High Cost of Low Employee Pay: Avoid These 3 Employee Hiring Mistakes
Is your approach to the employee hiring process costing you money? As a childcare business owner, you want to hire employees that will contribute to the profitability of your company, not detract from it. In this article, we explore three common mistakes that business owners make in the employee hiring process that come with a high cost. Keep reading to learn about these common hiring mistakes so you can avoid them.
Ironically, some of the costliest mistakes that business owners and hiring managers make in the employee hiring process are an attempt to save the company money in the first place. The adage, “You get what you pay for,” often proves true, especially when it comes to who you hire for your childcare business. Here are three common mistakes businesses make in the employee hiring process:
Hiring a Low-Quality Candidate for a Low Wage
Finding a candidate for your position who will work for a lower wage is a win for your business, right? Probably not. You may have thought you struck gold when you found a “qualified” candidate to work for a low salary, but consider the ways a low-quality candidate could be costing your childcare business money:
- Reduced productivity – A low-quality candidate may check all the boxes on paper but in reality, may under-perform on the job. From an inability to perform job duties effectively to a poor work ethic, the wrong candidate will slow down productivity and defeat the purpose of your new hire.
- High cost of retention – Keeping your new low-quality hire around often proves more expensive than you thought. Onboarding, training, and re-training are costly and time-consuming processes, especially when the individual hired may contribute so little to the overall performance of your daycare business.
- Low motivation and morale – The wrong candidate may prove expensive and burdensome to keep on staff, especially if they lack internal motivation and a good work ethic to do the job right. This can lead to low morale as other members of your team become frustrated or put out by the new hire’s contribution or lack thereof.
The money that business owners attempt to save by hiring a low-quality candidate for a low wage quickly disappears as they realize their ongoing investment in an employee who detracts from the business’s profitability in the long-term. This is a position in which you don’t want to find yourself as a childcare business owner. Hiring the right candidate at a competitive wage is a much better investment for your business.
Hiring the Right Candidate and Losing Them
Adding the right employee to your daycare team can prove a valuable asset to your childcare business—if you can hang onto them. Employee retention is a crucial aspect of managing a successful company and saving your business money down the road. Employers who find their best employees walking out the door too soon have a major problem—a costly one—on their hands.
The Society for Human Resource Management (SHRM) estimates the cost of replacing a salaried employee who leaves the average business to be roughly six to nine months of that employee’s wages. For mid- to higher-level positions, the cost is significantly greater. From the cost of the initial hiring and onboarding of a new employee to the training and re-training periods, as well as the cost of the time it takes for an employee to reach their full potential at a business, you can imagine how much company owners are set back when they have to make the investment over and over again.
Boosting your employee retention efforts is a much smarter option. Check out these ten reasons why great employees stay at a company and see which ones you can work on to help make your childcare business one your employees don’t want to leave.
Making Poor Decisions During Your Job Search
Your best laid plans for hiring a great employee can go awry when you make poor decisions during your job search. Here are some of the ways employers set themselves up to hire the wrong candidate:
- Hiring out of desperation – When employers rush their hiring decision because they are desperate to fill a position, they will often hire the wrong candidate.
- Writing vague job descriptions – Using obscure language and failing to nail down the essential job duties, qualifications, and requirements of your position can result in a low-quality pool of applicants and, ultimately, a bad hire.
- Using expensive recruiter websites – These websites can cost a lot of money to access candidates for your open position and there are no guarantees that you will find the right person for the job.
- Failing to consider your company culture – You may be ready to hire a candidate who looks like a great employee on paper, but have you considered how they will fit into your company work culture? Hiring the right person with the wrong personality, attitude, or interpersonal skills means you hired the wrong person.
- Not checking references – A candidate’s references are an invaluable source of information. Failing to follow-up with a candidate’s references may prove a costly mistake when information you could have learned up front comes to light after you’ve made the hire.
Remember, implementing a few best hiring practices for your childcare business can go a long way in saving money on the right candidate. The hiring process is seldom easy, but you can take extra steps to prepare and find the right employees who will add value to your company.
The Cost of Hiring Mistakes for Your Daycare
The three common hiring mistakes we have explored in this article can certainly have far-reaching effects on any childcare business. The expense of hiring the wrong employee for your daycare is only part of the big picture. Unfortunately, the wrong employee can have a negative impact not only on your revenue and staff, but also on the families you serve if they too have a bad experience with a low-quality employee.
Families who leave your care as a result of a bad employee represent a loss of revenue, relationship, and reputation. Business owners who discover themselves in this situation wish they had invested in the employee hiring process from the outset to save the frustration and heartache.
Hopefully, this guide gives you insight into some common hiring mistakes business owners make so you can avoid them. Setting up your childcare business for financial success starts with a solid plan, and the experts at Honest Buck Accounting are here to help. Schedule a discovery call to discuss your childcare business accounting needs with us!
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