Studies show that within a year of being hired, 80 percent of new hires do not live up to expectations. A bad hiring decision can be one of the most expensive mistakes you can make.
A study by Brad Smart, author of Topgrading, showed that only 20 percent of managers turn out to be high performers, while the rest are disappointments. In terms of finances, a CareerBuilder study found that 24 percent of companies experienced a bad hire that cost them a figure over $50,000, with 41 percent of businesses reporting losses of over $25,000.
While these statistics are concerning, these numbers reach new heights when accounting for high-level management positions. A mis-hire for a hotel general manager can cost 8 to 10 times their salary, which is an average of $1.5 million. This happens frequently in the hospitality industry. Positions are being filled despite hiring managers being unable to fully identify if they’ve found the right fit. This uncertainty carries on for months and isn’t unveiled until 6 to 12 – maybe even 24 months later.
The Results Take Time
It’s unlikely that your hotel will take an immediate hit. Odds are, your General Manager will have a strong financial acumen that creates the illusion of lasting stability. Unfortunately, there are residual effects to mismanagement that will affect your finances later. If your Director of Sales, Director of Revenue and Director of HR are struggling because of your manager’s ineffectiveness, your associate and guest satisfaction will also struggle. After all, your hotel’s success is dependent on your employees’ success.
There’s a massive cost to employing the wrong person. Often, hiring managers are picking the best person out of a flawed pool of candidates. It’s common to put up a job posting online and let an internal recruitment team shoot messages out to potential candidates. The problem is that in the land of the blind, the one-eyed man is king. Having a group of sub-par candidates will make the unsuited seem satisfactory.
So What Now?
Unemployment is at 3.5 percent and most Americans are not looking for a job. With a tight labor market, finding the right candidate is tedious. By posting listings online, you’re only tapping into a small percentage of the market. So how are you identifying the entire pool of candidates when 90 percent are passive? Mitigating this talent crisis starts with discovering what candidates want. Does your opening provide them a challenge, a better location, advancement, more money, a better culture, more stability? If you want to hire a candidate to onboard without extensive upskilling or training, you will have to look beyond traditional talent pools.
Recently at the 2019 Lodging Conference, Arnie Sorenson, the CEO of Marriott said that one of the biggest issues facing the industry is finding talent. Executives need to address how to identify quality candidates and existing talent. If we’re willing to admit that there is a talent crisis at the highest level, what are we willing to do about it?
Are you struggling to find the right candidate? If the local talent pool is not meeting your demands, let JDI help. Joseph David International is regularly ranked as one of the top hospitality recruiters in the country because we do more than find candidates; we find the ideal candidate for your specific needs. For more information about our hotel recruiting services, please click here.