Jeff Lipschultz’s Blog

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The Cost of a Bad Hiring Decision

Hiring Managers!  Do you know all the costs associated with making a bad, biased, or rushed hiring decision?  There’s more to this than the obvious.  Instead of reading about it, here’s an opportunity to hear me tell you as I take a break from a bike ride.  Yep, I bike at lunchtime.  A lot.


November 5, 2018 Posted by | General Musings, Management 101, Video, Working with Recruiters | Leave a comment

Why Use a Recruiter: Part I – The Cost of a Bad Hire

Whether internal or external, recruiters bring value to a difficult process of finding the best talent for an open position in a company.  Granted, if a role has countless, very qualified candidates at the door, random luck will suffice.  However, for many roles, careful screening of potential candidates is required to ensure the best fit for the job is hired. Taking shortcuts can lead to settling for the best of what may be a “B-list” of candidates.  Sometimes, employers think the candidates who apply for their open position on a job board are the best possible candidates.  A good recruiter can prove this wrong time and time again.  Sometimes the best candidates are not even looking for a change (until it is presented to them).

One of the obvious problems associated with hiring a “less-than-optimal” employee is the risk of an eventual mismatch and having to let go of the employee in the first 90 to 180 days (by the way, good recruiters replace their hired candidates if this is determined early on).  There are many costs related to a bad hiring decision–many companies have unique situations that contribute even more to the wasted time and money.  Zappos CEO Tony Hsieh once estimated bad hires had cost the company “well over $100 million.” In general, the U.S. Department of Labor estimates the price of a bad hire to be at least 30% of the employee’s annual salary. 

The more influential the role, the bigger the cost might be.  What about hiring a new Sales and Marketing Director?  During the hiring process, the company is losing potential revenue.  Once hired, the new Director must get up to speed, learn the products and approach, start down the road of getting productivity within the team, and then finally start to concretely contribute to the bottom line (hopefully).  If things don’t work out, and the company has to start all over again, imagine how much money has been lost in unrealized revenue.  This doesn’t even include the other employees’ time in training the new-hire, setting up benefits and payroll, and other tangible activities.

Taking this a step further, how does firing employees impact the rest of the team.  Employees start to wonder if they are next, or if they’ll ever have a boss or peer that will be around longer than 90 days.  This assumes the “bad apple” has not rubbed off on others, perhaps telling stories about how messed up the company is compared to other places they have worked.  This can lead to a downward spiral, snowball effect wrapped into one, along with some serious morale issues.  This is just the internal effects.  A bad hire can also sour relationships between the company and its customers (potentially leading to more lost revenue, legal issues, or even worse, a negatively impacted reputation in the marketplace).

Good companies tend to give poor performers a chance to rebound.  After all, maybe some of the problem is due to the company’s training practices or just bad timing.  Performance reviews and coaching requires time and energy beyond the normal training.  Time that could be spent working on the regular day-to-day issues.  Worst case, these leaders have to deal with micromanaging and potentially, disciplinary actions.  If this pattern of bad hiring decisions continues, the decision-maker’s reputation may quickly become tarnished, too.

Other non-recoverable, tangible costs include relocation allowances, referral bonuses, unemployment insurance withholding, and sign-on bonuses.  A huge, non-tangible cost includes a newer concept, “Employer Branding.”  Actually, the idea is not new–the term is.  People have checked into company’s reputations long before there was Glass Door.  Simply by asking their network, potential candidates can see if an employer is worth the trouble before even applying for a position (or saying yes to a recruiter’s request to interview).  Once a company’s reputation is blemished in this area, it can be very hard to attract good talent for a long time.  Then the likelihood of hiring B-list candidates becomes even higher, and the whole cycle starts again.  A little scary, actually.  Rate of turnover or average tenure are among the more popular questions recruiters are asked.  People want a good salary, but they want stability even more (along with opportunity for growth). 

