Failed hires are less expensive than you think

Some of the "War for Talent" rhetoric is just propaganda.

There, I said it.

The phrase itself suggests a fight for the "very best" people, of whom there are too few (probably earning too much) and who are almost impossible to find.

Certainly, given a normative distribution of Talent, there are statistically fewer superstars than average performers, but using the frame of a "War" allows badly run companies to place an external locus of blame on the reason why "it's impossible to get good staff".

Whilst I'm sure that there are some good companies who fail to attract talent, I imagine that it is a failing of marketing, branding or in a few cases, location. Most of the rest of the companies who struggle to find talent are struggling for one of the following key reasons:

• Poor pay and reward: they underestimate the value of talent
• Poorly defined roles: they don't look at the real need for the role today
• Poor interviewing: Unchecked bias, and a failure to treat candidates like they were investors
• Poor management: Progression is arbitrary or an afterthought
• Poor development: time is not invested in staff skill development, so they are not creating their own stars
• Purposelessness: They have failed to define the why of the business, and the why of working there

These are pretty significant commercial failings in any analysis. But in hiring we all have the "War for Talent" as a prepared excuse for why our teams and businesses aren't excelling. It's just not possible to find great people, and we struggle to find good people at all!

And then there are all the failed hires. We finally get a candidate to join and they let us down, losing us time, money and investment and the whole cycle starts over.

I have a feeling that we're overconcerned about these miss-hires, and that the focus on the "investment write-off" of getting hires wrong is highly damaging to a business.

I've written about acceptance of Hiring risk before, I think we should be designing better job descriptions, interviewing with clarity and without bias, and then making the best judgement given the information we have.

Not everyone agrees with this tolerant, even laissez-faire attitude. Indeed, one of the big selling points of the Hiring Solutions Industry (the big selling point really) is the ROI on cutting hiring errors. Buy our psychometric test /applicant tracking system /candidate attraction platform / new app / assessment criteria and you will see radical cost savings from curing miss-hires.

You won't of course. There's nothing wrong with any of those solutions, and all of them can improve good processes, but they don't solve any underlying issues, and alone they won't fix your hiring. Plus, you likely don't really know what a miss-hire costs you. You've got an idea based on training costs and lost salary, but it is an incomplete sketch.

The price of failure

The good news is that I don't think miss-hires are actually that expensive. Sure, if we compare them to the mythological "Ideal Candidate" they are expensive. But the "Ideal Candidate" does everything perfectly from day one on the job, so it's best not to use that as a measure. In reality the difference between the median "good" hire and the median "bad" hire is probably quite slight, and can often be attributed to unknowable external factors.

Sure there are outrageously poor hires. People who cause issues on their first day and who clearly are both incapable and unwilling to help, but these are vanishingly rare* (*and if they aren't you need to go back to first hiring principles anyway) we might know perhaps one or two in a whole career.

Excluding outrageous outliers, a failed hire is either:

someone who doesn't pass probation, or

someone who passes probation but leaves in less than a year.

Someone who stays more than a year despite demonstrating a lack of performance or other issues is more likely a failure of staff development than hiring (though it never hurts to re-examine the hiring assumptions that led to that hire).

Failing probation

In the first case: A hire who does not pass probation is usually a poor fit for the need. Either the role was poorly explained, or the interviewers did not define the questions (or listen through the answers) well enough.

What is interesting here is that either mistake is  equally likely, yet the idea that "the candidate was less than honest with us" is the narrative we choose most. Sure, sometimes a candidate will flat out lie - charming and beguiling their way into an entirely unsuitable position. It's vanishingly rare actually, but it makes the headlines, especially when qualifications are faked too. You need not worry about the "interview libertine" however, that's not the reason your hires aren't working out.

The reality is much more straightforward and avoidable. Either you do not understand the role, or the candidate did not understand the role. Simple as that.

If the role is poorly defined it is hard to describe how a hire will add value. Consequently it is hard to track how a hire is performing or judge them objectively. What usually happens then is the person is compared (unfavourably) with the previous long-term incumbent, and, found wanting, are not offered further support (because it a waste of time). By the time probation review rolls around it has all gone too far to be redeemed. Or else the candidate, having been miss-sold the scope and influence of the role, and finding resistance to change (so that the role can more closely meet their abilities) makes the decision that it will be better for their resume that this failed experiment ends quickly.

Passing probation but leaving within 12 months

Candidates who pass probation are a different matter. Usually a candidate who passes probation but does not stay a full year is a problem of management rather than hiring. That is to say that the candidate clearly had the ability required (passing both the interview and the much stiffer test of probation) but never fully committed to the business.

When we look at a failure to commit the fault is often with systemic issues inside the business that make committing difficult. I'm thinking of issues like a lack of mission, values that are just statements and that do not influence day-to-day decisions, teams that are siloed or otherwise inhibited from welcoming new thinking, or a lack of psychological safety.

