Receive daily articles & headlines each day in your inbox with your free ERE Daily Subscription.

Not logged in. [log in or register]

The Cost of a Bad Hire: Butts in Chairs and How to Convince Hiring Managers to Avoid Them

by Aug 9, 2010, 5:26 am ET

I need someone, anyone, now … just put butts in chairs — I don’t care about quality.

This must be one of the most feared phrases that a good recruiter can hear, unfortunately, it and phrases like it are not uncommon. A better name for it is “reckless hiring,” as such demands are essentially a directive to source candidates who are the real-world equivalent to Homer Simpson. While I certainly understand the pain a vacancy, particularly one in a highly visible role can cause, such shortsightedness often ends up backfiring.

The cost of hiring a weak employee like Homer Simpson in many cases exceeds the cost of leaving the position vacant until you can get a top-quality hire. Superior recruiters rarely cave to pressure and find ways to talk managers out of this silly request. Following are some arguments that I have developed to respond to “butts in chairs” recruiting requests.

(Incidentally, the same arguments can also be applied to existing weak employees in cases where layoffs or terminations are being considered.)

The Top 30 Arguments against Hiring … “Butts in Chairs” a.k.a. Warm Bodies, “C” Players and Homer Simpson

Business Impacts of Butts in Chairs

  • Lost productivity — a new hire who produces in the bottom quarter of employees in a position can produce between 25% and 600% less than a top performer. The quality of their work may even be lower than the volume of their output.
  • Reduced revenue — if the new hire happens to be in a revenue-generating or revenue-impact position, the loss of revenue could be significant.
  • Lost innovation – in a fast-moving world, high rates of innovation are critical to maintaining competitive advantage. Organizations cannot tolerate employees who are resistant to change and whose work may actually distract other employees.
  • Customer impacts — customers know when they are dealing with a weak employee, so hiring a subpar employee into a role that interfaces with customers can measurably reduce sales, customer satisfaction, and increase customer turnover.
  • Error rates – poor performers make many mistakes generating work that must be redone. Weak employees may also cause more accidents, hurting themselves and others.
  • Slower time-to-market — weak employees are slower in both their work and their thinking. As a result, they can slow the progress of the entire team, especially in important areas like product development.
  • Competitive advantage – hiring weak employees sends a message to competitors that you are getting weak. This might encourage and empower them to become more competitive and confident.

Increased Management Time and Effort From Butts in Chairs Employees

  • More management time — weak hires are “high maintenance” requiring more coaching and concern. The time spent on weak employees can’t be spent on the best employees or on business planning.
  • Weak hires must be replaced — even though “warm bodies” may appear to help in the short-term, eventually (when their weak performance can no longer be tolerated), they will have to be replaced. Unfortunately, weak hires have little chance of getting poached, so if your organizations is averse to firing, they may stay with you forever.
  • Performance management and termination costs — weak employees require frequent performance management, sucking up management/HR time and development resources. Unfortunately most statistics reveal that such efforts fail, so all invested resources are essentially lost.

The Hiring Manager’s Image Is Impacted

  • Being branded as a “C” manager — it’s a well-known business axiom that weak managers routinely hire weak employees (C managers hire C players). Hiring weak employees will send a clear message to everyone in the organization validating that a manager has become a “C” manager.
  • Loss of your colleagues’ respect — Once a manager makes the decision to go down the butts-in-chairs road, they will instantly lose the respect of other managers. This loss of respect may negatively impact their willingness to cooperate, to share ideas, as well as their responses to 360° reviews.
  • Reduced bonuses — for managers who hire and retain a significant percentage of weak performers, performance bonus opportunities will be significantly reduced.
  • Impacts on promoteability — hiring weak employees will be noticed by superiors, which coupled with poor business results will limit chances of promotion. It may also limit opportunities for jobs at other firms.