The cost of a bad hire has so many aspects, it is hard to get an accurate measure of its impact.  And again, it does depend on the role and span of responsibility.  However, much of what’s been discussed effect all companies when they do not hire the best candidate.  The more the process is focused on quality, the more likely the best will be hired.  Often times, a third-party can be the difference.  Someone who will put in the time to present a short list of great candidates and guard against hiring those who only claim to be a good fit.  A good recruiter also can take some of the subjectivity out of the process–their reputation is on the line every time they present a candidate.  They don’t want to fail.  A really good recruiter can also help with the interviewing and selection process the company is using.  This focus on quality can help a company avoid the cost of a bad hire, but also allow their hiring decisions to pay dividends for a long time.

June 13, 2018 Posted by | Candidate Selection, General Musings, Management 101, Working with Recruiters | Leave a comment

Every Employee is Different. Or Not.

Employee MatrixThe other day, my wife and I were discussing the challenges of managing many different personalities on the same team.  With the help of some wine, I deduced there are really only four with regards to your management style.  Check out this article to see if you agree.  As always, comments welcome.

AOL/emurse article: All Employees Are Different. Or Are They?

February 8, 2010 Posted by | AOL article, General Musings, Management 101 | Leave a comment

Are You a "Know-It-All?"

Recently I was asked by a colleague of mine, Ryan Leary, to write an article for the Recruiting Carnival (a month of daily articles from recruiters from all over) on  What’s great about this concept is it is unique opportunity to learn from people you may never even meet in person.  This concept (and hiring a new cycling coach) inspired my article for Ryan.  Although directed at my recruiter friends, the idea applies to everyone.

Article: Are You a “Know-It-All?” Ask Your Mentor.

February 1, 2010 Posted by | Careers, General Musings, Management 101 | Leave a comment

What’s Your Take on 2010?

I’ve been hearing a lot of conflicting information and opinions about 2010.  What better way to add to my confusion than a poll of my friends, Tweeps, colleagues, blog followers, and maybe a few folks who actually have data analysis under their belt.

By they way, here’s a few snippets from CareerBuilder’s 2010 U.S. Hiring Forecast:

Twenty percent of employers plan to increase their number of full-time permanent employees in 2010, up from 14 percent in 2009. Nine percent say they plan to decrease headcount in 2010, down sharply from 16 percent in 2009. Sixty-one percent don’t plan to change staff levels, while 10 percent say they are unsure.

When asked which areas employers plan to hire for in 2010, one-third pointed to technology followed by 28 percent in customer service. Nearly one-quarter (23 percent) plan to add sales people, 18 percent will add in research/development, 17 percent in business development, 15 percent in accounting/finance and 14 percent in marketing.

Perhaps your vote is gut instinct. Perhaps it’s based on company budgets set for this year. Maybe it’s based on your January activity.  Whatever.  Let me know your thoughts and we’ll see how it compares to the rest of the voters. Feel free to provide comments substantiating your vote, too.

January 14, 2010 Posted by | General Musings, Job Search, Management 101 | 7 Comments

Double Duty for Hiring Managers


My wife has been in China for a week and I’ve been playing the role of Mom AND Dad for our girls.  Stereotypes aside, I’ll just say I’m having to be the good cop and bad cop.  Sweet and sour.  There are many who do this full-time and I admire them.

This situation reminds me that hiring managers have to remember to pull double-duty during the interview process.  A hiring manager should be critical during the interview and ask pertinent, direct questions.  At the same time, the manager needs to realize the (best) candidates are also interviewing them.  Managers must present themselves in a professional manner, but should also let their true personality show.  Being a real person during the interview gives the candidate a chance to evaluate how well they could work with that manager.  Being open to questions about management style, work environment, and expectations is a good start.

A relevant example comes from a friend of mine who was interviewing recently.  She interviewed with a manager who asked all types of off-the-wall questions and pushed hard for more if he thought she was giving “pat answers.”  Later in the interview, he explained why he asked certain questions and gave feedback on her answers.  He went on to say how he is easy to work for, but nonetheless, my friend had a hard time picturing a good working relationship.  Most likely, she was not the right fit for the job.  The right person for the role might have been someone who enjoys frequent debates or a fever pitch work environment.

