China bad hire costs cannot always be fully calculated. Good hire benefits have the same issues. Some people at Career Builder put together some numbers 3 years ago indicating a bad hire costs more than 300,000 RMB in China.
I think we all can nod our head and say, “Yes, more than 300,000.”
It is not just that you have to fire this guy, pay severance, and finally hire a new guy. A bad hire in management impacts your company culture, and even after that person leaves, habits remain.
To get a leader to maintain your culture is not easy. To get a leader who can get rid of the bad impacts on the culture is even harder to find. (See 11 Things You Need for Excellent Executive Search China) So most companies carry harm from past hires for years knowingly or unknowingly.
I think we all know that hurting a company culture is easy, Human nature is such that the slide into bad habits does not need training.
China Bad Hire Costs Example
We know one US company that has a hard time hiring Chinese management and technical staff for their high technology work.
They had some instability in their market which caused some turnover. The HR manager, unbeknownst to the other managers, would talk down to candidates and leave them waiting in the lobby and fail to give feedback and on and on. Those candidates talk to their friends and suddenly people hear the name of the company and lose interest
Then they appoint a Western GM who was the gut feel choice of the CEO. The CEO tasked him to cut costs as the GM’s background was supply chain. He saw that he needed to lower staffing costs, so he laid off a hard to find R&D engineer because the severance was low! Not only did they lose this great guy, but that Engineer’s friends were their staffing market. Talk about shooting themselves in the foot.
So, 2 years on the HR manager still mistreats candidates quietly, and it is known in the community that this is a bad place to work. This is despite the fact that they know have an excellent GM. It is hard to change that kind of impression. What is the cost of that? Be sure that it is a lot more than 300,000. People who accept work do it for the money or because they can find no other jobs. The rock stars see it is too high risk. (See deeper on China recruitment agency thinking.)
China Bad Hire Costs Conclusion
How much has the HR Manager cost them? What is the severance on her now? How much did the bad GM cost them?
These little things costs so much. One gut feel hire. One bad HR hire who likes to be mean to candidates, and the whole value of the operation is decreased no matter how good a GM you have put in. That is not to say that a good hire is worthless. It is simply harder to fix a company than to build a culture and reputation.
See also Ideal China Recruitment