Not only does 6-figures of cash get burned, but you're back at square one needing to find a new hire, not to mention your project now being behind schedule because you expected work from someone, and now the existing team has to go through another interviewing spree.
The root issue is that, the costs of bad hiring are even higher than that. For a rapidly-growing company bad hires can snowball into a bad organization.
I totally agree that this dramatically underestimates the cost of a bad hire. It's more accurate for a hire not hitting expected performance, but in my experience a bad hire has a much more extreme worst case. This is especially true in programming because the effect of an individual's decisions gets amplified by large numbers in many cases (the number of internal and external customers downstream of these decisions).
In my experience, getting a bad hire is worse than not hiring at all. It takes a huge amount of resources to properly onboard a new team member, and then if they are not performing well the work they were doing ends up becoming a liability instead of an asset to the team.
I suspect that the idea that the costs of bad hires are huge comes from not identifying bad hires early. If you hire a jerk who makes poor coding decisions and fail to oust him for a year or more, the effect could be devastating. If said jerk is spotted in a month or so, it may not be so costly.
And really there are levels of bad hire. There's the bad hire who really doesn't know how to do the job and will never get good enough to do it. That person should be very easy to spot with not too much effort in the interview process. The dangerous hire is someone who on the surface can do the work but has a toxic attitude and/or doesn't learn/grow. I'm not sure putting someone through a torturous interview process is going to root that person out.
I think where a lot of the elitist hiring is at now is that many companies aren't so much trying to filter out people who can't do the job, so much as they're holding out for who they think are rockstars. So they put candidates through the ringer with the thought that what will be left is rockstar material.
But many highly-qualified individuals won't jump through hoops for any but the top tier companies, and sometimes not even then. Furthermore, by definition, rockstars make up a very small percentage of the devs out there. What are the chances that every company who is holding out for elite coders even has any applying? Especially considering that elite people probably don't jump around often.
That's the logical tradeoff for any company. Bad hires create an incredible amount of damage that can sink a whole team. It is x10 better to have no hire than a bad one.
Especially at senior levels, there's ramp up time AND a larger scope of impact if the person makes bad technical decisions or negatively impacts the team. A bad hire is super expensive on both those dimensions. It's even worse when the candidate is hired into a leadership role and will be responsible for further hiring.
It's easy to see if someone is incompetent during their first 90 days: that's a basic recruiting failure. It's the other type who are sort of good, but ultimately disastrous, that cause real problems. And often, these mis-hires take ~12 months to identify and correct. The result is that caution dominates when hiring.
Spot on. Bad hires fall into basically 3 categories:
1) A bit worse than average, maybe 10-20% worse than their coworkers. They still add plenty of value and with good management and time can be improved. Just not quite the "gem" hire.
2) Clearly unqualified/unsuitable for the role. Easy to spot and you can let them go with a couple of months serverence. Everyone is happy. Total cost maybe 3-4 months wages.
3) Qualified but toxic. Has negative value and can destroy a team. Problem is these people can get through tough interviews anyway. Having higher testing standards does nothing to stop these people.
On the other hand a good software engineer, working within a company and framework that supports them can easily add $1,000,000/year to the bottom line.
Have you ever worked with a really bad hire? Someone totally incompetent at doing the job? In my personal experience, that person completely tanks the productivity and moral of the entire team. I’ll also point out you are not doing that person any favors by hiring them and firing them one month later (if your org is even capable of doing that). Bad hires are disastrous.
This is a tough one. The thing is that for small companies, bad hires can be disastrous for any position key to the company's execution.
For instance, hiring a bad dev can be very costly. There is all of the time/work required to find, onboard and provide knowledge transfer, the real expense associated with the employee (i.e. compensation), and the fact that it generally takes time to determine it's not working. In that time the product hasn't moved forward as it could have and the company is out of a lot of time and money. And, frequently, it is the principals who are taking time away from building and running the company in order to try to hire/train. So, it's an even bigger disruption to the company.
For, say, a bootstraped company that has a small dev team (or the founders are the only dev) and not a LOT of money, this can be really painful or game ending. There is a real choice to be made between rolling the dice that you'll find good talent, or pushing forward at a slower pace, but without the disruption of hiring/training and without the additional expense.
TLDR; The cost of a bad hire is extremely high and not worth the risk.
I'm a team lead and do a fair number of interviews. It's amazing how many people can talk about their experience and make a ton of really impressive statements that makes it appear as though they are knowledgeable and then that person can't perform a simple coding exercise. On the other hand, it's equally amazing how a person can do an excellent job coding but not be able to get through basic day to day human interactions with their peers.
If a candidate falls into either of these camps, they are an easy no hire. If a hiring manager ends up hiring a candidate that is difficult to work with either because they can't code or because they have poor social skills, it can be very costly. It often takes several months to find out that you made a bad hire. By the time you figure it out it's often taken a large toll on the team and can lead to productive team members leaving.
When you finally find out that you've got a problem most companies have a huge process to go through for firing that person and that process is super intensive and takes months. Not to mention how emotionally difficult it is to tell someone they are so bad they have to be fired.
All that to say, the cost benefit analysis is clear only hire people that will over time be a net gain. Don’t take any risks ever.
If I were a recently graduated software engineer, I would be hedging against these risks in every way. I would produce a lot of code in the area I’m seeking to be hired. I would work a lot on being friendly and carefully choosing my words, so I don’t sound like a know it all or a person who enjoys conflict. I would prepare statements about my goals of how I fully intend to spend at least 3 years at this job if conditions allow, and I would practice being humble.
No one actually expects you to spend the next 3 years at a job if it’s not going well, you just need a way to express that if it’s a good fit you intend to stay put and do a great work. 3 years is just an arbitrary number.
This sounds like the kind of thing that happens when you make a bad hire and then try to force it to work.
Words to live by: Hire fast, fire fast. Yep, as the article mentions, that has costs. What has a much higher cost is hiring the wrong person and hanging on to them, hoping to manage them into a great fit.
Every bad hire costs the company $50,000 - 200,000. Sometimes more. They can also sink or demoralize teams.
Many of the people conducting interviews are new to the process and don't know how to extract signal. Sometimes scales don't line up.
When you have a revolving door of employees (because that's the way things are these days), have trouble scheduling interviews (busy engineers trying to get their own work done), and can't get enough skilled interviewers on a panel, then of course the process will be a suboptimal experience for candidates.
To a degree, companies would rather a good candidate was passed over than a bad candidate was accepted. Type I and II errors.
Companies also don't like telling candidates how they did because that opens them up to lawsuit liabilities.
You have to do enough interviews to get signal yet not piss off candidates. (Or your employees in the interview pool!)
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