Do You Know How Much Hiring Mistakes Are Costing Your Company

1. The MCQuaig RepoRT
As reported in the Michigan
State University Study on
DO YOU KNOW HOW MUCH HIRING MISTAKES ARE
Predictors of Performance, COSTING YOUR COMPANY?
“90 percent of all hiring
decisions are made as the result Study after study lists “hiring and retaining talent” as one of the key issues that
of the interview. Interviewing keeps CEO’s awake at night. If you have the right people on board, the issue of
is only 14 percent accurate.” motivating and driving them to produce results largely goes away. If you don’t
have the right people, the best strategy in the world won’t save you.
In a study of over 400 publicly
traded companies in The HR That said, most managers are less scientific about hiring their greatest resource
Scorecard: Linking People, than they are when buying a piece of equipment – they replace rigorous analysis
Strategy and Performance and reference checking with general impressions and gut feel.
(Harvard Business School
Press), the top performing 10
percent were 7½ times more
HIRING MISTAKES FALL INTO TWO CATEGORIES:
likely to use a validated False positives: In this scenario, a promising candidate is hired, but does not
employment test in the deliver once on the job. The cost of this mistake is generally accepted to be two
selection process. to three times the individual’s salary.
In The Watson Wyatt HCI False negatives: In this case, a talented, but not interview-savvy candidate is
“Global Truths” report, passed over. The cost of this mistake is the opportunity cost of not having the
companies that demonstrated best person possible – lower productivity, lower sales, missed deadlines, etc. In
Excellence in Recruitment and
his book, Topgrading, Dr. Bradford Smart estimates this opportunity cost to be
Retention were rewarded with
a 5.4 to 14.6 percent growth in
twenty-four times salary for senior roles.
shareholder value. The cost of a hiring mistake is especially high in demanding roles like
leadership, sales and professional where the ramp-up time is several months
and the talent pipeline is drying up.
SOME OF THE MORE COMMON HIRING MISTAKES INCLUDE:
• Being overwhelmed by gut feel
• Over-relying on information obtained in unstructured interviews
• Not having clearly defined expectations
The McQuaig Institute® If you would like to read an article from The Canadian Manager, Five Hiring
Mistakes and How to Avoid Them, by Michael Gravelle, CHRP, of The
Phone: 416-941-9418 McQuaig Institute, please email Michelle Kalra, mkalra@mcquaig.com or
Toll Free: 1 800 387-5455 phone (416) 941-9418, ext. 362.
www.mcquaig.com
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