Hiring well is beyond challenging.
With the attendant timeline constraints, budgetary considerations and team dynamics, bringing the right person on board can feel like trying to run a minefield blindfolded.
After all, a bad finance hire carries with it both direct and indirect costs. Here are 3 ways a hiring mistake can hurt your bottom line.
Typically, when we consider direct costs, we think about salary as the prime variable. But there are other direct cost considerations as well. Severance pay, temporary staffing fees or recruiting costs all must be calculated into the bottom line. If you decide to hire a permanent employee to replace the bad hire, then you might be facing advertising and relocation costs as well.
This particular cost has a number of facets to it. Your new hire, even if he or she is exceptional, will have a certain ramp-up period until they reach maximum productivity (think 3-6 months). To facilitate his or her success you’ll need to invest energy and time in training them. The trainer, whether it’s a co-worker or manager, now has to juggle their own duties, while ensuring that the new hire is brought up to speed. This is a double whammy – a new hire who is not fully productive and an established employee whose attention is divided.
When you bring a bad finance hire on board the impact to employee morale is significant. While the team may initially rally to support the poor performer, eventually it can affect their ability to deliver. When the bad hire is transitioned out, the rest of the team must absorb their duties, typically without an increase in pay or benefits. A great team will continue to try and make do, but eventually resentment can ensue. A happy team is a productive team, and a poor finance hire undermines that.
Aside from the obvious direct costs of hiring badly, there are a number of hidden expenses that can profoundly impact your bottom line. By having a well-thought-out hiring process founded on an understanding of what it takes to be successful in a given role, you can sidestep many of the obstacles that can lead to a bad finance hire.