Poor Hiring Decisions Impact Your Bottom Line

By Doug Walner President & CEO, Psychological Services, Inc. | October 28, 2008

Evaluating the strengths and weaknesses of job applicants isn't an easy process. Conventional interviews and first impressions can often be misleading. The candidates you may have thought would be strong performers could buckle under pressure or be ill equipped to handle what you may consider the most basic tasks.

So, what can employers do to "hedge their bets" and help ensure that they're hiring the best candidate possible for the job at hand? One answer is by using assessment and evaluation programs to better match candidate capabilities with key job demands. Cognitive, aptitude and other such tests can help measure not only a person's mental ability, creativity and decision-making skills, but also specific personality traits, whether that person shows a willingness to learn and to succeed, and other factors.

Assessments can also help "weed out" poor candidates and help companies from making mistakes that could severely impact their business's bottom line.

Costly Misjudgments

According to a survey by one of the country's leading accounting firms, turnover costs about 1.5 times the salary of the employee who needs to be replaced. That includes severance costs and other costs related to recruitment, training and lost productivity. It's a hard pill for any employer to swallow, particularly in the hotel and hospitality business where having one "bad apple" in a key position can result in untold damage to a hotel's name, reputation and revenue from repeat business.

The annual hotel industry turnover rate at present is a staggering 48.35%, according to the American Hotel and Lodging Association. When one takes that figure, and combines it with the typical cost of replacing an employee, the case for making the right hiring decision becomes even stronger. Bad hires can cost money - lots of it. But there are other downsides, as well.

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The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.