Bad-Hires-for-Technology-Projects-What-Are-The-Costs

As we continue to build a community of top technology talent, one observation pops up again and again: The frustration of poor job fit hits employers and employees alike.

For jobseekers, unsatisfactory jobs lead to stress, burnout, underperformance, and of course, attrition. It isn’t better on the other side.

Hiring managers experience equal frustration—because in their case, it’s about more than an exchange of skills and rewards. A bad hire translates into project delays and can even cause project failure, not to mention the sunk cost of onboarding such a resource.

But here’s a question: If hiring managers knew what bad hires look like, would they onboard them at all?

What Exactly Is A “Bad Hire”?

Are skills all that set apart good hires from the bad? Even for software developers, and other technology professionals, (for whom ‘hard skills’ count for a lot!) the answer is no. A jobseeker with strong technical knowledge will still be a bad hire if he/she doesn’t make the effort to upgrade skillsets or explore areas other than his/her core expertise. For instance, at Xperti, we receive many applicants with a decidedly strong background in Java development. The ones who qualify for the best opportunities are those who regularly add to their existing skillset, with experience in Angular, Spark, etc.

So hiring managers are well-advised to measure a jobseeker’s adaptability during the assessment. But is it just technical/skill-based adaptability? What about industry norms? Save on onboarding costs by rewarding candidates who’ve made the effort to familiarize themselves with industries other than the ones they’ve worked in.

We’ve seen the trend of headhunting passive candidates really catch up. i.e. Approaching candidates who aren’t looking for jobs. Done right, this helps create a healthy talent pipeline. Done wrong, it creates a vacuum between the organization’s existing talent pool and the one it is acquiring externally.

This vacuum provides important insights into the third—and most critical—a factor that hiring managers need to look into Cultural adaptability. In a thorough solution, candidates are tested over a wide range of areas: Professionalism, flexibility, communication skills and more.

Person-Job Fit
Technical Skills
Capabilities
Experience
Upgrade
Relevance to role
Functional Skills
Domain knowledge
Prior domain experience
Regulatory knowledge
Behavioral Analysis
Flexibility
Punctuality
Courtesy
Professionalism
Communication
Responsiveness

As we mention in another blog, there are reasons that exclude staffing agencies and recruiting firms from measuring these factors, and/or measuring them accurately. But does this mean managers who onboard candidates without this assessment aren’t any worse off than those who do? Is it a case of “If it ain’t broke, don’t fix it?”

According to the numbers, no.

How High Are The Costs for Technology Projects?

Bad hires are expensive. Always. Let there be no doubt. Elsewhere, we’ve mentioned that the cost of a bad hire reaches about 30% of his/her annual earnings. But if you consider the intangibles of hiring a bad fit, the costs are even higher.

Consider the following:

Opportunity Cost: This is the ‘alternative’ cost of choosing one option over another. For instance, let’s assume you have a budget of $100/hour for an A-tier candidate. The person you hire was a poor fit. Your opportunity costs would be:

  • $100/hour for a real A-tier fit
  • 2 B-tier candidates at $50/
  • 4 C-tier candidates at $25/hour

Or simply to outsource the project to someone who would do it for $80/hour.

And so on.

Lost Morale and Toxicity: How much does a poor work environment cost a business? Depending on its consequences—which include lower productivity, loss of top talent, and cultural erosion, the costs go anywhere between 25% to 80%. If by the bad environment, we mean toxic work relationships and culture, the costs are even higher. Cultural erosion is another serious cost associated with contractors and permanent hires alike, but which is much harder to measure.

Turnover of Good Hires: In a now-famous study, 75% of job hoppers attributed their decision to a need to change ‘bosses, not jobs’. Add back the opportunity cost of replacing, onboarding and managing their replacements.

