The Cost of a Bad Hire: Butts in Chairs and How to Convince Hiring Managers to Avoid Them

Aug 9, 2010, 5:26 am ET

I need someone, anyone, now … just put butts in chairs — I don’t care about quality.

This must be one of the most feared phrases that a good recruiter can hear, unfortunately, it and phrases like it are not uncommon. A better name for it is “reckless hiring,” as such demands are essentially a directive to source candidates who are the real-world equivalent to Homer Simpson. While I certainly understand the pain a vacancy, particularly one in a highly visible role can cause, such shortsightedness often ends up backfiring.

The cost of hiring a weak employee like Homer Simpson in many cases exceeds the cost of leaving the position vacant until you can get a top-quality hire. Superior recruiters rarely cave to pressure and find ways to talk managers out of this silly request. Following are some arguments that I have developed to respond to “butts in chairs” recruiting requests.

(Incidentally, the same arguments can also be applied to existing weak employees in cases where layoffs or terminations are being considered.)

The Top 30 Arguments against Hiring … “Butts in Chairs” a.k.a. Warm Bodies, “C” Players and Homer Simpson

Business Impacts of Butts in Chairs

Lost productivity — a new hire who produces in the bottom quarter of employees in a position can produce between 25% and 600% less than a top performer. The quality of their work may even be lower than the volume of their output.
Reduced revenue — if the new hire happens to be in a revenue-generating or revenue-impact position, the loss of revenue could be significant.
Lost innovation – in a fast-moving world, high rates of innovation are critical to maintaining competitive advantage. Organizations cannot tolerate employees who are resistant to change and whose work may actually distract other employees.
Customer impacts — customers know when they are dealing with a weak employee, so hiring a subpar employee into a role that interfaces with customers can measurably reduce sales, customer satisfaction, and increase customer turnover.
Error rates – poor performers make many mistakes generating work that must be redone. Weak employees may also cause more accidents, hurting themselves and others.
Slower time-to-market — weak employees are slower in both their work and their thinking. As a result, they can slow the progress of the entire team, especially in important areas like product development.
Competitive advantage – hiring weak employees sends a message to competitors that you are getting weak. This might encourage and empower them to become more competitive and confident.

Increased Management Time and Effort From Butts in Chairs Employees

More management time — weak hires are “high maintenance” requiring more coaching and concern. The time spent on weak employees can’t be spent on the best employees or on business planning.
Weak hires must be replaced — even though “warm bodies” may appear to help in the short-term, eventually (when their weak performance can no longer be tolerated), they will have to be replaced. Unfortunately, weak hires have little chance of getting poached, so if your organizations is averse to firing, they may stay with you forever.
Performance management and termination costs — weak employees require frequent performance management, sucking up management/HR time and development resources. Unfortunately most statistics reveal that such efforts fail, so all invested resources are essentially lost.

The Hiring Manager’s Image Is Impacted

Being branded as a “C” manager — it’s a well-known business axiom that weak managers routinely hire weak employees (C managers hire C players). Hiring weak employees will send a clear message to everyone in the organization validating that a manager has become a “C” manager.
Loss of your colleagues’ respect — Once a manager makes the decision to go down the butts-in-chairs road, they will instantly lose the respect of other managers. This loss of respect may negatively impact their willingness to cooperate, to share ideas, as well as their responses to 360° reviews.
Reduced bonuses — for managers who hire and retain a significant percentage of weak performers, performance bonus opportunities will be significantly reduced.
Impacts on promoteability — hiring weak employees will be noticed by superiors, which coupled with poor business results will limit chances of promotion. It may also limit opportunities for jobs at other firms.

People-management and Team Impacts

Resentment by coworkers — better-performing employees often resent being on the same team with “losers.” They may have to spend a significant portion of their time helping out or fixing the mistakes of weak employees, ultimately reducing their productivity.
Lost leadership and promotional opportunities — every weak hire is a missed opportunity for building leadership bench strength. If your organization’s attrition rate is high, you may be faced with a situation where a long-tenured weak hire may by default eventually become a team leader. Over the long term your internal candidate pool for promotions will be dramatically reduced.
Increased turnover — hiring and keeping weak employees may send a clear message to high-quality employees that standards are being reduced and performance is no longer important. This may cause them to transfer or to quit the organization altogether.
Reduced internal transfers — as other employees learn of reduced standards through informal channels, the number of quality employees who will consider transferring into affected departments will drop like a stone.
Opportunity costs — every slot taken up by a weak employee can’t be filled with a great employee. Without as many great employees as possible, you won’t have an effective team that produces superior results.
Negative impacts on future hiring — when candidates meet and interact with weak employees, they may reconsider and pursue other opportunities.
Legal issues increase — weak hires are much more likely to file formal complaints and grievances. In addition, they often require extensive discipline. If a lawsuit or government complaint results, the cost of making a bad hire will be significantly amplified.
Hiring costs — it costs no more to hire a better performer. The salary costs of weak hires are not lower than average employees.
Lost agility — if your organization operates in a fast-changing business environment, every team needs to have agile members. A weak hire cannot contribute to that competency and will slow down everyone else on the team.
Longer ramp-up time — weak new hires will require more intense and time-consuming onboarding, taking longer for them to reach minimum levels of productivity if even possible. As their salary will not be reduced during this time, your ROI will.
Reduced learning — other members of the team can’t learn anything positive from weak employees, thus reducing overall team learning speed. If weak employees do coach others, they may actually hurt their productivity by steering them in the wrong direction.
A loss of competitive intelligence — new hires who come from direct competitors can provide you with intelligence and best practices. Unfortunately, any “hurry-up” hiring is unlikely to capture even a single employee from your best competitors.
Lower technology competence — candidates with the most technology experience and skills are difficult to land. As a result, a butts-in-chairs approach will likely yield fewer candidates with advanced technology skills and experience.
More training is required — throughout their lifecycle, weak hires will require more access to training and retraining, which in addition to their lower levels of productivity may result in them costing more than they produce.
A loss of diversity — rapid hiring of any kind without sufficient pre-work almost always results in lower-quality candidates. If you expect to hire diverse candidates, expect any “butts-in-chairs” approach to have a well-below-average yield in this area.
More temporaries required — weak employees are more prone to absenteeism and tardiness, which will require more use of costly temporary workers to fill in.

Final Thoughts

Although it’s quite common for individual shortsighted managers to request that you stoop to a “butts-in-chairs” level, resist such demands. If momentary drops in standards catch on, it could decimate the organization. While not a scientific study, most informal assessments peg the cost of a bad hire to be 150-300% of their annual salary each year they remain employed. As a professional recruiter you have both a professional and fiduciary responsibility to your organization’s shareholders to ensure that new hires not only perform but also have the capability of continuous learning and eventual promotion. If you happen to be an external recruiter, the battle is even more difficult but it still must be won unless you are willing to permanently damage your reputation.

Almost all “butts-in-chairs” hiring can be attributed to a failure to plan ahead. Forecasting hiring needs, developing candidate pools, and building candidate relationships are tried and true approaches that can prevent reckless hiring. If you are ever forced into a “butts-in-chairs” mode, it is essential that you use a “quality of hire” measure so that next time you a request, you will have supporting data demonstrating the dollar cost of the damage done by use this approach.

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http://dreamlearndobecome.blogspot.com This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.

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Monday, August 9, 2010