Why you Need a PEO: The Real Costs of Hiring the Wrong Candidate


In a perfect world, all the employees we hire work together, making our businesses stronger and better than ever before. But what if the person you hire is just plain the wrong candidate? You only have a resume and a few interviews to go on, and it’s quite easy to find yourself stuck with someone who clearly isn’t right for your business. Attracting the best candidates is one of the reasons why you need a PEO.

Seriously, Just How Bad Can It Be?

Let’s get this straight: hiring the wrong candidate is something that can happen to anyone, but small businesses are the most vulnerable. For smaller businesses, hiring new staff isn’t an everyday event. Many of them won’t even have a specialized HR department. That gap in the organization is hurting, and they want to fill it fast.

Get someone in that position. Get the job done. How bad can the consequences be? Well, it turns out that hiring the wrong person can be one of your costliest business mistakes. Let’s see why.

Unknowns Are Why You Need a PEO

1. You’ll Need to Replace That Person Real Soon

Replacing employees quickly

The wrong person in the wrong position is an unsustainable situation. Not only will you be frustrated with your new employee, but he or she probably realizes the job’s a bad fit. Whether they leave or you dismiss them, you’re back at square one. The whole recruiting process has to start from scratch.

That’s hours of your time spent studying applications, going through a series of interviews, and of course, onboarding yet another new employee. There have been various attempts at quantifying this cost, and they come up with some scary totals. By the way, help with onboarding is one more reason why you need a PEO.

2. You Waste Time and Resources Trying to Help Them Settle In

Sometimes, people get off to a bad start and then find their feet. As a fair-minded employer, you end up spending a lot of effort on training, goal-setting and performance reviews as you try to help your cuckoo in the nest settle in. It’s not always an utter waste, but it would be so much better if your new staffer could just slot in nicely from the beginning.

Time Wasted Ramping Up New Eployees

3. Lost Productivity

Employee Turnover Reduces Productivity

Apart from the time you put in trying to guide your misfit employee, you’ll probably need to ask a supervisor or another staffer to monitor and mentor the work he or she does. That means that you and your staff spend less time doing what you’re actually supposed to be doing: making money.

Let’s not forget that your workflows are going to bottleneck. You and your staff will be putting out fires every step of the way. While that’s going on, other work gets put on the backburner – the knock-on effect can be far-reaching.

4. A Bad Hire Costs Money

When we hire someone to do a job of work, we pay them to get it done. A bad hire isn’t just failing to get the job done, he or she is costing you a salary. That’s beside the cost of any formal training you may sponsor or any informal training that’s happening in the workplace. Meanwhile, things aren’t running as smoothly as they should, and that could cost you sales.

How much more production would be turned out by your company if this person was actually doing the job you expected? Does that affect your quarterly numbers? Will that affect your ability to scale? What else could you be doing with that money? All of these are questions are one of the reasons why you need a PEO in place to help mitigate those risks.

Bas Hires Waste Money

5. Employee Morale Takes a Dive

Bad Hires Lower Company Morale

There are many reasons why your staff will dislike a bad hire almost as much as you do and possibly even more. Bad hires create more work for everybody, and it’s infuriating to know that the person they have to drag through every workday is earning a salary for getting underfoot.

If the newbie’s personality isn’t right for the organization, things get even worse. There are personality clashes, and there’s more tension in the workplace. A good team can become a lame duck team because one person isn’t doing the job properly.

6. Your Hire Hurts Your Business Reputation

Even when a bad hire doesn’t work directly with your clients, his or her actions can have a very negative impact on your business’ efficiency and the way clients experience your business.

An incorrect bill, a late delivery, a substandard result – all of these could cost you a client. What will that person say about your organization when talking to others? Your reputation takes a painful dent.

Your Business Reputation

The Big Takeaway: Every Hire is Important

Every Hire Is Important

A wrong hire has an impact no matter whether you’re dealing with a high-level post or an entry-level one. An incompetent clerk or a slovenly cleaner can do their share of damage. At the end of the day, the lesson is clear: every single hire will have either a positive or negative impact, and every one of them is important.

That means taking the time to vet job applicants carefully, and since time is the one thing that most business owners have a short supply of, help is needed. A professional HR manager can make mistakes, but at least he or she will take the time to follow through every step of the hiring process.

Why You Need a PEO:

If you have a Professional Employer Organization (PEO) to back you up, things get even better. A good PEO will be able to offer you HR advice that you can use to help you choose the right employees, and the fact that you have PEO-based benefits packages means you’re more likely to attract a better class of applicants. Your PEO can offer your staff better benefits at lower costs to you, and if there’s one reason you need a PEO, this is it!

Recruiting and retaining staff becomes so much easier when you have a PEO to back you up.

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