Bad Rep For Passive Candidates: Increasingly, management literature shifts the spotlight from “Healthy Competition” towards “Retention Tactics” and “Best Place To Work.” There’s a reason for that. Toxic cultures, or workplaces that have been scarred by frequent job hoppers, tend to become homogenous with time. It’s a snowball effect: One bad hire in a position of power will create a coterie of likeminded individuals, thereby popularizing a culture of inefficiency and underperformance. With time, the influence of this group grows, until there is little room—or appetite—for cognitive diversity. So the more talented the external hire is, the more isolated he/she will be in this new culture. If a case doesn’t exist a good new hire, it will be manufactured. In such cases, quantity overrides quality. The more attrition there is of passive candidates headhunted for the job, the harder it becomes to attract and retain good hires.

Technology Projects & Bad Hires

Why is bad hiring more problematic for recruiters in technology—than say—manufacturing? In a word, transferability. Unlike the skills needed to produce tangible goods, technology professionals operate in an environment of cerebral intricacy. Their achievements cannot be explained or replicated as easily as perhaps those of flooring manufacture, or factory engineer.

Technology Projects

With a ‘moderately’ bad hire, there will be costs associated with project delays, downtime due to errors, and higher integration time. Project managers will also have to allocate resource cushions for ‘future explosions’ emanating from the inadequate output of such hires.


Then there is the added cost of ‘recovering the debris.’ Unfinished projects? Missing source code? Poor or no documentation? A bad technology resource will leave at least some of these in his/her wake. It costs the business more to recover than it would have not hired him/her.

Undoing The Damage: What Hiring Managers Can Do

As mentioned above, no one sets out to hire a bad resource—or a good resource who will prove to be a bad fit. But it still happens, and with more frequency, than we’d like to admit.
If you’re a recruiter, what can you do to lower the incidence?

Define what successful hires are:

Unfortunately, recruiters limit measurement of their efforts to metrics like:

  • Time taken to locate the resource
  • Negotiation results
  • Speed of onboarding
  • JD/resume fit

All of which describe what happens before someone joins a project. None of these can adequately predict what happens after the talent comes on board.

Setting 30, 60 and 90-day targets helps clarify expectations on both ends, provided these targets are quantified and objective. For instance, in the case of onsite projects, absenteeism thresholds could be one measure. Above-the-line problem solving, which goes beyond the contractor’s defined JD could be another metric in the 60- or 90- day range. And so on.

This helps define what organizational culture looks like when applied to practical work situations.

Measure success over the long run:

If success is the absence of failure, is the converse also true? We know what the traits of bad hires look like, especially in technology projects. Does the absence of those traits indicate success? The answer, unfortunately, is not that straightforward. The workplace is changing. Diversity and inclusion mean that demographic and psychographic assumptions about the workforce that was true two decades ago are probably illegal today. Likewise, skills that would have earned a market premium just 5 years ago are mainstream today. The point: Using short-term results as a yardstick is both misleading and damaging. Xperti’s advantage is that it is built on nearly two decades of recruiting analytics—with its database regularly replenished with new technology resources. This gives a long-term and real-time snapshot of talent equity.

Be mindful of how recruiting analytics will be influenced by the past and the future:

Past biases will damage predictive analytics. But what about our assumptions about the future? How do they influence our recruiting decisions today? When planning the contractor-permanent hire mix in resource charts, what assumptions do we make? How accurate are they? When it comes to technology projects, it’s quite possible to underestimate emergent technologies.

Bad Hires for Technology Projects – Conclusion:

Conversely, the hype around legacy software might die in the industry long before even the decision to phase it out starts at the enterprise level. In such cases, finding ‘niche specialists’ is both a challenge and a risk. Does your business depend on a solution that’s too big to dispose of with, and too old to scale? Map out your recruiting requirements against that with timelines for a realistic picture of your recruitment costs.

In subsequent posts, we’ll be covering how recruiting analytics can help minimize the incidence of bad hires. In the meantime, share your thoughts and questions about good and bad hires with Xperti today!

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