Hiring the wrong candidate and trying to make them fit in to your property business is much like trying to force a square peg in to a round hole. It can be extremely frustrating and very costly.
A mis-hire can have significant costs for any organisation, and this Insight delves in to five key costs to your property business and three steps you can take to attract the right talent.
#1 Financial Costs
The overall financial impact of a mis-hire can be significant.
Salary and Benefits:
Hiring the wrong person is often estimated to cost between 5 – 27 times the basic salary of the position in question.
Paying the salary and benefits of an employee who doesn’t contribute effectively or fit with your culture soon after their appointment, is a direct financial loss.
This includes not only the base salary but also any bonuses, health insurance, retirement contributions, and other benefits.
However, the costs of a mis-hire are multi-faceted, and go way beyond their compensation and benefits. Other costs of hiring the wrong candidate include:
- Recruitment Costs – The cost of recruiting an individual can include expenses such as advertising the role, the fees of a Search Consultant or Recruitment Agency, and the time spent by your HR team and hiring managers in the recruitment process. Read more about Recruitment Costs and Fees
- Training and Onboarding Costs – Once an employee is hired, significant time and resources are invested in training and onboarding them. This includes not only the time and effort of those delivering the training, but also the cost of training materials, and lost productivity while the new hire gets up to speed.
If the employee leaves or is let go, these investments are lost.
If the hire doesn’t work out, these costs are essentially wasted, and you’ll incur additional or similar costs and expenses to find a replacement.
- Severance and Legal Costs: If the employee’s contract needs to be terminated, there may be severance pay involved, as well as potential legal costs if they contest the termination. This might add a significant financial burden to your business.
- Lost Productivity: It’s highly likely that the time and resources you spend on managing an underperforming employee could have been better allocated or used more effectively elsewhere. This opportunity cost can be significant, as it may well impact the overall productivity and efficiency of a team, department or your business overall.
- Impact on Revenue: Whilst having more of an impact in customer-facing roles, an ineffective employee can have a detrimental effect on client experience or relationships with external stakeholders, leading to lost revenue.
By ensuring a thorough and effective recruitment process, you can reduce the risk of a mis-hire and minimise these financial risks, ensuring your investment in any new hire yields a positive return.
#2 Productivity Loss
An unsuitable hire can lead to decreased productivity, not only for the person in question, but also for the immediate team and wider business. They may require more supervision and support, diverting resources from other important tasks or activity.
- Increased Supervision: A poor hire will often require more oversight and guidance. This means managers and team leaders have to spend additional time supervising and correcting their work, diverting attention from other critical tasks and projects.
- Team Disruption: A poor fit can disrupt the workflow and dynamics of the team, with colleague needing to pick up the slack. This can lead to frustration and decreased morale and impact productivity and efficiency in a negative way.
- Training Time: If the new hire struggles to adapt or learn quickly, more time and resources are spent on training and development. An extended training period can delay the progress of projects and reduce the overall output of your team.
- Quality of Work: An employee who isn’t well-suited for their role may produce lower-quality work, leading to errors and rework. This not only affects the immediate tasks but can also have a ripple effect on other projects and deadlines.
- Opportunity Cost: The time and effort spent on managing an underperforming employee could have been used to pursue other opportunities, such as developing new projects, improving processes, or focusing on strategic initiatives for the future. This lost potential can be a significant setback for any property business.
- Employee Turnover: If the poor fit leads to higher staff turnover, the constant cycle of hiring and training new employees can further drain productivity. High turnover rates can also impact the stability and continuity of your team’s work.
#3 Employee Morale:
Hiring the wrong property executive can negatively impact team dynamics and morale. Other employees may become less engaged in the business, frustrated and demotivated, leading to a decline in overall workplace satisfaction and performance.
- Increased Workload: When a new hire isn’t performing well, their tasks often fall to other members of the team. This can lead to increased workloads and stress for those employees, causing frustration and burnout.
- Team Dynamics: A mis-hire can disrupt the harmony and collaboration within a team. If the new hire doesn’t gel with the existing team culture, it can create tension and conflict, affecting overall team cohesion and morale.
- Decreased Motivation: Seeing a colleague struggle or fail to contribute effectively can be demotivating for other employees. It can lead to feelings of resentment, especially if they feel their own efforts are being undermined by the poor performance of the new hire.
- Loss of Trust in Management: If there’s a perception from current employees of management consistently making poor hiring decisions, their trust in leadership can easily erode. They may start to question the company’s direction and decision-making processes, leading to decreased engagement and loyalty.
