The true cost of a bad hire in UAE

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Hiring anyone and expanding your team involves an element of risk but, there are things that can be done to limit that risk and ensure getting the best fit possible.bad hiring UAE

As a small enterprise or even a startup there is nothing more valuable to your organisation than man (or woman) hours. Putting in time and effort is what companies are built on and when you are dedicating upwards 15 hour per day to your vision you want to make sure that anyone you are paying, is also working to make that vision a reality, but what happens when it goes wrong?

This is not advice on hiring per se, or advice, on when, where or how you should develop your team and hiring strategy. The purpose of this article is to address the very real cost of getting it wrong so that we can then start to look at how we get it right.

The real financials

Boiling down the numbers of it, there are several expenses involved in any hire. Even more in a bad hire. So lets lay it all out here:

  1. Salary – Before you realise you have a bad hire in your hands, organisations tend commit to a salary package. This is still payable and whether you feel that you are getting the performance you expected or not, that salary is going to go out of your coffers each month.
  2. Additional Training – No one is likely to give up on a new hire at the first hurdle. So, when the performance you expect doesn’t materialise, it is important to look inward and support your new hire with training and courses that might develop their understanding and ability. This naturally will come at a cost, whether this is a direct cost for the training or indirect cost in taking your time in additional support that hadn’t originally been accounted for.
  3. Visa – Not only do you need to cover the costs of processing the visa but, also put a deposit with the immigration for the length of employment. This can be a total cost of up to AED 9,000 ($2,500) for a standard UAE employment visa.
  4. Visa cancellation – If the bad hire turns into having to dismiss the employee, there will also be the cancellation of visa fees and possible repatriation costs to cover. Will you be replacing your lost hire? That’s a second visa to apply for too!

Productivity Costs 

We touched on this in the financial effects of bad hiring. If you, as the business owner are having to spend more of your time away from your own desk in order to additionally train, support and assist your new hire, you are losing productivity from both them and yourself. As a small or startup business, it is not unreasonable to assume that you, as the owner, are one of the main revenue generating members of the team, this drain on your productivity could easily have a disastrous effect on your numbers.

Reputation Costs

So, your bad hire has mismanaged your clients, led them to question your company’s capabilities and possibly even its integrity and you are now having to spend your time clearing up and performing damage control.

The old adage has taught us that if someone receives a great service they might tell another person; but, if they receive bad service they will tell them that too. Your reputation as a small business is still being developed and build on, and will likely be severely affected by an early dent like that.

Employee Morale

After all of the above is said and done the effect of it all on morale within your organisation cannot be underestimated. As the business owner your own morale is the glue that will keep any team you have together, and in the right frame of mind to deliver. Having said that, you of all people stand most at risk and likely to be affected by the bad hire.

It cannot be overstated how important it is that you lead your team through any bad hire. Other team members witnessing the poor performance from the bad hire, potentially having to deal with some of the fallout from it, and not getting the same amount of managerial support while your time and efforts are sidelined on the bad hire, can easily become disgruntled and lose respect for their employer, the company, or the collective mission.

With all of the above in mind, it is easy to see how that right hire is more important than you might initially think.

It is a daunting task to expand your team as a small start up and symbolises a large step in your company development, and though starting and growing a business of your own will be filled with mistakes and uncertainty, the reward from getting it right can be the unlimited success you set out for.

So now that you know the true costs of getting it wrong, how do you ensure that you get it right? Well, there is no black and white answer for that. Hiring anyone and expanding your team involves an element of risk but, there are things that can be done to limit that risk and ensure getting the best fit possible.

More on that to come….

(Melissa O’Neill is Director of Operations at SwissGulf Partners)

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