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Mar 21, 2019

Approx. 5 min. read

The Real Cost of Hiring the Wrong Cultural Fit

Hiring a great talent is hard. You need someone with the right qualifications and skills, but you also need this talent to be the right cultural fit...

Hiring a great talent is hard. You need someone with the right qualifications and skills, but you also need this talent to be the right cultural fit for your organization.

When your newest recruit is a good cultural fit, it enhances your team’s shared purpose and vision, helping everyone to feel like they’re a part of something greater than themselves as individuals.


When employees share the company's vision and core values, they work well together, they are more productive, and they cultivate a positive atmosphere that your customers will feel. But if you hire someone who doesn’t fit your company culture, though, things can go wrong. How wrong? Very wrong. Employees who are not the right fit are most likely going to leave the company soon after the onboarding process which may lower other employees' motivation and productivity. At the end of the day, your ability to achieve your business goals can be greatly compromised.

Let’s take a look at the costs (including hidden costs) you may face if you don’t hire the right culture fit:

What Are the Financial Costs of a Cultural Mismatch?

When you let someone who is not a good fit for your organization go, you’re likely going to need to replace them. Advertising an open position to find a replacement, interviewing applicants, and hiring a recruiting agency if you decide to work with an external recruiter to find the right talent may cost thousands of dollars. Then, you may face costs linked to candidate background checking process and pre-employment testing, and you may also need to reimburse applicants’ travel and relocation expenses. SHRM reveals that the average cost per hire is $4,129, and when you make a bad hire, you end up paying that amount of money twice.

In parallel, the average company spends $986 per individual on employee training programs each year. All that money goes down the drain when a bad hire leaves the company after just a few months. When an employee leaves unexpectedly, you’ll also have to cover that person’s workload, which may come in the form of paying employees overtime or paying over the odds for a temporary hire.

hiring-the-wrong-cultural-fit-can-affect-your-business-success-minThe financial costs of a bad hire can vary depending on the size of the company – for a small company, the average cost runs to $11,000, while a large company with over 1,000 workers loses $22,000 for every bad hire on average. Overall, the US Department of Labor estimates that a bad hire could cost up to 30% of that individual’s annual earnings.

Hiring a Poor Cultural Fit Can Affect Your Company’s Success Overall

The cost of hiring the wrong cultural fit is not purely financial: the negative impacts the wrong fit may have on the team’s productivity and motivation can actually have a severe impact on your business success. 

A single manager who’s a bad fit can create an atmosphere of employee disengagement throughout the entire company, undermining your staff’s ability to work well together, and introducing negative work practices that can take years to undo. Over 90% of CEOs recognize that a bad hire drags down morale in the company as a whole, and 20% of workers say that they’ve lost trust in a manager due to his bad hiring decision.

The consequences of hiring the wrong fit are hard to predict but are certain to be felt. Over one-third of managers report that their company’s productivity dropped due to a bad hire. Think about it: when an employee leaves the company, their workload has to be redistributed across the team while you're re-advertising the job, which leads to resentment, even more employee disengagement, and compromised work quality.

a-bad-cultural-fit-can-have-negative-impacts-on-the-teams-productivity-minYour other employees have to work harder and longer to cover the gaps, making them less efficient. Projects get disrupted, come in over budget, or have to be dropped. The knock-on effect on missed business goals, increased customer support issues, and disrupted supply chain can lead to you losing long-term customers.

There’s also the further risk that your bad hire could then make more “bad hires”, creating a vicious cycle that drags your company down. Zappo’s CEO Tony Hsieh says he’s lost over $100 million through bad hires.

Reducing the Risks of Attracting and Hiring the Wrong Talent

Some 37% of tech leaders say that “culture fit” is the hardest thing to judge in job interviews.

One of the best ways to improve your chances of hiring someone who is a good cultural fit is to make your employer brand a collective effort and to do so, you’ll need to engage your employees in content creation and distribution. Think about it: about 79% of job seekers and 86% of young millennials use social media in their hunts – both to find open positions and to research company culture. When your employees share behind-the-scenes content on social media, they showcase what it's like to work at your company which reduces the chances of getting applications from someone who would be a “bad cultural fit.” Gallup highlights that a business with visibly happy and fulfilled employees can attract the top 20% of applicants.

Related: Jörgen Sundberg on How to Build a Great Employer Brand on Social Media

What’s more, three-quarters of applicants say that they consider an employer’s brand image, and 84% say that they would consider quitting their current job to move to a business with a positive company culture. When your employees step in and share content that makes them feel proud of themselves and their company, it increases your chances of attracting and hiring the best cultural fit for your organization!

Related: How to Make Social Recruiting a Company-Wide Effort

Conclusion

The costs of hiring the wrong cultural fit can be immense, both in terms of financial costs and the negative impacts the wrong fit may have on the team's productivity and morale. It’s difficult to judge if a candidate would be a good cultural fit during the hiring process, so make your employer brand a collective effort: when your employees share blog posts, pictures or videos related to their own experience, it eases your hiring process by raising your brand image in the eyes of the best talent!

Are you interested in learning more on how your employees can help you attract the right talent to your organization? Feel free to download our free eBook “How to Succeed in Social Recruiting with Employee Advocacy” for more tips!

Reach more talent with the help of employee advocacy and social recruiting

Written by

Smarp

Smarp

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