and monthly Keeping On Track publication.

If you are open to a conversation about how our in-depth work style and personality assessment could help your team, including pricing and the science behind the tests, please contact us at 310-453-6556, extension 403.

If you would like additional information on this topic or others, please contact your Human Resources department or Lighthouse Consulting Services LLC, Santa Monica, CA, (310) 453-6556, dana@lighthouseconsulting.com & our website: www.lighthouseconsulting.com.

Permission is needed from Lighthouse Consulting Services, LLC to reproduce any portion provided in this article. © 2021

Dana Borowka, MA, CEO of Lighthouse Consulting Services, LLC and his organization constantly remain focused on their mission statement – “To bring effective insight to your business”. They do this through the use of in-depth work style & personality assessments to raise the hiring bar so companies select the right people to reduce hiring and management errors. LCS can test in 19 different languages, provide domestic and international interpersonal coaching and offer a variety of workshops – team building, interpersonal communication, stress & time management, sales & customer service training and negotiation skills as well as our full-service Business Consulting Division. Dana has over 30 years of business consulting experience and is a nationally renowned speaker, radio and TV personality on many topics.  He is the co-author of the books, “Cracking the Personality Code”, “Cracking the Business Code” and “Cracking the High-Performance Team Code”. To order the books, please visit www.lighthouseconsulting.com.

Lighthouse Consulting Services, LLC provides a variety of services, including in-depth work style & personality assessments for new hires & staff development. LCS can test in 19 different languages, provide domestic and international interpersonal coaching and offer a variety of workshops – team building, interpersonal communication, stress & time management, sales & customer service training and negotiation skills as well as our full-service Business Consulting Division.