The True Cost of Hiring Mistakes and How to Avoid It
Hiring mistakes can have a significant impact on your healthcare business. Nelson Scott reminds us that we are hiring an employee not just to fill today’s vacancy, but potentially hiring an employee who will be our co-worker for the next ten years. It makes sense to take the time necessary to be prepared to hire the right employee. [See: Interview Right to Hire Right with Guest Expert Nelson Scott | Episode #108]
Otherwise, you may pay the direct and indirect costs of your hiring mistakes summarized below.
What is the Cost of Hiring the Wrong Person?
Have you ever made a mistake and hired the wrong person? You are not alone. In fact, the CareerBuilder reports that:
75% of employers believe that they hired the wrong person for a position
and ended up losing an average of $15,000 for every hire.
So, what makes up the cost of your hiring mistake? Here are common direct and indirect costs.
Time and Effort
When hiring the wrong person, immense amounts of time and effort are wasted. Not only does it take a considerable amount of time to interview and recruit candidates, but the hiring process itself can take up to 42 days or more. From there, the wrong hire can cause a drop in productivity and lost time in recruiting and training new personnel.
Hiring the wrong person can have a significant effect on morale and team dynamics. The National Business Research Institute found that 37% of companies who reported bad hires claimed it impacted employee morale, and 18% reported it had a negative impact on client relations. Bad hires can cause good employees to be overworked and resentful, leading them to consider looking for alternative employment.
Loss of Productivity
Hiring the wrong person can have a significant negative impact on an organization's productivity because of the lost time and effort spent on recruiting, training and managing the employee, as well as the potential for distracting the team, lowering morale, and damaging customer relationships. The poor performance of one employee can cause the rest of the team to put in extra effort to make up for it, leading to burnout and frustration.
Hiring the wrong person can be a costly mistake, with the financial costs ranging from recruitment advertising fees, staff time spent on recruitment processes, salary payments, costs of education and training, and costs of rehiring.
With training costs, it's important to consider the investment of both time and money. An average new hire takes 3 months to become productive. During this time, they need extensive training to get the replacement up to speed on the company and the job. This involves the time of several individuals, and can be a considerable expense.
The cost of hiring—again–a new employee and then training them can be double what it would have cost to hire the right person the first time.
Hiring the wrong person can have a significant impact on quality. The employee may not have the required skills, resulting in mistakes that can be detrimental to the company's reputation and lead to a loss of customers. Poor employees may be habitually late to work or miss days, which affects on the efficiency of the clinic operations and patient satisfaction reviews. The wrong person can cause a drop in employee morale and productivity, as well as disrupt team dynamics. In extreme cases, it can damage reputational relationships and advertising. In this way, a hiring mistake can impact your healthcare practice’s quality standards.
Expenses Associated with Recruiting
The expenses associated with recruiting can include writing a great job posting, paying job search websites to post a job ad, screening resumes for the right work experience, reaching out to passive and active candidates, following up with qualified applicants, scheduling and conducting interviews, performing background checks, negotiating annual salary, sending offers to candidates, and waiting on candidates to decline or accept an offer.
Loss of Reputation
Losing reputation associated with hiring mistakes can have a significant effect on the cost of hiring. If they perceived a business to have bad hires due to negative reviews, disgruntled former employees, or poor customer service, it can lead to a drop in patient satisfaction, referrals, and reputation. If your healthcare practice has a rotating door of new employees, your reputation can make it harder to recruit excellent candidates.
The Financial Cost
In hiring the right person for a job, it is important to consider the financial cost of hiring the wrong person. We often estimate that the cost of a bad hire can be up to 2.5 times the salary of the employee.
Interview Right to Hire Right
Hiring the right person for the job is one of the biggest tasks for a manager. It is important to invest in the right person for the job to ensure a successful hire and avoid the cost of hiring the wrong person. That's why it is so important to take the necessary steps to reduce the chances of a bad hire and make sure that you are getting the right people for the job.
In a recent Practice Management Nugget Podcast for Your Healthcare Practice episode, Jean L. Eaton interviewed Nelson Scott. Nelson is an expert in hiring employees and a coach for managers who need to be better prepared to manage employes. You can listen to the podcast episode #108 here: Practice Management Nuggets Podcast
9 Steps to Hire (and Keep!) Employees in Your Healthcare Practice
It takes time to prepare to recruit, interview, hire, orientate and maintain the right employee for your healthcare practice.
And a little help from a friend (or a Jeannie 😊) is appreciated!
The 9 Steps to Hire provides a comprehensive guide to the entire hiring process, from the job description to onboarding. It goes further than just understanding the cost of a bad hire, and provides tangible steps on how to make sure the right people are hired. It’s a must-read for any healthcare practice looking to hire new employees.
Check out our templates and training available to you right away!
See: 9 Steps to Hire (and Keep!) Employees in Your Healthcare Practice.
If You Need Somebody Now
Many practices appreciate the importance of hiring the right person. But, they may not have the luxury of the time. They need someone to do the job now.
A virtual medical office assistant and virtual receptionist might be an excellent solution for your healthcare practice.
Read the article here, How Virtual Medical Office Administration Services Can Help Your Healthcare Practice With Kyle Sherritt
Career Builder. How Much Is That Bad Hire Costing Your Business? DECEMBER 7, 2017
Enkel. The True Cost of Hiring a New Employee in Canada Omar Visram / CEO and Co-founder Enkel. June 24, 2021
Hubspot. Replacing a single employee costs from 16 to 213 percent of annual salary.