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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