11 Min. Read

How to Avoid a Bad Hire: 5 Hiring Mistakes Identified

June 6, 2024

Even though your products or services are at the core of your business, your employees are its lifeblood. Hiring the right team is absolutely crucial—great employees help you achieve your goals, improve productivity or sales, and contribute to a winning company culture.

On the other hand, a bad employee can slack off, waste company resources and even bring others down with them. To prevent costly mistakes from draining your business, you need to know what to look out for, and how to avoid certain practices that could make a subpar situation even worse.

How Bad Hires Can Impact Your Business

Making the wrong hiring choice will cost your business a huge chunk of your resources and money. Here are five reasons that a bad hire is one of the worst things that could happen to your company:

They Hinder Employee Morale

Employee morale is important no matter the size of your business, but it’s particularly consequential for small businesses with fewer employees. After all, one bad apple can easily spoil the bunch, especially if you don’t act quickly and decisively.

Bad hires can affect morale in a variety of ways. Firstly, if they have a bad attitude, it can create a hostile working environment for your other employees, causing even top performers to dread coming to work. Secondly, if you decide to keep this person on despite the red flags, other people could feel demoralized by your inaction.

The most common result of low employee morale? High employee turnover. You risk losing your best workers due to a domino effect if you hire bad employees.

They Negatively Affect Productivity/Performance

Productivity isn’t always easy to quantify, but a bad hire will noticeably impact productivity and employee performance in a negative way.

If they are not a good fit for the job skill- or personality-wise, you’ll have at least one person who isn’t pulling their weight. Everyone who relies on that employee to do their own work will also be affected. This forces your top performers to take over the bad hire’s workload just to hit targets, which can burn them out and cause their own productivity to dip.

They Drain Resources

More often than not, bad hires will require additional training, coaching and attention. And if you have limited time and staff (as most small businesses do), they could be more trouble than they’re worth.

With a bad hire on the team, managers are forced to monitor the problem employee closely. This takes away their time and energy from other important revenue-generating tasks.

They Hurt Your Reputation

Bad hires hurt your reputation with both employees and clients. On the employee side, a bad hire could contribute to a negative company culture that demoralizes employees and causes high turnover rates. Potential future talent (especially the good ones) will be wary of working for any employer that tolerates bad worker behavior.

On the customer side, dealing with a bad hire could create a negative impression of your business, especially for first-time clients. Plus, if customers notice that you have a high turnover rate, they will assume that something is wrong with your company and be less likely to recommend you to others.

They Lose You Revenue

The crux of the issue is that bad hires hurt your bottom line, whether it’s by slacking off, taking away resources from other aspects of your business, or causing the loss of good employees.

According to the Department of Labor, a bad hire can cost a business up to 30% of that employee’s earnings in the first year. That amounts to about $14,900 on average for each bad hire, or up to $240,000 in hiring and retention expenses.

Top 5 Mistakes Companies Make When Hiring

Rushing It

The number one reason businesses make bad hiring decisions is because they are more concerned with hiring quickly than well. While filling a staffing gap is important, especially in high-performing businesses, it’s more important to take your time until you find the right fit.

When hiring is urgent and immediate, you cut corners in a lot of ways. Firstly, you don’t give yourself enough time to prepare the job description or the interview questions, both of which are invaluable tools to filter out the wrong candidates. Secondly, you won’t have enough time to do thorough background and reference checks.

Emergency hiring is necessary in some cases, but the faster you move through the interview process, the more likely you are to make a decision that’s good for now instead of the long run.

Keeping a One-Track Mindset

Every open position has an “ideal candidate” profile, but you’ll miss out on some potentially great candidates if you follow that profile too strictly. While it’s good to have an idea of the skills and personality traits that you want to see in a hire, looking only for those candidates while discarding those who don’t fit the profile perfectly is a surefire way to limit your options.

The one-track mindset applies to job postings as well. Putting all your stock into one or two job boards may have been an effective hiring method in the past, but unless you explore new channels and attract new personalities, you’ll get the same kind of hire over and over again.

Hiring According to Biases

The workforce is more inclusive and diverse than ever before. But there are still hiring managers and recruiters who have subconscious, unchecked internal biases that may result in poor hiring decisions.

One specific kind of bias that’s predominant in hiring is affinity bias, or when you are biased towards someone of the same race, gender or background as you. Companies that aren’t critical of their own biases run the risk of hiring the wrong person—and overlooking the right one.

Getting Swept Away by a Good Interview

There’s another kind of bias that you need to be careful of: the halo effect. The halo effect leads us to judge someone based on one or two traits. For example, people who are physically attractive are more likely to be judged as kind, sociable and smart, despite the fact that appearance has no relation to personality.

