The Hidden Hiring Crisis: Why Overlooking Character is Costing You Talent and Trust

Bad Hires Don’t Just Fail – They Burn Companies to the Ground

Elizabeth Holmes. Bernie Madoff. Sam Bankman-Fried. Each of them looked great on paper. Impressive resumes, prestigious pedigree, and glowing references (handpicked, of course). But what their employers, investors, and teams didn’t account for was their character.

The cost? Billions of dollars lost, lives and reputations destroyed, and careers derailed.

These are dramatic examples. Most of us will never encounter fraudsters who level companies all by themselves. What front-line managers face is the daily risk of their team’s slow death by a thousand low character cuts.

Which makes the focus on skills and experience in hiring – rather than character –  so perplexing. The numbers paint a bleak picture of how this is working out for American companies.

• One in three new hires will quit or be fired within 90 days (one in two within 18 months)
• Bad hires cost companies up to 5x their salary in lost productivity and turnover
• Employee fraud alone drains 5% of annual revenue—more than $4.7 trillion globally

We aren’t just hiring bad talent. We are hiring time bombs.

Retention is a Character Problem, Not a Hiring Problem

HR leaders comfortably talk about hiring the “best talent.” Often what they mean is workers who check the most boxes on the job description. But if that talent is toxic – if they lack integrity, accountability, humility, respect – it won’t matter how skilled they are. They will leave, and often, they will push others out as well.

According to a recent Cornerstone report, toxic employees make their teammates 54% more likely to quit and cost employers up to three times more in hiring fees.

Like Rome, the best culture isn’t built in a day. But it is built by starting today. Want to improve your culture? Begin modeling and rewarding strong character. Make it clear that toxic high performers undermine growth even if they make it rain in the short run. How? Ignoring or even rewarding low character sends a clear signal to the rest of your team that when the stakes are high, arrogance, dishonesty, and disrespect are A-OK. Then watch the good people leave or disengage.

Our Hiring Process is Broken – And We Know It

Let’s be real. We aren’t effective at measuring character pre-hire. Background checks are limited and poor predictors of future behavior. Talking with references who have been handpicked by the candidate is mostly a “box checking” exercise. Personality tests can be arduous for the candidate and yield little verifiable information about their core values.

These tools fail because we simply cannot reliably self-report our own character. It must be observed by others. And until recently, there has been no scalable way to gather and use first-hand character observations in hiring.

A New Way Forward: Hiring for Character

Character will soon be recognized as the single most powerful determinant of performance and company culture. In his brilliant book, “Hidden Potential,” organizational psychologist Adam Grant confidently declares that it is character, rather than talent, that unlocks our career potential.

The most successful organizations don’t just evaluate skills or experience anymore. They prioritize character in hiring, development goal setting, performance reviews, and leadership development.

Companies that embed character into their culture will gain competitive advantages across multiple areas. First, they will attract and retain true “best talent”. The next generation of workers seeks purpose not just pay. The best will combine skills and character to unlock solutions to our biggest challenges.

Second, character-first companies will develop a reputation for trustworthiness among their customers, partners, and vendors. Revenue will grow as the market responds to the value trust creates.

Third, firms that embrace character will reduce the all-to-common legal and financial risks of low character hires. Teams who openly speak the language of integrity, accountability, and humility will quickly screen out smaller versions of the Madoffs, Holmeses, or SBFs.

If your hiring process isn’t actively filtering out low-character candidates, you’re rolling the dice on your culture, your retention, and your company’s long-term success.

The Next Step: Make Character Non-Negotiable

If your organization is ready to reduce hiring risks and attract people who make your team stronger, here’s how to start:

• Read the research. Dr. Paul Spector’s whitepaper, The Business Case for Character, lays out exactly how companies can use character to drive retention and culture.[Download the Whitepaper Here]
• Start talking about character traits in your onboarding, training, and meetings. Make it normal for people to recognize humility or grit.
• Build character into performance measures. Reward traits like integrity, accountability, and humility in evaluations and promotions.
• Assess character in hiring. Use independently sourced character data – not gut feel or personality tests – to measure candidates’ trustworthiness.

The character of your people does more to boost performance and shape culture than anything else. