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Avoiding Hiring Disasters  

by Tom Weinstock

Photo of Tom Weinstock
Getting rid of a bad employee following a hiring disaster is a slow, painful process. It can result in a law suit and even if you win, you lose.
You are six times more likely to be sued for terminating an employee than for not hiring someone in the first place. It is expensive.
And going through the replacement process is major trauma as anyone who has been through, or even watched the process knows very well.

Why the problem?

There are several reasons that hiring disasters happen:

During the hiring process, objectivity can evaporate. Everyone is on their best behavior and the employer really wants the candidate to be "the one," particularly in light of the shortage of good people.
You're up against people who are trained and practiced in the art of job hunting. They have resumes professionally produced, they've read all about interviewing and know all the tricks, and they have studied all the questions they are likely to be asked — and have prepared, and probably rehearsed, all the answers. It’s not easy to get to know someone during the hiring process.
People pride themselves on being good judges of people. The truth is that most people don't really know how to interview, even if they do it often and many don't do it very often.

Consider the dollar cost of a bad hire

Estimates vary, but the number can be three times the employee's annual salary. Let’s say the average salary is $25,000. And let’s say the replacement cost is only twice the amount of their salary. It would cost an average of $50,000 to replace an unsatisfactory employee (for employment agency or advertising costs, your people’s time, months of substandard productivity, morale problems).

If only one hire in ten has to be replaced because of poor selection up front, the average cost to replace a person will be $5,000. That’s the amount it's worth paying per employee to avoid the mistake in the first place.

Pre-employment testing — a solution?

Pre-employment testing can provide uncanny insight into whether a candidate will make a good employee. A Michigan State study on predictors of performance by a candidate after they are hired show them to line up like this (percent validity):

             

                Interviewing 14%
                Reference checking      26%
                Tryout          44%
                Pre-employment testing 53%

What can tests tell you?

There are three main categories of performance that testing can help predict:

The candidate’s character — trustworthiness, work ethic, substance abuse.
His or her behavior on the job — motivation, teamwork, objectivity, creativity.
The candidate’s abilities as they relate to the demands of the job — problem solving; vocabulary, spelling and word usage, arithmetic, speed and accuracy in handling details.

A panacea?

Can you let pre-employment tests select a candidates for you? Of course not. The traditional screeners still apply — including compatibility of chemistry.

But it usually costs less than $200.00 for effective pre-employment testing of a candidate. The economics of testing are a no-brainer; you can’t afford not to.

They aren’t a panacea but they can often highlight future problems and, if you pay attention to them, avoid hiring disasters.