Why Making the Wrong Hire Can Cost SMBs Significant Time, Money
When choosing candidates for open positions in your company, you fully know, as a small business owner, this can sometimes be a daunting process. It takes both time and money to hire and train a new employee, not to mention the adjustment to the company culture; and this just occurs when you hire the right person for the job. What would happen if you spent all this effort, and the candidate turned out to be the wrong fit?
For the most part US small business owners recognize these risks and know how they can impact their business model. In fact, Monster Worldwide, which is known for its Monster.com job search brand, recently released the results of this, as reflected in its Small Business, Big Hire survey. Conducted by Braun Research on behalf of Monster, the study found that nine-in-ten small business owners (89 percent) identify hiring the wrong person for a job as a risk to the company, with half (51 percent) saying it is a major risk.|
Small business owners today are very mindful of how hiring the wrong person can put their business in jeopardy. Among small business owners who view hiring the wrong person as a risk to their business, top reasons include a negative impact on the company’s reputation (68 percent) and decreased productivity (62 percent).
While most small business owners consider talent to be the greatest asset to the success of their business (82 percent), the majority believe it can be time consuming (89 percent) and expensive (70 percent) to find the right person for the job.
On average, small business owners spend $1,872 to hire someone new and up to 4 months searching for the right candidate, depending on the job level. Furthermore, about four in five owners are looking for a strong skill set for the industry (78 percent) and past job experience (77 percent) when hiring someone new, while half (52 percent) also look for something less tangible: grit.
Small business owners have unique needs and limited time, but without the necessary resources and data in place, the employee search can take a toll not only on them, but also on their business as a whole. As a result, more than half have settled for a candidate who was not as qualified as they would have liked (56 percent) or have previously made a wrong hire (62 percent). In addition:
- 58 percent of owners fear laziness more than any other quality of a new hire.
- 44 percent of owners fear the employee not getting along with customers; whereas 41 percent worry they do not have the right skills for the job.
- Small business owners that have made the wrong hiring decision generally realize their mistake quickly – 70 percent realized it within the first three weeks, with about one-third (30 percent) being aware of it after only a few days.
In addition to being a financial burden, hiring the wrong person can have an emotional effect on small business owners. About three in four owners who have hired the wrong person before feel frustrated (73 percent), stressed (47 percent) and discouraged (36 percent) as a result. The survey also found that:
- Over half of those who have hired the wrong person before have experienced a loss of time (69 percent) and money (56 percent) due to wrong hires.
- Specifically, one-third or more of these owners estimate wasting over 50 hours of their time (34 percent) and over $1,000 (42 percent) due to their most recent wrong hire.
- Other issues caused by hiring the wrong person include product errors (51 percent) and loss of customers (24 percent).
While many of today’s small business owners continue to devote more of their own time and effort to finding the ideal candidate, some are actually not improving their search whatsoever. Of those who have hired the wrong person before, 56 percent are investing more time to make sure they don’t do this again, but only about one in five aren’t doing anything at all (18 percent).
Although nine in ten (89 percent) small business owners find the hiring process time consuming and three-fifths (61 percent) wish they had more help in finding the right person for the job, significantly fewer owners are currently hiring an outside service to help recruit (11 percent).