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Feb
08

How to Avoid Hiring Disasters

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In recent years, the number of available candidates for financial services jobs has swelled, making it even more challenging for recruiters to identify the right individual with the relevant skills, the best attitude and the appropriate experience.

Making the wrong choice can be extremely costly – both financially and in terms of the potential disruption to teams and reputational damage. Is it ever possible to minimise the risk of making a hiring disaster and what steps can you take to ensure your choice is the right one? The cost of getting it wrong Choosing the wrong person for a job can do untold damage to a business. A bad hire can affect the morale of a team or an entire company, depending on their influence and level of seniority.

If someone causes enough disruption to a team, it can even prompt other valuable staff to leave. Put simply, bringing the wrong person on board is an expensive mistake for a firm to make, in terms of lost productivity, potential impact on profits and the associated recruitment costs.

The cost of hiring the wrong person is about two and a half times the salary of the individual in question, according to the Chartered Institute of Personnel and Development (CIPD). Harvard Business School, meanwhile, calculates that the cost can be between three and five times annual salary or even up to ten times if the person has a specialist role or holds a senior enough rank in the organisation. A bad hire can also cause reputational damage from which it can take years for a firm to recover – if it ever does. Both Vince Cable and David Cameron belatedly labelled Sir James Crosby, who spearheaded HBOS’s aggressive mortgage lending during his period as chief executive which eventually led to its downfall, as a bad appointment.

Meanwhile, Johnny Cameron, who led Royal Bank of Scotland’s investment bank during its pre-crisis expansionary period, was banned from taking another City job by the Financial Services Authority after the firm was rescued by the government. These are high-profile examples, but recruitment experts advise that firms take their time in identifying the right person for a role, however urgently they need to fill it.

Extract Taken From http://marketing.dice.com/pdf/Feb_2012_whitepaper.pdf

 

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