As a part of being the “good cop” in the process, it is also important to convey the benefits of working for the company.  Even in an economy where there are many candidates available for every posting, managers still have to present their job as a great opportunity.  After all, the best candidates for the job may have other options.  More information on communication strategy for enticing the candidate to work for your company is available in a previous post:  Have You Wooed Lately?

Acting as Mom and Dad boils down to simply being a good parent.  And acting as an interviewer and interviewee during this process is a part of being a good manager.

Got more advice on how to be a good interviewer? Leave a comment below.

October 14, 2009 Posted by | Candidate Selection, Management 101 | 6 Comments

A Recruiter’s Poem: Bad Drivers, Bad Managers

While I was recently moving along in my car,

I realized bad drivers and bad managers set the same bar.

Both have things in common that are easy to see,

Read this poem to see if you agree.


Bad drivers are constant lane changers,

Inciting all kinds of dangers.

As are some hiring managers who don’t know who to hire,

Who bring in candidates who they later must fire.


Bad drivers are poor at following the road rules,

They do their own thing and think us all fools.

Some managers skirt hiring policy with strong defiance,

Making the selection process more an art than a science.


Bad drivers step on the gas when the green turns bright,

Only to slam down the brake when they reach the next light.

Bad managers often state they need to hire right away,

But once into the process, making the candidates wait appears OK.


The worst drivers act like they are the only one there.

They make their maneuvers with absolutely no care.

Hiring managers can act similarly it would seem,

They need to know they can work with a team.


So as you drive down the road or want to hire a new star,

It matters not if you are in an office or car.

You need to throw all the bad habits away,

Be a good manager AND driver starting today.

September 17, 2009 Posted by | General Musings, Management 101 | 7 Comments

Have You Wooed Lately?

A-List candidates want to work for A-List companies.  And, they want to be treated like an A-List candidate.  As companies interview and identify the best candidate for the job, many act as if they are the only (or best) opportunity the A-List candidate has. This is counterintuitive.  A-List candidates typically have more than one opportunity and often have a hard time choosing between them.  The choice sometimes boils down to the level of wooing!

So what is professional wooing, anyway?  Just like selling a product to customers, hiring managers/interviewers need to sell the company to candidates, especially the A-List.  For great companies, this can be easy.  They just need to strategically communicate what makes them great.  Like most things, it comes down to execution.  Here are some of the details on communicating a company’s “greatness” and wooing the candidate during the interviewing process.

What to communicate?

What differentiates your company from the rest?  What do you offer that is part of their list of “wants” for their next job?  A-List candidates want autonomy, challenge, education, strong growth potential (for themselves and their company), and respect.  Interviewers must listen carefully when A-List candidates share what has made them successful before.  What was it about their past environments that propelled them to greatness?  Listen for aspects that describe the perfect “fit” for the candidate.

When to communicate?

Don’t wait until the end of the interviewing process to share all these winning qualities.  You need to be doing it all along.  Even in early stage interviews, when candidates ask about the company, you should be prepared to share all the aspects of the company that would be appealing to the candidate.  During the offer-to-acceptance period, realize that counteroffers from current companies are possible and stay in tune with the candidate’s feedback.  Even after acceptance, be sure to keep the new employee upbeat about starting the new job (before starting, upon starting, and for weeks after starting).

Side note: Outside of the interviewing process, many of the best managers are even wooing candidates when they do not have an open job.  They talk to A-List candidates all year long anticipating following up with them later.  Others leverage Social Media to communicate about their Employer Brand.

To whom to communicate?

You need to provide information to anyone who is part of the candidate’s decision-making process.  At times, this might be indirect by asking what questions a spouse or parent might have.  At other times, it might be chauffeuring the candidate and his family around a new town or providing a real estate agent.  The key is to ask questions to the candidate that probe into the lingering issues that are being discussed at home.

