Everyone knows that the average hiring process is less than perfect.
In fact, most selection processes have high failure rates (i.e. even after months or even years of “assessment,” nearly 60 percent of the marriages in California end in divorce).
So it shouldn’t be a surprise that as many as 46 percent of new hires fail within 18 months, according to Leadership IQ. Research also reveals that 61 percent of new hires are unhappy because they feel that they had been misled during the hiring process, according to Harris Interactive.
The Recruiting Roundtable similarly reports that 50 percent of the hiring organizations or the new hires themselves regret the decisions they made. Shifting to non-exempt workers, research by Humetrics reveals that 50 percent of all hourly employees quit or are fired within their first six months.
Given this high rate of mishires, it’s surprising that most corporations don’t even track mishires who must be terminated or encouraged to resign. Even fewer organizations have a formal “early release process,” like a no-fault divorce for identifying bad and frustrated hires and releasing them as soon as possible.
Why you need to release bad hires as soon as possible
Some of the reasons why you should have a formal effort to release mishires include:
- They are unlikely get better – One major network equipment company that thoroughly researched the issue determined that new hires who are still weak performers after six months on the job have an extremely small chance of ever getting better. If that rule holds for your corporation, it makes sense to cut your losses at the six-month point and move on.
- They take up everyone’s time — Weak hires may take up to 17 percent of the manager’s time that could be spent on employees who have a real chance for improving. They will also waste the resources of the training and performance management teams that will try in vain to get visa mishires up to speed.
- Customers can tell — If these weak new hires have interactions with customers, their negative impacts after their first six months may equal or exceed their yearly salary.
- They frustrate their co-workers — Co-workers can quickly get frustrated with having to constantly help new hires who never appear to “get it.” Keeping weak performers may also frustrate and drive your top performers into job search mode.
- They delay the hiring of a quality replacement — Keeping a weak performer eliminates the possibility of refilling the position with a top performer. In addition, if you put off the releasing of the weak new hire, you also delay the time until a replacement hire can be fully trained and at work meeting their minimum productivity levels.
- They may “check out but never leave” –Failing to release a weak hire may “doom” both the firm and the hiring manager to 10 to 20 years of weak performance. They unfortunately may stay “forever,” because their weak performance record will make it unlikely that they will ever be recruited away by another firm.
How to quickly ID and release weak new hires
There are at least eight (8) approaches that you should consider that facilitate the identification of weak new hires and their quick release. Those approaches include:
- No-fault divorce after six months — Cisco once offered a “no-fault divorce” option that would still work today. Under the concept, managers could offer several months of pay and a good reference if their poor performers at the six-month point agreed to resign after being told there was an extremely low probability that they would succeed if they stayed on. If they refuse the offer and stay until their one-year evaluation and failed it, they would get no severance money and a bad reference. This gives them a powerful incentive to leave early. Incidentally, accepting the package means that they must sign away their right to sue. Having the no-fault divorce as an option may also encourage wavering potential candidates to accept your companies’ offer, because they know up front that even if they fail in the job, they will have a palatable “out” available to them.
- Extended onboarding — Some firms use an extended onboarding process to better identify hiring mistakes. Facebook (six weeks) and Zappos (four weeks) use this intense onboarding process as a secondary assessment level. It has the advantage of giving much more time to accurately reveal not just her skills, but also their team and cultural fit.
- Pay them to leave after onboarding – It may seem expensive to pay weak hires to leave. But if you calculate the damage that they can do, the idea turns out to have a high ROI. Zappos offers all new hires a $3,000 bonus to quit at the end of onboarding if they realize that this is not the job for them.
- Use initial training as a screening process — If there is an extensive new hire training program, make it an “early mishire identification process.” HR must also learn how to statistically project the probability that the new hire will succeed/fail, based on their training scores. Those with a low likelihood of further improvement should be released immediately.
- Consider a more rigorous probation period — almost all corporate “probation periods” are ineffective, because they are unstructured and they are supervised by managers who are naturally reluctant to fire someone who they just recently picked themselves. A more effective approach is to require managers to set periodic objective assessment points, with passing scores, and to report the subsequent rating of each new hire to HR. Human resources should also make managers aware of the low probability of success of a weak initial performer getting better and the economic costs of stretching out their release.
- Use a mentor — Some firms — like Facebook — provide every new hire with a mentor. That new hire mentor can be trained as an assessor, so that they can advise the new hire and the manager whenever they deem the new hire to be a lost cause.
- Allow the team to vote them out – Whole Foods has a unique approach that allows team members to “vote” at the end of an assessment period on whether to make the new hire a permanent member of the team. Because there is a team-based performance reward, it makes sense to give team members a voice on whether to accept weak performers or “bad-fit” hires.
- Encourage the dissatisfied to leave quickly — Because 61 percent of new hires may be unhappy with their choice of a new job, it makes sense to take proactive action to encourage those who are dissatisfied (even if they are good performers) to quit even sooner than they would naturally. If you take the option of offering good performing new hires money to leave, you may be initially criticized but realize that you are also sending the message that the firm is “looking out for their interest.” and as a result, you may also create a long-term “friend” of the company who may yield future business or referrals. The best way to identify dissatisfied new hires is to have an HR generalist or the recruiter who brought them in to assess whether their dissatisfaction will eventually impact their performance and teamwork.
Why is recruiting so error-prone?
Human resources can take a more aggressive role in the early release by developing predictive metrics that through statistics, allowing your firm to accurately predict the likelihood that a weak new hire will eventually become a very good employee.
HR can also develop a new-hire monitoring program to more closely watch weak-performing new hires and to provide the hiring manager with their recommendations on which new hires should be released. HR should also report to senior managers on how well they have reduced the “time to release” of weak-performing new hires.
Recruiting is at best a hit-or-miss operation. Even the best-designed recruiting systems provide ample opportunities for misjudging candidates and thus producing bad hires. Hiring errors occur because candidates misrepresent themselves on their resumes (more than 50 percent do).
New hires also exaggerate their experience and put on their best behavior during interviews, so it’s easy to overrate a candidate. Companies also make errors by skipping or doing ineffective references and by assuming that managers are a good judge of talent.
Unfortunately, despite these many potential errors in the hiring system, recruiting managers continue to operate under the false “zero failure rate assumption” that everyone is a good hire! If continuous improvement of the hiring process is also a goal, you will need a formal feedback mechanism that educates and thus improves the hiring system after a hiring mistake is discovered.
Once you understand the damage the weak new hires can create, everyone should work together to reduce the nearly 50 percent new-hire failure rate.
However, because there will always be a significant percentage of weak hires, an additional focused effort is required to speed up the identification and then the quick release of these “weak and won’t get better hires” who somehow get through the hiring process.