People-management and Team Impacts

  • Resentment by coworkers — better-performing employees often resent being on the same team with “losers.” They may have to spend a significant portion of their time helping out or fixing the mistakes of weak employees, ultimately reducing their productivity.
  • Lost leadership and promotional opportunities — every weak hire is a missed opportunity for building leadership bench strength. If your organization’s attrition rate is high, you may be faced with a situation where a long-tenured weak hire may by default eventually become a team leader. Over the long term your internal candidate pool for promotions will be dramatically reduced.
  • Increased turnover — hiring and keeping weak employees may send a clear message to high-quality employees that standards are being reduced and performance is no longer important. This may cause them to transfer or to quit the organization altogether.
  • Reduced internal transfers — as other employees learn of reduced standards through informal channels, the number of quality employees who will consider transferring into affected departments will drop like a stone.
  • Opportunity costs — every slot taken up by a weak employee can’t be filled with a great employee. Without as many great employees as possible, you won’t have an effective team that produces superior results.
  • Negative impacts on future hiring — when candidates meet and interact with weak employees, they may reconsider and pursue other opportunities.
  • Legal issues increase — weak hires are much more likely to file formal complaints and grievances. In addition, they often require extensive discipline. If a lawsuit or government complaint results, the cost of making a bad hire will be significantly amplified.
  • Hiring costs — it costs no more to hire a better performer. The salary costs of weak hires are not lower than average employees.
  • Lost agility — if your organization operates in a fast-changing business environment, every team needs to have agile members. A weak hire cannot contribute to that competency and will slow down everyone else on the team.
  • Longer ramp-up time — weak new hires will require more intense and time-consuming onboarding, taking longer for them to reach minimum levels of productivity if even possible. As their salary will not be reduced during this time, your ROI will.
  • Reduced learning — other members of the team can’t learn anything positive from weak employees, thus reducing overall team learning speed. If weak employees do coach others, they may actually hurt their productivity by steering them in the wrong direction.
  • A loss of competitive intelligence — new hires who come from direct competitors can provide you with intelligence and best practices. Unfortunately, any “hurry-up” hiring is unlikely to capture even a single employee from your best competitors.
  • Lower technology competence — candidates with the most technology experience and skills are difficult to land. As a result, a butts-in-chairs approach will likely yield fewer candidates with advanced technology skills and experience.
  • More training is required — throughout their lifecycle, weak hires will require more access to training and retraining, which in addition to their lower levels of productivity may result in them costing more than they produce.
  • A loss of diversity — rapid hiring of any kind without sufficient pre-work almost always results in lower-quality candidates. If you expect to hire diverse candidates, expect any “butts-in-chairs” approach to have a well-below-average yield in this area.
  • More temporaries required — weak employees are more prone to absenteeism and tardiness, which will require more use of costly temporary workers to fill in.

Final Thoughts

Although it’s quite common for individual shortsighted managers to request that you stoop to a “butts-in-chairs” level, resist such demands. If momentary drops in standards catch on, it could decimate the organization. While not a scientific study, most informal assessments peg the cost of a bad hire to be 150-300% of their annual salary each year they remain employed. As a professional recruiter you have both a professional and fiduciary responsibility to your organization’s shareholders to ensure that new hires not only perform but also have the capability of continuous learning and eventual promotion. If you happen to be an external recruiter, the battle is even more difficult but it still must be won unless you are willing to permanently damage your reputation.

Almost all “butts-in-chairs” hiring can be attributed to a failure to plan ahead. Forecasting hiring needs, developing candidate pools, and building candidate relationships are tried and true approaches that can prevent reckless hiring. If you are ever forced into a “butts-in-chairs” mode, it is essential that you use a “quality of hire” measure so that next time you a request, you will have supporting data demonstrating the dollar cost of the damage done by use this approach.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • Pingback: Tweets that mention The Cost of a Bad Hire: Butts in Chairs and How to Convince Hiring Managers to Avoid Them - ERE.net -- Topsy.com

  • Todd Noebel

    John – this type of hiring is self-perpetuating, and not in a good way. The attrition rates remain or become high, which requires more volume of hires. It’s a vicious crap cycle that takes leadership fortitude to break.

    Butt’s in seats hiring = butt’s for brains leadership.

  • Connie Hampton

    John,
    Can you get this posted on SHRM’s website? We all know this, but there is a larger audience who needs to hear it.
    Connie

  • http://www.processspecialist.com Leanne HoaglandSmith

    Not only for hiring but for training and development and let us not forget public education. The attitude of butts in the seat is 1000% counter productive to creating a culture of high performance not to mention profitability. Human capital is still the most valuable and overall the least developed and recognized in any organization due to Status Quo thinking e.g. We have always done it that way.

  • Gabriel Gheorghiu

    Unfortunately, this is the HR strategy many small businesses use because they think it’s less expensive than recruiting, training and trying to keep employees.

    It is less expensive not only because they don’t have to invest in people, but also because they can hire entry level people which are paid less. Of course, the quality of the products and services these companies provide is quite low, but that doesn’t seem to be an issue.

  • http://www.talmax.com Jari King

    Hi John,
    I couldn’t agree more. In fact, I wrote an article some time ago that actually walks the reader through a step-by-step financial review of the “cost of a bad hire” and demonstrates in black and white how very expensive hiring “butts-in-chairs” can be. The article can be found by copying and pasting the following URL:

    http://www.talmax.com/realcost

  • Keith Halperin

    Dr. Sullivan,

    Thank you for advocating a point of view which helps Contract Recruiters (like me) maximize our incomes, because as long as hiring is done, the longer it takes, the more money we make.

