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The 3 Main Reasons Companies Make Bad Hires—And Why These Employees Stay Longer Than They Should


I don’t think anybody can say, “I have mastered the art of hiring or firing people.” Because hiring and firing are not just an art or a science—they are a little bit of both. And from my experience leading teams and people in both commercial and volunteering capacities, a lot more goes into finding the right team members than just scanning resumes, interviewing, hiring, and hoping that they will be a fit for the job and the organization. 

Also, only 50% of hiring is getting the right person in the door. The other 50% is about grooming and retaining them, which is really making sure they are walking into a healthy company culture, set up for success, and given a solid growth and career plan. For example, if you, as the leader or hiring manager, say you want to hire “hard-working people who enjoy learning and growing in their careers,” then does your company really offer opportunities to learn and grow? 

There are a number of reasons companies make bad hires. Here are three big ones, and why these employees end up staying longer than they should.

1. People who are not the right fit for your culture stay because nobody is measuring their outcomes and performance soon enough.

When you are a small company, a bad hire reveals itself almost immediately.

In larger companies, however, it can be more difficult to know when a bad hire has been made. There are more layers of management, the quality of someone’s deliverables are not measured immediately, and there are more opportunities for individuals to hide behind various corporate-friendly excuses. And even when a bad hire has been identified, steps must be taken and procedures followed in order to give them proper warnings, opportunities to improve, etc. Whereas at a small startup, if someone isn’t pulling their weight, it’s going to be very apparent very soon.

Every company, at some point or another, makes a bad hire. It is inevitable. But the level of damage occurs in how long the company chooses to let the bad hire stay.

People that are not the right fit for your company’s culture are going to leave their footprint either way. They are going to make your good people frustrated. They are going to impact the company’s morale and way of doing things. So, sometimes the intangible cost of keeping a bad hire is way higher than the tangible cost of replacement. 

2. Managers and leaders tend to prioritize technical expertise over cultural fit and attitude.

Another reason hiring and firing are such complex issues is that different managers and leaders will value different qualities in their employees.

Some leaders, with a focus on results and the bottom line, value technical expertise above everything else, and can tolerate a star player with a bad attitude. Other leaders value the opposite (sometimes to a fault) and want to keep people on board who have terrific attitudes, regardless of their competency in the role for which they’ve been hired.

At the end of the day, it has to be a balance, which is, unfortunately, hard to find. You want people who are both competent at their job and who fit into the culture of the organization. And you have to be honest and clear with yourself and the rest of your leadership team about which values and characteristics are the most important to your company’s business results and culture, and what the tolerance thresholds are. Like many other leaders, I’m coming from the school of thought that competency can be learned and achieved, but bad work ethics and misaligned values cannot be easily changed. 

So every leader and organization will have to develop their own, customized recruiting and hiring processes as well as employee performance measurements and thresholds that work for their own leadership style and organizational needs and culture. 

Of course, this can be a difficult thing to know immediately after hiring someone. It takes time to see the imprint they have on the organization. So as long as you have a plan to continue assessing each individual and helping them improve and grow, and you know the thresholds for cutting them loose, you are moving in a positive direction.

3. Companies don’t calculate the true cost of a bad hire, so they hire fast and fire slow.

When you hire someone, you are inheriting a lot more costs than just their salary.

Every new employee comes with a slew of operating expenses:

  • Money, time, and effort spent on recruiting, hiring, and onboarding
  • Money, time, and effort spent on training 
  • Learning curve time associated with complex jobs
  • Cost of new hardware and software tools and licenses associated with their role
  • Cost of insurance, relocation, benefits, time-off, travel expenses
  • Etc.

But every time a company makes a bad hire, they pay for it in two ways: culturally and financially. Once a bad hire is identified, the company tends to rationalize keeping them onboard longer than they should by thinking about the financial cost of replacing them and how much they’ve “already paid them.” Meanwhile, they fail to see all the other ways this hire is draining the company’s resources—usually in far more ways than just financial. 

Whenever you are contemplating keeping someone onboard, it’s worth asking the question, “What are all the ways this person is negatively impacting the business?” For example, how much will it “cost” you in order to fix the culture problems or the client relationship issues that have stemmed from this individual? How many other good employees you are going to lose if you keep this one bad hire around long enough to damage your team’s morale and get them frustrated enough to leave? 

Once you start to add all the different “costs” up, you’ll realize whatever benefits this person brought to the table are severely outweighed by the negative impact they are having on the business, both financially and culturally. 

As leaders, it is our job and duty not only to hire the right people and help them grow and develop but to let go of the bad hires before they damage our cultural values and the quality of our deliverables to our stakeholders and customers.

I am the president and managing principal of Optimum, a modern software solutions consulting firm that helps clients increase efficiency, reduce operational costs, and increase productivity by 25% or more. We achieve this through a combination of business consulting services and fit-for-purpose software solutions that drive true results.

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