Running a small business is time-consuming. Not only do you have to keep your customers and clients happy but you also have to hire, train, and manage employees while keeping up with the daily financial tasks that come with running a small business.

As a small business owner, you can't afford the cost of a bad hire in terms of time wasted and money lost. Hiring a new employee takes, on average, 42 days. With the U.S. Department of Labor's estimate that a bad hiring decision comes with an average cost of an amount equal to 30% of the employee's first-year salary, it's easy to see how just one bad employee can seriously impact a small business owner's bottom line.

This article will point out five warning signs that you have a bad hire, cover what to do if you decide that you have made a hiring mistake, and offer ways to avoid hiring the wrong person. It also covers how saving time with other aspects of your business — like managing your company's accounting and other financial matters — can free you to spend more time on employee hiring and training.

5 Signs You Have Made a Bad Hire

The term "bad hire" covers a lot of ground. In a nutshell, a bad hire is someone who fails to meet expectations because they do not show up — either physically, from a work productivity standpoint, or both. A bad hire can have a lasting negative impact on a company, poisoning your entire team by bringing everyone down with them. If you are wondering if you have a bad hire, look for these five signs:

Substandard Work Quality

It is expected that a newly hired employee will take some amount of time to settle in before doing their best work. Some people are slow to convert their skills and knowledge into performance in a new role, so allowing some time for a learning curve is only fair. If enough time has passed and their quality of work is still not up to par, however, it is also fair to assume that the employee is a bad hire.

Persistent Negative Attitude

Nobody wants to deal with an employee who has a bad attitude. If the person you brought on board is constantly complaining about the job, whining about their co-workers, or even disparaging your company, that is a big red flag that they are not a good fit for your company.

Elevated Stress Level

Everybody has a bad day here and there, but if your new hire seems to freak out every time they are presented with a new challenge, their temperament may simply be incongruous with the rigors of their new job. When an employee behaves in a way that manifests a stress level in excess of what can be tolerated in your organization, that is an indication that they could be a bad hire.

Presenting Themselves in a False Light

Sometimes the person who shows up for work bears little resemblance to the person you spent time with during recruitment and onboarding. While it's only natural for a job seeker to put their best foot forward when applying for and starting a new job, it is not acceptable for them to present themselves in a false light.

For example, if the well-groomed person with a calm demeanor that you thought you were hiring turns out to be someone who dresses inappropriately for the workplace and is prone to disruptive or loud outbursts, it is reasonable for you to question their integrity — and the decision to hire them.

Negatively Affecting Company Productivity

The negative repercussions of a bad hire often go beyond one individual's job performance to the team or department they are assigned to. Often, a bad hire can produce negative repercussions that permeate throughout an entire organization. A single bad hire can wreak havoc on co-workers, affecting employee morale and productivity. If you start seeing an increase in missed deadlines or notice an uptick in customer complaints, look at how a potentially bad hire could be responsible.

Rehabilitate or Fire? How to Handle a Bad Hire

In many instances, a bad hire can be turned around, especially if the issues surround job performance. If you are willing to provide the employee with the education, coaching, training resources, and other support needed to improve, then it is probably worth the effort to try to rehabilitate them. Of course, if they are resistant to improving or not willing to accept their shortfalls, then you may need to accept that it is time to part ways.

If the problems the employee is encountering or causing have nothing to do with technical competence but are a question of interpersonal skills, emotional intelligence, coachability, or temperament, you are going to have a much harder time reforming those traits. Further, if the bad hire is creating a toxic environment at your business, especially if it results in increased employee turnover, it is prudent to cut ties sooner rather than later.

If you do decide to part ways with your employee, be sure that you consult with an HR professional or, if appropriate, legal counsel to ensure that you comply with all relevant labor laws when letting them go. Take what you can from the experience and apply what you have learned to future recruitment activities.

How to Avoid Hiring Mistakes

Of course, the best way to handle a bad hire situation is to avoid making hiring mistakes in the first place. To save yourself the high cost of hiring the wrong person, consider the following:

  • Take more time during the hiring process. When it comes to hiring new team members, it never pays to be in too much of a hurry. Take the time to prepare a complete job description, think about what interview questions to ask, contact references, and complete thorough background checks on your most promising candidates.
  • Trust your gut. Even if a candidate's resume makes them look like a perfect fit for your open position, don't rush to judgment about hiring them. Look to see if any of these red flags could indicate that something is off:
    • They arrive late to the interview and/or seem unprepared
    • They don't ask questions or seem pumped up about the opportunity
    • They say negative things about their previous employer or colleagues
    • They spend any time during the interview complaining
    • They seem to be inauthentic in any way
  • Avoid the halo effect. It's easy to fall into the trap of judging someone based on one or two traits that we find particularly attractive or engaging. For instance, even though there is no relationship between how attractive a person is and whether or not they have a good personality, we tend to consider attractive people to be kind and smart even if we don't know them. In a hiring situation, the halo effect can rear its head when the interview process goes very well — the candidate is charming and you hit it off — and you end up hiring them even though they were not your most qualified candidate and do not actually have the requisite know-how or skill set for the job.
  • Go for a balance of experience and culture fit. Talent acquisition is an art. Don't treat it like an exact science by making the mistake of hiring a candidate based solely on their technical proficiency without also taking company culture into account. Look for traits like positivity, empathy, and a good work ethic.

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Notice to the Reader

The content within this article is meant to be used as general guidance for recognizing and dealing with personnel issues and may not apply to your specific situation. Always consult with a human resources professional and legal counsel when determining how to manage employee hiring and termination issues.