Who is to communicate?

In a word: everyone.  Make sure the messaging is consistent.  All interviewers should be appraised of what is important to share with an A-List candidate.  Each will have their own way or perspective communicating the selling points which will build reputation equity, a consistent image, and excitement.  All levels of the organization should be involved.  A-List candidates like talking with the executives and typically have great questions for them.

How to communicate?

Don’t make it a hard sell.  Many companies shy away from this process because they don’t want to appear to eager or are not comfortable pushing too hard.  If done right, these are not issues.  If you are building the impression of the company one brick at a time throughout the whole process, you don’t have to build the whole house at the very end.  Be matter-of-fact about the information you are sharing.  Weave it into conversations along the way as you hear the triggers in the questions that are asked.  When they talk about their goals and vision, mention the company goals and vision.  When they talk about their favorite job experiences, share some of yours with your company. 

Sometimes, you will need to be more direct.  If you sense there is a concern the candidate is not sharing, ask if they have any hesitations about joining the team.  Sometimes just asking, “What about this company and job attracted you to interview with us?” will prompt a great deal of conversation.

Why to communicate?

As stated above, you can never assume a candidate will take your offer.  You need to act as if you are one of three choices for the candidate.  Even if your company is truly fun to work for, many may not know this.  If you are not communicating your Employer Brand through Social Media and other methods, how would they know?  It is your job to share this in a unique, conversational way.  By the way, do not assume economic conditions alter the level of communication required.  This is always a requirement.  At times, this effort can even mitigate the chances of getting into a salary negotiation.

Often the interviewing process is compared to dating, and why not?  Both sides are getting to know each other over the course of a few meetings by asking questions and learning about each other.  Both sides go back to their peers and influencers to seek approval of the other.  Both sides compare the other to an ideal benchmark.

So if only one side is doing the wooing, chances are the romance is not going to last.

April 30, 2009 Posted by | Candidate Selection, Management 101 | 14 Comments

Keep High Standards for Selecting Employees and Employers

high jump We tell ourselves we are looking for the best.  The best candidate.  The best job.  The best fit.  But often times the process gets compromised along the way and we settle for less.  For employers, it might be the timeline, the looming workload, lack of patience…or quality candidates.  For job seekers, it might be desperation to move on to a new opportunity or fooling themselves about the true fit for a long term relationship.  No matter the reason, the reality is neither party should compromise the high standard.

Having a high standard makes us all better.  The benchmark of quality or ability should stay in place regardless of circumstances.  Even when it becomes tiresome.  My freshman year of college, I learned to play racquetball by playing my roommate who had been playing for years.  I would lose each game by 16 to 20 points every week.  This went on for months–halfway into sophomore year, in fact.  But during that time, my ability got better and the score got closer and closer.  Until one day, I won a game.  After that, all our games were close.  My friend Tim was the benchmark and he never wavered from giving me the same challenge each week.  There were several lessons learned from this experience:  never give up; playing someone better than you makes you better; and stay true to a high standard–aim high!

So how do we ensure as employers and job seekers we keep our standards consistently high during the employment process?

Employers must do the following:

  • First, establish a true job description that is based on the needs of the organization.  Be specific.  Have clear goals.
  • Dig deep for candidates.  Don’t rely on one source, whether it be internal, networks, or recruiters.  Although, once you find a good source, sustain it so it will be there whenever you need it.
  • Be critical.  Although a candidate might be good at a lot of things, make sure they are good at the “right” things.
  • “Fit” is not just ability, it includes cultural/organizational aspects.  Will the candidate get along with the team and follow well-established, proven processes?  Or will they be too much of a maverick or “high-maintenance?”
  • Have a consistent interviewing process that provides objective evaluations.  When holding to a process, it is harder to fall back to “gut decisions.”
  • Know how to seal the deal.  Just the other day, a friend told me a story about his employer bringing a candidate in from out of town and having no plan to take the A-List candidate to dinner or tour the city.  When employers lose the #1 candidate, they at times settle for #2 (who may be a far cry from #1).

