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Almost one half of new hires fall short of expectations, predominantly because of fit issues, rather than technical competence. Competency models offer a proven method for significantly improving the hiring process.
Hiring managers are well aware that talent management is the key resource necessary for achieving and sustaining a competitive edge. Yet, finding the right person to fit the right job is a difficult business. Few hiring managers can claim to have never experienced the fallout surrounding a bad hire decision. The costs are enormous and the lessons painfully learned. Core competency modeling offers a solution that increases success in new hire decisions and aids in talent management necessary for the achievement of a competitive edge.
"The cost of not hiring the right people is the cost of mediocrity and failure. How much is that worth to you?"
-Charlie Wonderlic, president, Wonderlic, Inc.
The Hard and Soft Costs of a Bad Hire
It has long been understood that poor hiring decisions can be enormously costly to an organization. Hard costs surrounding a bad hire have been calculated at 50-200% of the first year salary, dependant on the employee level (Alpern Rosenthal). Soft costs, while difficult to assess with a dollar figure, can be even more significant. A loss of confidence in management's decision-making prowess, potential destabilization of the workforce, and morale problems may have farreaching negative impact on the organization following a bad hire experience. A key position filled by a bad hire can knock an organization back by years, in terms of competitive advantage. The costs surrounding a bad hire can have significant impact on bottom-line results. This is especially so as bad hire outcomes are far more common than most have realized.
"Motivation will almost always beat mere talent. " -Norman R. Augustine
How often do organizations experience bad hires? A recently published, three-year study of new hire success rates demonstrated that it happens frequently. Conducted by Leadership IQ, a Washington-based research firm, this study surveyed more than 5,000 hiring managers from 312 organizations involved in more than 20,000 new hire events. Some 46% of those 20,000 new hires failed within the first 18 months. Root cause analysis revealed that a mere...