Written by: Jake Tourand & Ian MacRae
The ultimate goal for most organizations is working towards fostering a culture that promotes health, success, and innovation. Unfortunately, the objective of a healthy, successful and innovative organization is not always the case. When organizations select the wrong people and make a bad hire the consequences should not be underestimated. It is estimated that the “cost of a bad hire to be anywhere between 1.5 to 3.5 times their annual salary” (The Mason Group, 2017). According to Statistics Canada, the average salary in 2017 was “$46,700,” which would translate to costs ranging between $70,050 and 163,450 for the average bad hire (Statistics Canada, 2019). With the costs being so large, why risk making a bad hire due to avoidable factors?
The cost of a bad hire extends beyond the expenses of recruitment and selection. A bad hire may impact many facets of the organization. There are the normal costs associated with hiring such as “HR time, cost of managers involved in the interview process and training. (The Mason Group, 2017). The organization must deal with costs that may not be front of mind such as “the business you may lose when that individual interacts with customers, the cost you incur when you have to repeat procedures that were handled ineptly and the pressures on the other employees who must pick up the slack.” (Robert Half, 2017). The scope and magnitude of a bad hire often extends well beyond the confines of Human Resources.
The cost of a bad hire can be avoided by using sophisticated personality assessments to identify and hire those with potential. The High Potential Trait Indicator (HPTI) measures personality traits that are directly linked with the potential to succeed at work. Research with senior leaders in North America found that the HPTI predicted key leadership capabilities including ability to meet organizational targets, increase talent retention, improve innovation and to lead with integrity. The HPTI both short- and long-term leadership capabilities and is linked to individual and organizational achievement.
Research with officers in the Norwegian Armed Forces found the HPTI predicted leadership success twice as well as the commonly-used Big 5 model of personality traits. The research also found that the HPTI predicted about one-third of the variation in leadership attainment alongside other important factors such as intelligence.
During the recruitment and selection process, HPTI scores can be used to help evaluate applicants for how well they would fit within a particular role, how well they would work in a team environment, and how they would fit in the organization culture.
Human Resource professionals can easily implement this assessment into their selection process. Upon completion of the interviews, applicants can be asked to complete the HPTI assessment to ensure that they would be a good fit in the organization and be successful in their position. The HPTI assessment becomes even more useful at predicting success in more senior leadership roles, but it can also be used during initial selection and intakes to identify the future talent pipeline.
In an ever-changing and extremely competitive world, Canadian companies need to be concerned with reducing costs to be able to compete on a global scale and not be susceptible to the influences of globalization. One logical way to do this is avoiding bad hires. The costs associated with a bad hire and the fact Canada is faced with a growing problem “with an average of 16 percent, Canada ranks among the top countries in terms of employee turnover,” organizations should be focused on finding ways to avoid bad hires and decreasing employee turnover. (Canadian HR Reporter , 2018). The solution may lie in the implementation of a simple assessment that takes applicants fifteen minutes to complete, but could save organizations hundreds of thousands in the associated costs of a bad hire. The result would be the formation of work teams to better complement different strengths, and weaknesses. Overall, implementing the HPTI assessment in your recruitment and selection process can have tremendous benefits.
Canadian HR Reporter . (2018, 03 15). Canada ranks 4th globally for highest employee turnover. Retrieved from Canadian HR Reporter : https://www.hrreporter.com/culture-and-engagement/36271-canada-ranks-4th-globally-for-highest-employee-turnover/
McIntyre, B. (2018, 08 21). How Much Does A Bad Hire Really Cost? Retrieved from Business 2 community: https://www.business2community.com/human-resources/how-much-does-a-bad-hire-really-cost-02108605
Robert Half. (2017, 05 23). The Cost of a Bad Hire Can Be Surprisingly High. Retrieved from Robert Half: https://www.roberthalf.ca/en/blog/evaluating-job-candidates/the-cost-of-a-bad-hire-can-be-surprisingly-high
Statistics Canada. (2019, 04 23). Income of individuals by age group, sex and income source, Canada, provinces and selected census metropolitan areas. Retrieved from Statistics Canada: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110023901
The Mason Group. (2017). The Real Cost of a Bad Hire. Retrieved from The Mason Group: https://www.masongroup.ca/employers/real-cost-bad-hire/