It’s a common scenario: you hire a promising candidate, but over time, they don’t perform as expected. It’s never easy to admit when you’ve made a bad hire. But the reality is, many of us find ourselves in this position. The longevity of new hires in a company is a topic that has been under much scrutiny recently. In 2024, retention statistics for new hires show some interesting trends.
According to recent data from the U.S. Bureau of Labor Statistics, approximately 60% of new hires stay with their company for at least six months. However, this figure drops significantly after one year, with only about 50% remaining. For those lasting more than two years, the percentage shrinks further to around 34%. These statistics are for all hires across the US, and do not consider specific industries / geographical regions / or level of seniority yet reveal some interesting data points that we all need to be aware of when making new hires. How do we know if we have made the right hire, and most importantly what do we do now?
How did this happen?
First things first, identify the root cause. Here are a couple that might be the cause of making a bad hire:
- Cultural Fit: Research from the Society for Human Resource Management reveals that 33% of new hires leave within the first 90 days due to poor cultural fit. It’s not just about skills; values and work style matter significantly.
- Lack of Engagement: Gallup’s State of the American Workplace report states that only 34% of US employees are engaged at work. An employee who isn’t engaged is less likely to be productive and more likely to leave the company prematurely. U.S. companies lose an estimated $550 billion annually due to disengaged employees. This underscores the importance of addressing performance issues promptly and effectively.
- Inadequate Onboarding: An UrbanBound survey found that comprehensive onboarding programs help retain 69% of employees for up to three years. Without proper onboarding, new hires may struggle to acclimate and understand their role.
- Unrealistic Expectations: According to LinkedIn’s Talent Blog, 61% of employees feel that job realities don’t match their expectations set during the hiring process. Clear communication during hiring can mitigate this disconnect.
“Is it my fault that my employee is not living up to their potential?”
According to a recent study, 60% of managers believe the onus is solely on the employee. However, evidence suggests otherwise. The hiring process plays a significant role. A survey by CareerBuilder in early 2024 revealed that 74% of employers admitted to making a poor hiring decision due to insufficient screening and rushed processes. This highlights the importance of thorough recruitment strategies and the responsibility of the employer in setting realistic expectations. Many of us face this dilemma at some point. Holding yourself accountable is crucial, but it also involves assessing whether you’ve provided the tools, environment, and support your employees need to thrive. Recent studies indicate that a staggering 70% of employee engagement is directly influenced by managers (Gallup, 2024). This highlights the significant role that leadership plays in sparking potential. It’s no longer simply about assigning tasks; it’s about fostering a culture where employees feel valued, challenged, and capable of growth.
Furthermore, research by the Harvard Business Review in 2024 underscores that 84% of employees believe that lack of regular feedback is one of the biggest obstacles in reaching their potential. Without continuous guidance and constructive criticism, employees may feel adrift, unsure of how they can improve or align better with the company’s objectives.
How long should you give an employee to turn their performance around?
This question is a constant nagging concern for many leaders. Based on recent insights, the average time managers wait before addressing performance issues is about 6 months. However, that time frame might be too long. According to a 2024 report by the Harvard Business Review, holding onto underperforming employees for more than 90 days significantly affects team morale and overall productivity, and in fact, companies could see a 25% decrease in team efficiency during this period. Additionally, SHRM states that 60% of HR leaders regret not addressing performance issues promptly, leading to prolonged periods of decreased output.
Ever wondered if a poor hire can transform into a star employee?
Managing underperforming employees is one of the most challenging tasks for any leader. Consider this: Studies show that over 50% of new hires underperform in their first year. However, a remarkable 35% of these underperformers significantly improved within 18 months when given the right support. It’s not just about skills. A positive change in work environment and company culture can also play a big role. Set clear, measurable goals and have a structured review process. Address issues early and offer training or support where needed. If there’s no improvement within 90 days, it might be time to make a tough call for the greater good of your team.
When dealing with a poor performer, it’s crucial to evaluate whether coaching and development will yield improvement. Yet, sometimes, despite best efforts, it’s clear that a change is necessary. However, the risk has to be worth the reward….. By delaying necessary decisions, we risk demotivating our top performers and potentially losing them to competitors.
The key takeaway here is the value of taking decisive action. Having a structured performance review process and consistent feedback mechanisms can help clarify whether an employee can improve or if it’s time to part ways. Don’t let the fear of confrontation stop you from making necessary decisions that can benefit your team and company in the long run.
Turnover costs can be high, but the cost of retaining a disengaged employee, who could be hindering productivity and morale, is often higher. It’s always a tough decision.
Feel free to reach out directly to discuss this topic further as well as any other questions or concerns regarding the current hiring climate. I guarantee that in our call together you will leave with 2 or 3 ideas that will greatly impact your ability to find, attract, and procure the top 10-15% of the candidate pool on a consistent basis.
