The Street ran a good piece on bad hiring that’s worth applying to China. A few excerpts:
20% of all hires are bad hires.
Of course, some costs of a bad hire aren’t always obvious; “hidden” costs often cause even more damage than the financial ones, Kinicki says. “The hidden costs of bad hires include lower morale, interruptions to the unit’s work flow and negative perceptions about the unit, all of which negatively affect productivity and service quality.”
“If the bottom line is affected, then people’s salaries may be impacted and their bonuses definitely will,” Hovendick explains. “People may start to feel resentment towards the person who is leaving, or towards the managers who brought that person on in the first place.”
So What Is the Cost of a Bad China Hire?
That 20% figure caught my eye, because in China, the number for Western companies runs closer to 30%. My 20 years of experience with clients here reveals a consistent pattern in Western businesses operating in China: 20% are good hires, 50% are mediocre, and 30% are actively working against the company’s interests, whether they realize it or not.
What does it cost you when people aren’t rowing in the same direction? Or worse, are throwing wrenches into the initiatives you’re trying to run?
Why do we tolerate this? In production, we talk about Six Sigma. In recruiting, that same discipline tends to go out the window. Through continuous improvement and a rigorous process, we’ve brought our own bad-hire rate to under 5%, and the bad hires we do occasionally make aren’t nearly as damaging as the 30% figure above. We’re still working to push that number lower. See also Why We Background Check.
Consider how much that 30% drags down the attitudes of the 50% in the middle. Human nature being what it is, that influence runs deeper than anything the good 20% can offset. The real problem is that most companies can’t tell which hires are good and which are quietly working against them. I’ve watched companies push out genuinely good employees simply because those employees weren’t playing office politics as aggressively as the bad hires were.
How Cleaning Up Works
This pattern is understandable once you look at it cross-culturally, which is exactly why we specialize in this kind of work. A first engagement often starts with placing a single strong hire. From there, a client might move from 3 good hires out of 10 toward something much better, depending on how ready they are to root out the rest.
A stronger company emerges one placement at a time, as the hit rate on great hires climbs. You can build a genuinely bright future here, and the high cost of a bad hire can become a thing of the past. We love watching bad China hires disappear, replaced one by one with the kind of hire that actually moves your business forward.
At SHI Group, we’ve found that over 70% of professional job applicants in China have lied at some point to secure an offer. That single fact accounts for most of the 30% bad hires and 50% mediocre hires we see across the market. That’s the real cost of a bad hire: office politics, high turnover, low morale, poor efficiency, cost overruns, and more — all of it traces back to that mediocre or bad hire in the first place.
I paste some below:
20% of all hires are bad hires
And
Of course, some costs of a bad hire aren’t always obvious — “hidden” costs often cause even more damage than the financial ones, Kinicki says.
“The hidden costs of bad hires include lower morale, interruptions to the unit’s work flow and negative perceptions about the unit, all of which negatively affect productivity and service quality,”
And
“If the bottom line is affected, then people’s salaries may be impacted — and their bonuses definitely will,” Hovendick explains. “People may start to feel resentment towards the person who is leaving — or towards the managers who brought that person on in the first place.”
So What is the Cost of a Bad China Hire?
I admit the 20% number caught my eye as in China it is 30% in Western Companies. My 20 years of experience helping customers shows a common trend in Western Businesses in China: 20% are a good hire, 50% are mediocre hires and 30% are actually against you in their heart.
What is the cost of having people not rowing in the same direction or even throwing wrenches in initiatives you have going?
Why do we put up with this? In production we talk 6 Sigma. In recruiting, we throw that out the window. Through continuous improvement and the strongest process. we are under 5% bad hires. (Our bad hires are not nearly as bad as the 30% bad hires above.) We plan to keep pushing our number down. See also Why We Background Check.
How much impact does the 30% have on the attitudes of the 50%? You can be sure it is more impact than the 20% will have due to human nature. The real problem I see is that so many companies do not know which are the good hires and which are harming them. I often see companies kick out good hires as good hires were not playing politics full time like the bad hires.
How Cleaning Up Works
Cross culturally this is pretty understandable, so that is why we specialized in this area. A first engagement is often that we place one good hire. So, the client has 3 out of 10 that are excellent hires, then work gradually from there depending on how ready the customer is to get the rot out.
A better company emerges as the hit rate on great hires rises one placement at a time. You can build a bright future, and the high cost of a bad hire can become history. We love to see bad China hires cease and then light dawn, placement by placement.
We at SHI Group find that over 70% of professional applications in China have lied to get the job offer. That accounts for the 30% bad hires and the 50% mediocre hires. The cost of that is the real cost of a bad hire. Bad Politics, high turnover, low moral, poor efficiency, cost control problems and more all start with the mediocre and bad hire.
