Feature

Who is accountable for a wrong hire?

The cost of a wrong hire can be disastrous for a company, but is anybody held accountable for it, asks Sudipta Dev.

Most organisations take great pride in their stringent recruitment process, yet mis-hiring is a common occurrence. Lack of time to fill in vacancies puts great pressure on HR departments, sometimes to the level of desperation. Hurried recruitment without proper check on the capability and behaviour of candidates often results in hiring the wrong individual. The percentage of wrong hires varies according to the position and sometimes the number of inductees. It is also recognised as one of the reasons for the high attrition rate in the industry. The question is: who should be held accountable for a wrong hire? The recruitment consultant, the HR manager or the technical interview panel? While the blame rests on all, the problem is that the mistake is usually discovered a bit too late.

The cost factor

A wrong hire is more expensive for a company than not hiring at all. On an average, it is 1.5 times the annual salary. For senior levels this percentage is much higher. At the recent convention on Optimising Hiring Costs organised by the Executive Recruiters Association at Hyderabad, speakers were more concerned about the cost of wrong hiring than the cost of hiring. “This is particularly at the management levels— project manager and above. The cost of a wrong hire at the management level would be delayed project deliveries, cost over-runs, customer dis-satisfaction, etc. A wrong strategic hire can affect the topline as well as the bottomline of an organisation,” says Kris Lakshmikanth, Founder CEO and Managing Director of The Headhunters India, and General Secretary of ERA.

Bigger organisations are able to absorb the costs, while a small company may even collapse as a result of a hiring mistake. Vikram Bhardwaj, Managing Consultant, Redi-leon Executive Search, explains why: “At senior levels, other than the directly measurable costs, there could be loss of client confidence, negative attitude of the mis-hire impacting the performance of the team, and loss of shareholder value by impacting the stock price and reputation of the firm.”

The time period extends according to the level of seniority. Sometimes a whole year can be lost in the process. “A senior management recruitment usually takes at least six months from initiation of the process to the incumbent joining, another couple of months to realise that it was a wrong hire, and another few months to find a replacement. This could mean loss of about a year of projected growth for the department or organisation,” explains Raju Kapoor, Principal, 3P Consultants. Adding this to the loss associated with the opportunity during this period, and recruitment costs, and a wrong hire proves to be very expensive for the company.

The cost of a wrong hire at the management level could be delayed deliveries, cost over-runs, and customer dissatisfaction Kris Lakshmikanth Founder CEO & MD The Headhunters India	It is not only the HR who meets candidates but also line managers and the consultant. All are equally responsible Nirupama V G Associate Director TeamLease Services

Common mistake

It is a known fact that wrong hiring is more common at junior levels. At senior levels there are several rounds of interviews and reference checks which reduce the chances of making mistakes. “At the junior levels, about 15 to 20 percent can be mis-hired. This is mainly because of the time pressure to deliver people for projects, and inadequate/no check of references and certificates,” explains Lakshmikanth. He points out that there is wrong hiring even at the senior and board level.

Accountability

Interestingly, while all (the HR head, consultant and technical panel) can be held responsible for the mistake, accountability is rarely established. “It usually ends up as a blame game between the hiring manager and the recruitment consultant. As a result, the recruitment consultant suffers loss of credibility while the hiring manager may be pulled up for the same,” says Kapoor. He feels that the recruitment consultant should act with more responsibility; the consultant is expected to advise the client on his needs and help him make the right choice.

“However, in some cases, the corporate is unable to define its exact requirements and keeps making changes on the profile of the candidate till the end. But this does not absolve the consultant from his responsibility,” Kapoor adds.

Experts however believe that a single person cannot be held accountable for hiring mistakes. “It is not only the HR who meets candidates but also line managers and the consultant. All are equally responsible,” asserts Nirupama V G, Associate Director, TeamLease Services.

The recruitment consultant suffers a loss of credibility while the hiring manager may be pulled up due to a wrong hire Raju Kapoor Principal 3P Consultants	Pointed questioning should be exercised rather than soft-peddling and making assumptions Vikram Bhardwaj Managing Consultant Redileon Executive Search

Too late to rectify?

Some organisations realise it a bit too late that they have hired a square peg for a round hole. This time frame varies as per the position. Rajaram Agrawal, Managing Director of Mumbai-based Talent-Ahead India, believes that one gets to really know a person after the initial honeymoon period and/or training period which may last for 15-20 days, and later another 10-15 days on the job. “It is mostly too late, but sometimes you can rectify the situation if the offer letter has not yet been given.”

It is however not always easy to ask the person to go, particularly at senior levels. “Sometimes the employment contract can have serious repercussions on the employer who terminates an employee’s services...it can make companies vulnerable to litigation by the employee,” points out Bhardwaj.

Hiring Don’ts

Do not decide in a hurry and regret later Do not get carried away by big names on the CV (past employers or references given by a candidate) Do not consider people who always talk about their past achievements and how they have climbed 'steeper hills' than the challenges your company offers Do not hesitate in recording your views if you find something amiss in the candidate Do not skip the reference check process. It is usually the 4th or 5th reference who will tell you something that you may not have known about the candidate

Background checks

It is commonly known that at junior levels 10 to 15 percent of the information provided in CVs is incorrect. People bluff on experience, job knowledge, current salary, job responsibilities, etc. “This wrong information at senior levels is difficult to assess, but it can be about 2 to 5 percent,” remarks Nirupama of TeamLease. MNCs generally have more rounds of interviews that reduce the possibility of wrong hiring. Among all IT cities, Hyderabad is notorious for incorrect CVs—as high as 25 percent. In Delhi, the average is 15-20 percent, and Bangalore 5-10 percent.

Recruitment experts are unanimous about conducting background checks to prevent mis-hiring. This should be done through independent referees, not only the referee provided by the candidate. “Also, ‘pointed questioning’ should be exercised rather than soft-peddling and making assumptions. For example, a considerable gap between two jobs should be cleared with a candidate. Or an abrupt change with only a few months at a company should definitely raise pointed questions as to the reasons,” states Bhardwaj.

Nowadays, companies make spot offers at junior levels but inform the candidate that they will check his/her credentials through an independent agency. Lakshmikanth informs that if the agency gives a negative report, then the offer is withdrawn. “I have come across an instance where a candidate joined one reputed MNC from another at a project leader level. But after 15 days he was asked to leave because of a negative report from the agency. He could not do anything as he had shifted from one city to another and had burned his bridges with his previous employer. Luckily, he got another job within a month because of the current booming market.”

People often wear a mask and come for interviews, and recruiters trust their gut feeling to analyse them. Nirupama reveals the last safeguard that many recruitment experts rely on, which has saved them from hiring a wrong individual. “Assuming that everything else is in place, we often rely on our instinct to know whether a candidate is the right fit culturally, it is something that otherwise cannot be checked,” she concludes.

sudipta@expresscomputeronline.com