As the worldwide employee shortage is worsening, employers are feeling rushed, making vast and poor hiring decisions. According to research, more than half of employers settle for employees who do not match the job sufficiently, which not only increases costs but also hampers the company's growth.
North American companies expanding to Europe have to deal with more complexities, facing the additional challenge of different labor laws and policies that might even worsen the consequences of bad hiring decisions.
In this blog, we discuss the cost of bad hires and how the consequences of bad hiring decisions can be prevented.
The Consequences of Bad Hires
It is estimated that replacing an individual employee can cost an employer one-half to two times the employee's annual salary in most cases and up to 4x the salary for specialized staff. Which components contribute to these costs?
Employee turnover directly increases recruitment and training costs but also has indirect costs on lost productivity, decreased colleague engagement, decreased customer service, and an impact on the company's overall culture. This issue especially affects companies that hire internationally, since different labor laws and regulations can even increase the costs caused by longer notice periods, for example.
Therefore, making improvements in the first stages of hiring/recruiting and onboarding employees is crucial for your business to prevent the cost of bad hires.
Bonus read: After Quiet Quitting Comes Quiet Firing
Preventing Bad Hiring Decisions
Having to spend money on new hires is something you can't avoid. However, you can avoid making poor hiring decisions that will create a negative feedback loop, ultimately resulting in high turnover and hiring for the same position over and over again. To prevent bad hiring decisions and costs, you should:
Improve job description
Maybe your job description is attracting the wrong people. Try to involve the team you are hiring for in the writing process and find the right balance of what you ask from candidates.
Make the hiring process smooth
After that first step is fixed, the hiring process should be smooth, quick, and frictionless. Otherwise, you might lose qualified candidates to competitors. Implementing automation tools for administrative tasks can help you in this process.
Conduct interviews bias-free
When it comes to interviews, make sure your hiring managers are trained properly and know how to ask questions and know their input. Conducting multiple interviews until they are certain will save money in the long run.
Offer fair compensation
Lastly, in the competitive labor market, offering good compensation is important for keeping the best candidates. However, an employee's job satisfaction depends also on various factors, such as a supportive work environment, career growth and development, and work-life balance.
Avoid the Cost of Bad Hires With EuroDev
Hiring can be hard these days due to the tight labor market, especially in a foreign one. The cost of bad hires is increased costs, lower productivity, and hampered growth.
To prevent the cost of bad hires, companies should improve job descriptions, make the hiring process run smoothly, train hiring managers, conduct interviews with multiple decision-makers to prevent bias, and offer good compensation with benefits and perks for employees.
Finally, if you are hiring in Europe, you can prevent bad hires with EuroDev HR Outsourcing services without worrying about setting up an entity. You will stay compliant in every European country of your choice, and you will have an excellent team experienced to improve your hiring process with the necessary HR support.
Disclaimer: While we strive to provide accurate and timely information, please note that HR policies and regulations can change frequently. It is recommended that you seek guidance from our HR consultants to ensure that the data presented here is current and accurate.
Source: Forbes, ZDNE
