Dr John Sullivan Talent Management Thought Leadership
Data reveals that 46% of recent hires fail, and managers wouldn’t rehire up to 50% of their hires. Now, assume for a minute that you are one of your company’s top executives in a business world where “failure analysis” is an expected business practice. You were presented with data showing that one of your foundational corporate processes was producing a 50% failure rate. Wouldn’t you expect the leader of that function to be “called on the carpet?”
In the case of a major failure in your recruiting process, how would any talent leader justify the fact that they were not using failure analysis to determine the root causes?
When asked about the actions you would take to cut this failure rate in half, obviously, your first step would be calculating the dollar cost of these hiring failures. But the next step would be defining what exactly is (or isn’t) a hiring failure. Yet, I estimate that fewer than 15% of recruiting functions have a formal failure-analysis process for identifying and learning from each new-hire failure.
So if you are a recruiting leader who literally wants to save your corporation millions of dollars each year in preventable bad hires, this article covers the range of factors that can be used to precisely define exactly which recent hires qualify as hiring failures.
What Specific Factors Qualify A Hire As A Hiring Failure?
Because the practice of identifying new-hire failures is relatively rare, there is no universally accepted list of the qualifying factors that best indicate whether an individual recent hire was actually a failure.
So, when you begin developing your own list of qualifying factors, here is my long list of factors from which you can choose. The highest-impact indicators appear early in each of the three categories of factors.
Category #1 – The strongest indicators that you have had a hiring failure
The most impactful and recommended indications of a hiring failure include:
- They had to be terminated – during their first year, the new hire was either terminated for cause, asked to leave, or was forced out.
- They became early turnover – the new-hire voluntarily quit or abandoned their job within their first six months.
- Unacceptable job performance – the recent hire’s output reached unacceptable levels at least once during their first year. And/or they were a recent hire who was placed on a performance management program. Alternatively, if your performance appraisal process is accurate, their performance appraisal scores during their first six months were at least 33% lower than the average PA scores for new-hires in this job.
- Customer impacts – in jobs that involve customer interactions. The new hire received unacceptable customer ratings. And/or they had at least one serious validated customer complaint during their first year.
- Compliance issues – during their first year. There were multiple minor and/or one serious employee action that required consultations with HR or legal. And/or the new-hire was formally sanctioned by HR.
- Excessive absences – during their first six months, the new-hire had excessive absences or tardies.
- Team disruption – it’s clear that during their first six months. Their manager considered them to be a disruptive influence on team cohesion and performance. And/or their unacceptable output impacted the team’s overall results and bonuses. And/or there is evidence that their teammates ghosted the new-hire.
- Their manager had to apply discipline – the new hire had to be warned repeatedly about an issue by their manager during their first six months. And/or they were formally disciplined by their manager at least once.
- Manager dissatisfaction – the manager considered them to be a “high maintenance” employee. That wasted an inordinate amount of their manager’s time.
- Serious errors and accidents – in a high-risk job. Indicators of a bad hire would include an unacceptable error rate or a high reportable accident rate.
Category #2 – “Early indicators” that a brand-new hire is likely to become a hiring failure
During the first three weeks on the job, there are indicators that a brand-new hire is likely to become a hiring failure. And that early termination should have been considered.
- A serious delay in getting up to speed – the time it took the new-hire to reach their minimum expected level of productivity. And/or they were ranked in the bottom 25% of all new hires in this job for their “time to minimum productivity.”
- Early absenteeism – the new hire was late or absent at least once during their first two weeks.
- Onboarding issues – the new employee failed to satisfactorily complete their required onboarding by the deadline.
- Candidate deception turns up – within their first six months. The company discovered evidence of serious candidate lies or deceptions during its hiring process.
- Additional internal movement was required – the new hire had to be internally redeployed because they weren’t a good fit for their initial team.
- New hire training issues – the new hire failed their initial required training. And/or the new hire had to be provided with significant additional training that shouldn’t have been needed.
Category #3 – Prior to starting their job, indicators that you had a hiring failure
Before they even started the new job. There were these indicators that this new hire would likely become a failure.
- First-day no-show – they didn’t show up for work on their start date.
- They failed your initial drug test – they failed your required new-hire drug tests.
- They ghosted you – between their offer acceptance and their start date. They were considered to be unresponsive to your messages.
Recommended Next Steps For Your Bad Hire Learning Process
If you haven’t done so already, and you really want manager and executive support for the development of your bad-hire identification program. You will need to work with the COO office to assign a dollar cost to the average bad hire. So that everyone can fully understand the value of identifying and learning from each failure. Because in key jobs, I estimate the dollar damage (including customer impacts) a bad hire can cause. Often reaches three times their salary.
And after everyone agrees on the costs and the factors you will use to define a bad hire. The next logical action involves determining which of your new hires should be assessed as a potential bad hire. In most cases, it doesn’t make sense to assess every new hire. So consider using random sampling to cut down on the volume of candidates. Next, I would specifically focus on the assessment of new hires who either experienced early turnover or were terminated during their first six months. The next best alternative is to focus on the potential hiring failures that occurred in your critical jobs.
Note: Individual recruiters can determine their own hiring failure rate by revisiting each of their hires on their one-year anniversary date and assessing their weaknesses.
Final Thoughts
Steve Jobs estimated the value added by an exceptional hire at 10 times that of an average hire in the same job. So in my view, executives and recruiting leaders need to consider the possibility that the costly damage done by a bad hire could also approach that 10 times standard.
But before you automatically discount that possibility, you should revisit the Boeing case in which a single quality control supervisor failed to prevent the explosive detachment of a cabin door. Because that employee failure literally cost Boeing hundreds of millions of dollars.
So, in my view, it makes sense to immediately take the proactive steps necessary to significantly reduce the odds of hiring even one more extremely costly bad employee by learning what went wrong in the hiring process that produced each failed hire.
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Notes for the reader
This is the latest article from Dr. Sullivan, who was called “the Michael Jordan of Hiring” by Fast Company.
You can subscribe to his Aggressive Talent Management newsletter (which focuses on recruiting tools, current recruiting opportunities, and recruiting trends). Either here or by following him on LinkedIn.
