Read any of the books-du-jour out there that discuss hiring practices, and you’re guaranteed to read a chapter on “The Cost of a Mis-Hire.”  The general argument, according to these authors, is that the cost of making a bad hire isn’t simply the salary and benefits costs that were sunk  into the new employee who ultimately didn’t pan out.  They reason, quite correctly, that the “real” cost includes factors such as reduced team productivity and missed client opportunities.

The truth is much, much worse than these books let on.  While the loss of salary, productivity, and client opportunities are all clearly painful, the biggest cost of a bad hire - by far- is the psychological impact on the leadership of the company.  This effect is particularly accute in small businesses and entrepreneur-led firms because the leadership of these companies are invloved in most aspects of the day-to-day operations.  Dealing with poor performing employees is a drain on managers’ mental capacity and has far-reaching implications for the performance of the firm.

Have you ever made a bad hire?  Remember what it felt like the moment you knew that you made a hiring mistake?  That “oh no” feeling that dropped into your gut like a 50-lb rock when you had that first bad interaction with your new staff member?  The stress that set in the second you realized that today was the first day of a process of trying to get that person the heck out of your company?  The conversations with your spouse about that person, about how they drive you absolutely crazy, and about how you can’t believe that you ever offered them a job in the first place?  The frustration that “you knew in your gut” that you were making  a mistake, but made the offer anyway and are now living with the consequences?

And the “let’s give them a little more time to see if things turn around” mentality that keeps you from completing the mercy killing that everyone in the world knows should have happened yesterday?

Bad hiring decisions cost you more than money, they cost you mindshare.  For every hour you spend fretting over what to do with your new $75,000-a-year-plus-benefits disaster, that’s an hour not spend working on your business.  Bad hires are cancerous in that regard:  they crowd out the healthy and productive thoughts and grow until you’re literally forced to take action.  By the time most managers take corrective measures, the damage has been done.

It’s all the more reason to be absolutely, positively sure that you’re making the right choices when it comes to adding new staff.  Are you using a consistent hiring process to ensure that every open role is afforded the same level of care and diligence?  Have you provided candidate selection training to your staff so they’re up to speed on the right approach to use during interviews?  Are you conducting thorough reference checks?  If the answer to any of these questions is anything but yes, then you’re taking on more risk than is necessary.

Hiring is a science, and you must learn the science of making solid employee choices.  The sunk costs of salary and benefits certainly sting when an employee doesn’t work out, but it’s the psychological impact that ripples throughout the life of the company. 

Make improving hiring results a priority, and your business will thank you for it!