Job seekers must do the following:

  • Before interviewing, make several lists:
    • your attributes you want to use in your next job
    • the best elements of all the roles you’ve enjoyed in the past
    • the requirements for the next job including location, salary, level of responsibility/decision-making, visibility, day-to-day tasks, and others
    • what is missing is your current (or past) job that you really need for personal job satisfaction
  • If necessary, consult a job coach to learn more about yourself and your qualifications.
  • Next, combine all these lists in a job description that you should pursue. Set priorities for the elements of the job description.  Determine what are deal-breakers versus bonuses.
  • Although it may be hard to stay true to that vision (as it make take time to find it) accept trade-offs based on your pre-set priorities.  Don’t rationalize.
  • Ask probing questions to interviewers that clarify the job description they are offering versus what you want.  Make sure you meet a cross-section of the organization to solidify your impressions of the company.
  • Do your homework.  Find out everything you can about the hiring company leveraging Social Media channels, financial data, and personal networks.

We all know the cost of a bad hire.  For employers, it can be a daunting task to find a new employee after a recent-hire leaves due to a bad hiring decision.  For job seekers, a short tenure at a company listed on the resume prompts questions and doubt. 

Even if it takes 25 to 50% longer to find the right fit, both parties need to hold themselves accountable to a high standard for the decision.  When this happens, we all win.  We might be exhausted when it’s over, like playing my buddy Tim in racquetball.  But ultimately, we will find it well worth the effort.

April 14, 2009 Posted by | Candidate Selection, Interviewing 101, Job Search, Management 101 | 10 Comments

Leading in Uncertain Economic Times

As the world watches to see how new US leadership will address the myriad of challenges facing this country, many agree there will be long-term solutions and the worst of the economic woes may still be looming.  Certainly, renewed optimism is a key to recovery and even small steps will be welcomed.  However, in the meanwhile, many companies are taking strong action to stay the course through this stormy period. continually takes the pulse of employers to understand their plans for hiring, but also how companies are managing their resources.  They have offered an interesting article on how to lead the company during this historic period.

Leading in Uncertain Economic Times

You don’t need to hear yet again that we as a nation are in a state of economic turmoil. If you’re not hearing about it in the news, chances are you still get the latest updates at the dinner table, during office elevator rides, or while waiting in line for your morning coffee. But being aware of what is going on around you is only half the battle. How you choose to react to our current economic situation as an employer – and as a leader – will make a significant difference not only in your own life, but in the lives of the employees who depend on you.

According to a recent Duke University/CFO Magazine Global Business Outlook Survey, a record 81 percent of U.S. CFOs are more pessimistic about the economy this quarter (twice as many as last quarter), and 85 percent of European and Asian CFOs are also more pessimistic this quarter. Weak consumer demand and financial market woes are major concerns for CFOs around the world.

What are your employees seeking from your leadership?
Your employees are seeking stability and longevity in the market, solid career advancement opportunities, and a rewarding work culture in the times ahead. Moving forward, your employees are also looking to your leadership to guide them through economically troubled waters and onto safe workplace ground. Tensions are high, pocketbooks are light, and morale is low. Now, more than ever, they need a leader who is strong, realistic, and able to create a sense of balance. It is not an easy task, but we have laid out several tips to help you reinforce confidence during these trying times.

1. Absorb Uncertainty.
You likely have your own set of worries and uncertainties about the future. But as a leader, it’s essential to keep your own uncertainty in check. Leaders often tend to let their own feelings overwhelm them, and neglect to consider how their employees will receive negativity from those they look up to.

As leadership speaker and author Rita McGrath asserts in her Harvard Business Publishing article “Absorb Their Uncertainty – And Get Your People Unstuck,” leaders should ask themselves the following questions to more effectively absorb the uncertainty of their employees.

