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Would you 'pay off' a bad hire in order to keep your rep as a good employer?
Interesting blog post by Steve Boese on Fistful of Talent this morning. Steve's post is all about bad hires, and how companies deal with them. One chief executive mentioned that their policy was to give poor hires a large severance package so they, "feel good about you," as an employer. He further rationalizes the action saying, "it was our mistake to hire that person."
Would you offer a large chunk of change to poor hires? Do you think that actually improves your reputation as an employer?
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6 Answers
As I posted on Fistful of Talent today, I do think there are times that organizations often do a poor job taking responsibility for their contributions to the so called bad hire. Putting employees in positions that are unlikely to succeed, providing inadequate support or training, and not acting early enough to recognize and act on these situations are all part of the problem. Sure, many times new employees have a large part of the blame and responsibility for failures, but to put all the blame (and to fail to compensate employees), seems to me to be a one-sided and ultimately failing strategy.
Steve, I understand your theory and can see some value in your argument but tend to disagree. I think that companies need to take that money and invest it in training for hiring managers in selection and interviewing and in a system to avoid making the bad hire in the first place. Also, hiring managers need to be evaluated on their hiring decisions and the effect on the organization. Until that is done, I think you might see the severance looked at as good money after bad.
Interesting concept though and it has raised some great questions.
If the bad hire was the companies fault the company should pay. If the bad hire was the fault of the information provided by the employee than the employee should shoulder the responsibility for his actions.
Not an easy thing to determine.
Hmm.
I am some where in the middle. If you make an incorrect hire or placement and you recognize that it happened and you don't have a good fit for the person elsewhere I think providing a reasonable severance to assist them in transitioning to a new job is reasonable.
I agree with John that the first order of priority is to make sure "hiring" authorities have the right skills and training to make good selection decisions.
Beyond the "hard" costs of a "bad" hire you also impact the team and the individial. As Nilofer Merchant mentioned in a recent blog post on HBR people aren't cogs, they aren't disposable.
The worst strategy is keeping someone because no one wants to "blink". The employee doesn't want to admit they are struggling and management doesn't want to admit we made or poor hire or assignment- everyone loses.
Hire Hard, manage easy is a much better solution for the long term.
Mark Herbert is hitting on the more critical point regarding this issue...the worst strategy is keeping a poor performer in place because no one want's to tackle the tough conversation. If handing out a larger severance makes managers more apt to act on poor performance, i'm all for it. Netflix and Zappos both leverage this approach, and if you read online reviews from employees that have been let go, it's clear they respect the position.
So much depends on why the person is a "bad hire". Occasionally it may make sense to quickly pay off someone who does not perform but ...care needs to be taken to ensure that the good performers in the organisation do not get resentful of poor performance being rewarded and start to study their own remuneration package more closely.
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