Any of these factors can make it hard for an individual to build a connection with the team. The biggest reason, at least in the companies I have worked with is a lack of agency. Problems are thrown over the fence to the new person, but they are not given the requisite power to make a long-term solution. This problem is often misjudged as a lack of resilience, because eventually the employee gives up trying and moves on.

Reframing a miss-hire

But, whether the failure to thrive is caused by miss-hiring or failure to include, the fact is that the business has to go and fill the role again. Money has been lost, along with training and, importantly, time.

Whenever I work with companies it is the reference to this time, expressed as completely lost, written off from a cashflow perspective that seems the key regret in a failed hire. This time that can never be reclaimed, and its expressed financial value, feels to them like pouring money into a pit.

Is it really though? Again if we discount the true disaster hires, was there not a least some value generation during the tenure of our miss-hires? Assuming the hire turned up and at least tried, then I would argue the following would have been achieved at least:

Some commercial value was created

Less than the previous incumbent perhaps, or less than the planned impact of a theoretical hire for a new role, but not nothing. The hire will have assisted in advancing projects, building the knowledge infrastructure of the business unit, engaging with customers, stakeholders, colleagues or ancillaries. This work will have a commercial and progress value to the business.

Greater clarity is achieved on role need

It would be nice to design roles from scratch on a piece of paper and to be exactly right first time. In reality this never happens, the practical considerations are too large for a theoretical solution. Product development, engineering and design have moved away from trying to get things right in a vacuum, instead working in an agile, responsive way and designing a minimum viable product. It helps to think of the miss-hire this way too. An MVP hire helps the business understand the reality of the need in a far fuller way.

The areas where the miss-hire failed to make a noticeable impact are important enough to warrant changing the focus.

Colleagues who were forced to "step in and help" can potentially be offered development opportunities into that space, further changing the hiring need.

The only way to actually lose from a miss-hire in this regard is to re-advertise and re-hire from the same spec hoping for different results.

The miss-hire can have a skill development effect

When a new hire doesn't make it, the process is usually protracted. Chances and second chances are provided and coworkers are encouraged to support and help. This can be frustrating initially for busy teams, but sometimes there is real value in the skill development that occurs when an individual has to revisit a skill in order to teach it. Members of the existing team will discover they had new skills in the area of coaching or managing they were not aware of. New strengths are created from difficult circumstances and people may well discover hidden talents as they help the team carry the unsuitable hire.

Morale and belonging

Work can become something of a tribe. It can happen for any number of reasons, some of which are bad and exclusionary, but many of which are the positive bonding experienced when a group of people commit to taking on something big together.

New hires have to find a way to navigate the idiosyncrasies and artefacts of belonging - something which great companies help make possible - in order to truly become a member of the tribe. But failed members can have a surprising side effect of further bonding the team.

Helping the failing member is both a chore and skill development (as mentioned earlier) but once the hire "fails out" of the business there is often an internal reflection within the group because:

• Not everyone is capable of making it here (but we are)
• There are new shared stories about the "outsider". (Do you remember when?)
• The folkloric value of the teams shared adventures is increased (the team went through something together)

Learning, not loss

Each of these factors is not so much a significant win as a move forward on the game board, a move towards greater collaboration, belonging and understanding. Don't get me wrong, if the business choses to learn nothing from a hire, and therefore to keep miss-hiring, then morale will absolutely suffer, and the losses really will mount.

The loss paradigm can be really damaging because it can cause interviews to become more complex and to involve more stakeholders (to avoid this happening again).

This fear permeates the process, and if it is combined with a lack of analysis of why the hire failed it can make things exponentially worse. Now more time is spent on interviews than ever, good candidates are put off by the protracted and often investigative interview process, and the final hire still suffers the same problem as the other miss-hires!

By rephrasing the loss as learning, the business can move forward more effectively Seeing the value in the ancillary wins and the marginal gains, correctly recognising a pathway towards a a clearer person definition, and then reorienting the role and hiring questions to get a more accurate fit.

Incremental gains

After all, hiring is very hard to get right. Bringing human beings together in service of a goal: selecting, motivating, developing and inspiring them creates orders of magnitude of complexity. The solution is of course a level of discipline in the hiring process, but also a level of tolerance to risk in hiring.

You will get hires wrong, people will leave the business at inconvenient or "loss making" (as in financial) times, and the processes will continue to be opaque.

Reframing risk allows you to be more positive in your hiring choices, to see hiring as an experiment in building consensus, to redefine your processes for continuous improvement and to seek the kind of constant feedback from team and role that can transform your business.

Which is all to say that, next time a hire doesn't make the grade, look on the hire not as a total write off, but as a discount period of role, responsibility and culture consultancy which came with several training and skill development benefits for your team.