As a startup, we know what hiring from the ground up feels like, looks like and what it shouldn't be. Use these Wisconsin SHRM takeaways 2015 for your hiring initiatives.
Hiring is just one part of Human Resources, yet it’s one we’re constantly tinkering with because it sets the tone for the entire relationship. For growing companies, it’s something that can’t really be done wrong, or the consequences can be dire. Not scared of hiring? Think it’s not your problem? Consider these statistics:
- The average cost of a bad hiring decision can equal 30% of the individual’s first-year potential earnings. (From the US Department of Labor and Statistics)
- The successful aren’t immune, and they’ve had to learn from their mistakes. Zappos CEO, Tony Hsieh once estimated that his own bad hires have cost the company well over $100 million.
- 66% of employers said they experienced negative effects of bad hires in 2012. Of these employers, 37% said the bad hire negatively affected employee morale. Another 18% said the bad hire negatively impacted client relationships. And 10% said the bad hire caused a decrease in sales. (A study from the National Business Research Institute)
- 43% of respondents from the same NBRI study cited the need to fill the positions quickly as the main reason that bad hires are made.
- It costs $7,000 to replace a salaried employee, $10,000 to replace a mid-level employee, and $40,000 to replace a senior executive. (From HR.com)
- As much as 80% of employee turnover is due to bad hiring decisions. (From Harvard Business Review)
- 36% of 1,400 executives surveyed claimed that the leading factor of a failed hire, aside from performance problems, is a poor skills match. The second leading factor at 30% was unclear performance objectives. (Study done by Robert Half)
- 41% of companies polled by Vitamin T Staffing Firm estimated that a bad hire cost more than $25,000, and 1 in 4 said that it cost them over $50,000.
- SayIt Communications calculated the ROI of a bad hire at -298%.
- 75% of the demand to hire new employees is simply to replace workers who have left the company.
It’s enough to give recruitment and HR professionals “analysis paralysis”! Hiring for a start up may be very different than hiring for a large organization, but if anything it’s even more crucial, because while I have to follow the same guidelines and rules as ConAgra or Edelman, my resources are stretched farther, my “skin in the game” is much more and every payroll, including that of “mismatched” employees comes directly out of my pocket.
So too, with a smaller team. If I hire poorly, either I, or one of my other employees has to pick up the slack. The same is true in larger organizations, except in this case, you often don’t see the problem until it’s too late.