- Toxic Culture: Consistent poor hiring decisions can contribute to a negative and toxic work environment. Gossip, complaints, and overall dissatisfaction can quickly spread throughout the whole business. Unhappy team members will talk, making it harder to attract top talent in the future.
- Staff Turnover: Low morale can often result in higher employee turnover. If your team is unhappy and feels overburdened or undervalued, they may start looking for opportunities elsewhere, leading to further instability and loss of talent.
#4 Reputation Damage:
Hiring the wrong people in to your property business can harm your reputation. It may even affect relationships with clients, partners and stakeholders.
- Client Relationships: If a poor hire negatively impacts the quality of work or your client’s experience, they may lose trust in you and your organisation. This can lead to dissatisfaction, complaints and the potential of losing valuable clients or contracts.
- Industry Reputation: Mis-hires can tarnish your reputation within the property sector. Rumours can swirl around the industry and potential clients may start to view your business as unreliable or unprofessional, hindering business opportunities and growth.
- Employee Perception: As mentioned above, current employees may perceive the organisation and its leadership as having poor judgment or lacking effective management if they see a pattern of mis-hires. This can lead to decreased morale, engagement, and loyalty, as well as increased employee turnover.
- Talent Attraction: Damage to your reputation in the wider marketplace can make it more challenging to attract top talent. Prospective employees often research companies before applying, and negative reviews or a poor reputation can deter high-quality candidates from considering your property business for their next career move.
- Public Image and Reputation: In today’s digital age, news of poor hiring decisions can spread quickly through social media and online review platforms, such as Glassdoor. Negative publicity can harm an organisation’s public image, making it challenging to maintain a positive brand perception.
#5 Opportunity Costs:
The time and resources spent on addressing or managing a mis-hire could have been used to pursue other opportunities, such as new business development projects or improving existing processes.
- Lost Time: The time spent on recruiting, training, and managing an unsuitable hire could have been used more effectively elsewhere. This includes time that could have been spent on strategic planning, business development, or improving existing processes.
- Missed Opportunities: While resources are tied up with an underperforming employee, the organization may miss out on opportunities to innovate, expand, or take on new projects, hindering future growth.
- Delayed Projects: Rectifying the consequences of a poor hire can slow down project timelines and cause delays that affect the overall success of the business. This can result in missed deadlines and potential revenue loss.
- Resource Allocation: Training resources and the support invested in a poor hire could have been allocated to more promising employees or initiatives. This misallocation can impact the overall efficiency and effectiveness of the organization.
- Impact on Team Performance: The time and effort spent on managing a poor hire can detract from the performance and development of other team members. This can lead to a decrease in overall team productivity and morale, further compounding the opportunity costs.
So, what’s the solution and how do you avoid ending up with an underperforming property executive who drains your resources?
Avoiding the wrong hire is crucial for maintaining productivity, morale, and overall success. Here are THREE key strategies to help ensure you hire the right property leader:
1. Implementing a Robust Recruitment and Selection Process
The very best property leaders won’t actively be looking for a new role or fresh challenge, so digging deep to find the best property talent is crucial.
You may need to work alongside an external recruitment partner who can map the entire market and assess the whole talent pool, to ensure the very best candidates are found.
Applying a comprehensive screening process that includes multiple interviews and skills assessments.
Using behavioural and situational questions to gauge how candidates have handled past challenges and how they might fit into your company culture.
You may also want to consider using psychometric tests to assess personality traits and cognitive abilities.
Solid reference checks can also assist as part of the process.
2. Evaluating Cultural Fit and Values Alignment
Beyond skills and experience, one crucial step to avoiding a mis-hire, is actually assessing whether the candidate aligns with your company’s values and culture.
This can be done through cultural fit interviews, where you discuss the company’s mission, values, and work environment.
It’s about having a process that not only identifies candidates who have the exact knowledge and skills you’re looking for, but who share your organisation’s vision and values, and can add to it.
3. Involve Multiple Stakeholders in the Hiring Process:
Engaging a wide variety of team members in the hiring process will give you diverse perspectives on the candidate.
This can include HR professionals, hiring managers, and even cross-functional team members or more junior colleagues.
Having multiple viewpoints can help identify any red flags and ensure the candidate is a good fit for the team and the business as a whole.
Ensuring a thorough and effective recruitment and selection process can help mitigate against the risks of a mis-hire.
Making a larger investment at the outset – time and resources – to support your due diligence and hiring process, will lead to benefits in the long run.
Want to know more about how we go about finding the highest calibre property professionals for our clients?
