Jeff Lipschultz’s Blog

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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.

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

Managing Career Change

The majority of the working population alter their career path at least once in their professional life.  It could be minor and within their own employer’s walls.  Or, it could be a life-changing event, like leaving consulting to become a high school literature teacher.  Typically, it’s a little tougher to get buy-in from potential employers that you can adequately handle a new role utilizing new skills (as compared to the competition who may have had that role before).  My latest article for job-hunt.org discusses many aspects of managing this leap.

Article:  How to Transition to a New Career

September 19, 2017 Posted by | Careers, Job Search, Job-Hunt.org article, Resume Writing, Working with Recruiters | Leave a comment

Job Search in 2017

As has become tradition on my blog, I’m sharing a great annual collection of job search articles put together by a colleague.  From interviews, to resumes, to LinkedIn profiles, to personal branding.  Take a look at these if you’re going to be searching for a new job in 2017.

Article:  The Top Job Search Articles of 2016

December 15, 2016 Posted by | Interviewing 101, Job Search, Personal Branding, Resume Writing, Social Media, Working with Recruiters | Leave a comment

Career Planning & Adult Development Journal

The latest edition of this journal was guest edited by the Editor of job-hunt.org, Susan Joyce.  So naturally, she asked me to be a contributor, along with a large slate of experts in job search.  Access to the Journal is free to you below.  Enjoy.

Journal:  Volume 32, Number 2 Social Recruiting, Personal SEO, and Personal Online Reputation Management

September 29, 2016 Posted by | Careers, Job Search, Job-Hunt.org article, Personal Branding, Recruiting Industry, Social Media, Working with Recruiters | Leave a comment

Finding a New Job While You Still Have One

We all know there is a balancing act you must perform when searching for a new position while you have a full-time job.  In many cases, it does not reflect well if your boss finds out.  Although, I’ve always contended that there is nothing wrong with doing some “comparison shopping.”  Just like when thinking about buying a new house or car, you first compare what’s out there with what you’ve got.  Perhaps you should be happy with the status quo because it really is better than alternatives available to you.  But how would you know if you didn’t do the research?

The problem is that although the research might be just a cursory look, management may not see it that way.  Best not to “advertise” your efforts.  My latest article for job-hunt deals with the tenuous balance of being “available to talk” and keeping your research “off the radar.”

As always, feel free to add your comments or experiences within this article’s Comments section.

Article:  How to Find a Job While You Have One

October 9, 2014 Posted by | Careers, Job Search, Job-Hunt.org article, Working with Recruiters | 2 Comments

Tips to Land a Job in 2014

One of my colleagues asked six experts and prolific bloggers in the career resource/recruiting industry a simple question:

“What are your top 3 useful tips that a job seeker would need in 2014 to land a job?”

Here’s what he collected:

Article: Career Expert Roundup: 3 Tips To Land A Job in 2014

February 18, 2014 Posted by | Careers, Interview with Jeff, Job Search, Personal Branding, Resume Writing, Social Media, Working with Recruiters | 1 Comment

Games Job Seekers Play

Most job seekers know that there are some tough odds in landing some of the best possible positions.  It is a bit of luck and a lot of hard work that tips the scales your way when the opportunity is the right fit for both sides.  There are many ways to get noticed by decision-makers, but you must be careful about the reason you get noticed. 

Recruiters tend to be a little fussy about candidates playing games with them.  And sure, you can just move on to the next recruiter and hope they have the right opportunity for you.  But what if you gave up the perfect job simply because you weren’t following some simple rules of game?  That would make everyone involved a loser.

Check out my latest article for job-hunt.org to see if you’re staying out of trouble and playing by the “rules.”

Article:  Don’t Play These Games with Recruiters

February 18, 2014 Posted by | Job-Hunt.org article, Resume Writing, Working with Recruiters | Leave a comment

Counter-Offers Can Be Counterproductive

Once in a while, when a job seeker submits their resignation and offers a two-week’s notice, they get a surprise in return: a counter-offer. Quite frequently this includes a match on salary with the new company and sometimes an increase in responsibility. In this situation, many things can go wrong for all involved.