• Am I providing a clear set of assumptions for people to operate on, with the understanding that they may change as more information becomes available?
• Have I made sure to reach out to people who are badly affected by the current turmoil?
• Am I moving quickly enough to help people get past the current situation to focus on the future and what is coming next?
• Have I made clear to the people who are deeply valued by the organization that they have a promising future?
• When a decision will affect someone negatively, have I personally delivered the bad news, dealt with the fallout in a fair and transparent way, and made it clear to observers why the decision was made?
• Absorb your employees’ uncertainty first by assessing the current environmental barometer, and create your communication plan based on this assessment.

2. Communicate and Encourage.
In his Human Resources Magazine article “Managing in Tough Economic Times,” Associate Publisher and Editor Craig Donaldson stresses the need to ensure everyone is on the same page during an economic crisis. He adds that performance suffers when alignment on key goals is absent, according to studies on strategy execution. This mentality applies to departments from the top down, and as a respected figure, it is important for you to lead by example
by communicating your vision and goals for the company out to your employees.

Encouraging those who work for you to express their concerns – as well as their ideas about the future of your organization, however, will help restore lost faith and improve morale throughout the office. “Encourage questions and new ideas by making it safe for employees
to raise them,” Donaldson advises.

While, ideally, the leadership and the employees of a company will have a shared vision, your employees should feel secure in expressing unique or dissenting opinions, or in raising concerns about both their future and the future of the company.

3. Be Positive, Yet Realistic.
While things may fluctuate between better and worse, it is vital to be consistent – and authentic – in your communication. While your employees don’t expect you to paint a constant rosy picture of what the company may be going through, they also will tire of an endless stream of dire news. Strike a healthy balance between the two. Be honest in everything that you say, but realize that they are human, and that negative news can have a negative effect on morale.

4. Creativity. Innovation. Future.
In the business world, success belongs to those who innovate; those who think – and act – one step ahead of their competition. In this current recession, your competitors are employing many of the same tactics that you are thinking of or are doing already. To not only survive, but also stand out, it is imperative that you employ entirely different ways to
“energize the base.” Contrary to popular belief, recessions, and not peak economic times, are actually the best times for companies to invest in their competitive strategies.

“Studies have shown that companies have twice the opportunity to change their relative position in an industry during a recession compared to growth times,” according to Kevin P. Coyne and Shawn T. Coyne in their Harvard Business Publishing article “Recessions Call for More Creativity, Not Less.”

Begin by encouraging strategic brainstorming and original thought in your employees. Provide a forum for exchanging ideas, whether in the form of formal department-wide meetings or less structured gestures such as email feedback, small brainstorming sessions, and Q&A calls. It is important for those working for you to understand that their thoughts and ideas are respected – and won’t get them in trouble.

5. Reconsider Cutbacks.
While this option may be an impossibility in your particular company’s situation, there also may be alternatives to layoffs that you haven’t considered. Layoffs are often the knee-jerk reaction to financial situations such as the one we’re in the midst of, but as Donaldson suggests, if possible, businesses should reconsider across-the-board cutbacks.

6. Reach out to Your Customers.
While you may be concerned (and understandably so) about your own business’s future, you have another half of the business to consider – your customers. They have their own financial futures to be concerned about, in addition to your business’s. They also keep up with the news, and unbeknownst to you, they may be fretting over a recent article or malicious water cooler gossip about the strength of your company. Your customers need to have touch points
with you – not the masses; when they have opinions to give and questions to ask, engage them. Find out what they want and need from you as a business partner, and follow through on the promises you make to them.

One Last Thought
Be human. Reach out. Everyone is affected in small and large ways by this economic downturn, but by being compassionate, realistic, empathetic, and innovative, and by making your employees a valued voice within your organization, you will come out of this a much more effective – and respected – leader.

March 15, 2009 Posted by | Management 101 | 1 Comment