    In my own case: my first contract was with an organization which was very particular about their hires. They contracted out 4 experienced, trained sourcers and for one person/year of work and $120,000- they got two hires (one from me). So, by being overly cautious (or just sloppy) they paid $60,000 1994 dollars/hire for mid-level employees….Another is the example of a widely-touted “Employer of Choice”(we ALL know who they are) who (on at least one occasion) didn’t hire anyone in a given area for 6 months while actively looking and supporting a recruiting staff. I estimated a cost/hire (when they eventually did hire) at well over $100,000/mid-level hire.

    “As a professional recruiter you have both a professional and fiduciary responsibility to your organization’s shareholders to ensure that new hires not only perform but also have the capability of continuous learning and eventual promotion.” IMHO, our professional responsibility is to further our own careers through making our boss look good. If that happens to further the shareholders’ interests, so much the better. Furthermore, “quality of hire” is something which goes beyond the scope of what we have bandwidth or resources to do.

    Dr. Sullivan, I would be very interested in a similar article laying out the costs of hiring too slowly, or not at all (when truly needed). I would also be interested in an article which advocated an assertive rather than a defensive/reactive posture for staffing. As I’ve said before, if you’re more than just entry-level and you have to prove your value, you’re probably in the wrong place or wrong job.

    Thanks again,

    Keith

  • Pingback: The Cost of a Bad Hire: How to Actually Do Something About it - ERE.net

  • Pingback: 8/12/10: Top Talent Development Posts this Week

  • Pingback: Andy Parkinson’s World » Blog Archive » 8/12/10: Top Talent Development Posts this Week

  • Pingback: The Cost of a Bad Hire

  • http://ultimatehire.com/a/index Mark Thomas

    I agree and disagree with this post. I agree with it as the best practice for companies of 100+ employees, but strongly disagree with this post for start-up and smaller-size companies. I’m an entrepreneur working on my third company (which is going great), and I have always had success with the following motto: hire quickly and fire quickly. If I’m on the fence about someone, I’m fine with hiring them, with the knowledge that I may have to turn around and fire them in 3 weeks. I’ve actually fired someone within 3 days for having a bad attitude. It happens and you move on.

    The reason I say that this strategy works great for start-ups is that start-ups are more agile and capable of shifting gears quickly, which the hire quickly/fire quickly approach requires. I understand that big companies can’t necessarily do that.

  • http://www.processspecialist.com Leanne HoaglandSmith

    If you have the resources of to hire quickly and fire quickly that can be a solution. The expense must be balanced against being agile. Curious as to the down stream affect especially when human capital becomes far more expensive.

  • http://sayhired.com/ Mark Thomas

    Not sure what you mean by the down stream affect being expensive for start-ups. Usually in a start-up, it’s the owner or someone from senior management doing the recruiting, so other than time, there’s little to no long-term cost of this method. In say companies of 25+ people where there might be a full-time or contract recruiter in place doing all of the hiring, there’s little difference in the recruiter having to “re-recruit” on positions because someone got fired quickly vs. a position just staying open for a long time and having to continuously recruit on the same role. Some training time is lost of course, but employees in start-ups usually work longer hours, so it’s generally not as big of a deal.

    I think the way things happen in start-ups and smaller companies is just very different and lends itself to the hire quickly/fire quickly philosophy more.

  • http://www.processspecialist.com Leanne HoaglandSmith

    Mark – What I meant down stream is for example will you or your company have a negative reputation. Another example is your hiring pool may become contracted because other firms do not share the same philosopohy.

    One of my observations is for every action there is an equal and opposite reaction. Again this is Newton’s third law of physics and maybe the opposite reaction is not equal in business, but it is there.

    Time is a resource and depending upon what you are paying your people can be one of those dripping profit faucets.

    I do agree that under performing people should not stay with any organization. However, I believe by hiring a little smarter creates a far better long term investment.

    With that said if it is working for you continue to do it. My comments were just observations from the 30,000 ft view so to speak.

  • Pingback: The Monster 5 For Friday – Works Edition (Volume 11) | MonsterThinking

  • http://sayhired.com/ Mark Thomas

    Yeah I totally get what you’re saying about the negative reputation thing, but I still think most people that are looking to get into start-ups know that it’s a pretty cut-throat atmosphere and that if you don’t perform quickly, you’re gone. So I think the reputation part doesn’t matter quite as much as in a larger company (where a higher turnover rate can kill any chance of attracting top talent).

  • Pingback: 4 Petrifying Fears Of Jobs After College | KODA. The Community Blog

  • Pingback: The Minesweeper Strategy « thehrwiz

  • Pingback: Selecting The Best Fit: Interview Skills for Hiring Managers

  • Pingback: The Case for Staffing: Bad Hires | COATSsql Staffing Software

  • Pingback: The Case for Staffing: Bad Hires | COATSsql Staffing Software and Applicant Tracking

  • Pingback: 4 Things to Think About Before You Hire a New Employee to Work at Your Small Business | Nil2Million