The Candidate Perspective

I once had a friend go through this experience and he was perplexed as to which path to take. He was the one to instigate a job search process, so I was a little surprised there was even a decision to be made. After all, once you start a job search, it’s likely you have already decided, for whatever reason, that it is time to go. The counter-offer covered both money and responsibility. Even long-term growth potential. My friend had a long list of concerns, but in the end, I asked a simple question: “When you drive to work each day, what is it you want to do when you get there?”

In other words, no two jobs or companies are exactly the same. When the current company offers you reasons to stay, you need to remind yourself why you wanted to leave. Will those issues be addressed? Even if there are promises to address them, will they be able to live up to their intentions? Does past performance indicate they are true to their word? Without an employment contract, their word is all you have.

Just remember, money and title are nice. But 40-70+ hours of work per week is a long time to spend doing something (or being somewhere) you don’t enjoy. Most people want to accomplish something professionally. Be sure to consider which opportunity truly offers this chance?

The Current Employer Perspective

No one likes to lose good employees. Especially if we have groomed them, trained them, and depended on them for a long time. However, when an employee makes the hard decision to leave, you must accept you missed the boat somewhere and didn’t address the issues along the way. Trying to band-aid the situation by keeping them on board will likely prove to be temporary. The joy of a raise and new title is short-lived in the working world. Six months later, they will realize they still want to move on.

Sometimes the boss offers a counter just to protect their own reputation. Are you the first to leave the group in a while, or part of a series of folks leaving? Is the timing really bad for the company? You need to assess why the offer is being presented. Is it simply because you are too good to lose? And if so, why did it take a resignation to prompt this kind of action?

If you accept the counter, you should realize that some companies will start a search for a replacement anticipating your future departure. This is a disastrous situation as you may be potentially fired (or overlooked for future promotions). Instead of people moving on and new people moving in allowing for growth for all involved, the situation turns stagnant, and sometimes unfriendly.

The New Employer Perspective

No company has time to waste in a job search. They do not like interviewing candidates who turn out to be just “kicking the tires” and “seeing what’s out there.” They want to meet candidates who are ready to join their team, not consider it.

When a candidate rejects an offer to stay where they are, the relationship between the two is strained or severed. In essence, the company feels the candidate was not honest during the process.This impression is all they remember (and likely marked in their records/database).

If you are only curious about opportunities at a company, take one of their current (or past) employees out to lunch so you can get a true perspective of what it’s like to work there.

Bottom Line

When considering whether you want to leave, make a sound decision. Ask yourself right at the start, “If my company countered an equal offer, would I consider it? And why?” You may just need to have a heart-to-heart with your boss and ask how you can improve your current situation through increased responsibility or redirection of your role. If you do decide to leave, don’t look back unless you’re absolutely certain your old job will become better than the new job.

January 14, 2014 Posted by | Careers, General Musings, Working with Recruiters | Leave a comment

References Can Make a Difference

Recently, I wrote an article for Job-Hunt.org regarding the value of references and how to make them an effective part of your job search.  Many job seekers see references as a just a minor piece of the puzzle.  But in reality, references can sometimes be the “tipping point” to you whether you get the job. 

How you prepare them for the call from the hiring manager or recruiter can make all the difference.  Take a look at this article to make sure you’re doing all that you should.  And as always, feel free to share your own tips and thoughts in the comment section on this blog entry to share with others.

Article:  How to Manage Your References to Close – NOT Kill – Job Opportunities

September 9, 2013 Posted by | Job Search, Job-Hunt.org article, References, Working with Recruiters | Leave a comment

Are You a Scary Candidate?

When conducting a job search, your #1 Goal is to present yourself as an ideal candidate for as many job openings as possible.  You always should present yourself in a positive way.  Common sense, I know.  So it is a bit shocking at times to see how many job seekers can do the opposite.  Often they are not even aware it is happening and they may never find out.  In my latest article for Job-Hunt.org (who just revamped their Web site by the way), I discuss several ways you can unintentionally scare off recruiters (and hiring managers/HR personnel) including:

  • A Horrible Resume
  • Job Hopping
  • Ambivalence
  • Bad Social Media Image
  • Lack of Professionalism
  • Personal Agendas
  • Ignoring Advice or Not Following Directions
  • Dishonesty

Article:  How to Scare Recruiters Away

June 24, 2013 Posted by | General Musings, Interviewing 101, Job Search, Job-Hunt.org article, Personal Branding, Resume Writing, Social Media, Working with Recruiters | Leave a comment