When it comes to hiring, this usually manifests as a “good interviewee, but bad employee.” A candidate who is articulate, fun, interesting and friendly is more likely to get the job, regardless of actual skill or experience. It’s easier to overlook red flags if you’re already impressed, even if it’s just with one major aspect of their character.

Emphasizing Experience over Fit

It’s important for a candidate to have the right technical skills for the job, but skills don’t make a good employee—attitude and work ethic do.

One of the biggest mistakes a hiring manager can make is hiring someone solely on their talent, expertise and experience, without taking into consideration how well a candidate aligns with your company values. You can often train someone to be more technically proficient, but it’s so much harder to turn someone into an effective team player.

How to Avoid a Wrong Hire

Ask If You Need to Hire Someone in the First Place

If there’s a position to be filled, your first question should be, “Do I really need to employ someone for this job?” To address staffing gaps, here’s how to take an alternative approach:

Do the job yourself
Ask an existing employee to take on new or extra responsibilities (with the appropriate raise in pay to compensate them)
Outsource the job to a freelancer or independent contractor

All three strategies can help to save money and resources while avoiding the hefty costs associated with a bad hire.

Be Clear in Your Job Description

To get you the best candidates possible, the job description needs to be clear and complete—otherwise, you are wasting both your and the candidates’ time.

Determine the skills and requirements that your ideal candidate for that specific position would have. This includes technical skills, soft skills and personality traits. You can use similar job postings as reference, but never copy-paste a description—your business has specific needs and company culture, and what works for another business (even if it’s in the same industry) may not work for yours.

Attract More Relevant and High-Quality Candidates

If your ideal candidates don’t know about the job opening, you’ll only get bad hires or wrong fits for your team. There are two approaches to this:

Cast as wide a net as possible to get as many candidates as possible. You can do this by posting on job search sites and advertising in your community. While this will give you a larger pool to choose from, you’ll also have to sort through more resumes and conduct more interviews.
Target specific candidates with specialized skills. Go to industry-specific job ad websites or attend industry fairs to find the right person for the job.

You can also leverage your existing employees or industry connections to get referrals. After all, who knows the formula for success more than your top-performing talent and other people in the industry?

Look at Both Technical and Soft Skills

Even in industries where technical skill is paramount, it’s still not the best idea to hire someone based on their talent and technical skill alone. In fact, attitude and company fit are the number one reasons that new hires don’t work out, with almost half of all new hires failing within the first 18 months.

Working with a team also requires empathy, positivity, communication and a solid work ethic—prioritize these qualities in a candidate instead, and you’re less likely to waste resources and money on a bad hire.

Put Them Through a Trial Period

If a candidate seems like a good fit but you’re not entirely convinced yet, consider giving them a probationary period or asking them to complete a one-off project first. This allows you to test the candidate out in the field and see how they actually work, instead of just making assumptions based on their resume and experience. If you like them, then you can sign them on. If you don’t, then you can let them go with minimal wasted investment.

Don’t Rush the Interview Process

Unless you absolutely must fill a position now, slow and steady will help you to win at hiring. Give yourself enough time to prepare a comprehensive and clear job posting, do your due diligence on each of the candidates, prepare the best interview questions, and evaluate the hires. And don’t forget to take your time when vetting your interviewees and checking references.

When you rush interviewing, you tend to overlook huge red flags. Slow down, pay attention and look out for the following signs that a person is a bad hire:

Their resume is full of typos and grammatical errors
They arrive at the interview late
They don’t ask the right questions (or any questions at all)
They are not prepared for the interview and/or do not understand the position/company they are applying for
They are negative off the bat and/or make too many complaints
They are arrogant and overconfident
They’re not flexible or adaptable

Ask Better Interview Questions

An in-depth interview process will help you separate the mediocre candidates from the ones with the most talent and potential. Asking the right questions is key to getting to know your potential hires and avoiding costly hiring mistakes down the line.

Make sure to include questions that test both technical mastery and cultural fit. Avoid generic questions that candidates may have already prepared canned answers for. Probe for reasons not to hire someone—if you can’t, then you might have a good candidate on your hands.

Hire a Talent Recruiter

For a high-level (e.g., management) position or jobs that require an extremely specific skill set, you might have more success enlisting the help of a headhunter or talent recruiter. Talent recruiters seek out the best candidates based on your requirements in exchange for a commission. It’s not an affordable solution for every business out there, but if you have the budget for it, you’re almost guaranteed a good fit.

Conclusion

Making a bad hiring decision can be expensive for a small business. Thankfully, there are many ways to avoid a bad hire and cut your losses. Simply take your time, do your due diligence, pay attention to a candidate’s attitude, and know how to spot the signs of a bad hire—you’ll have a winning team in no time.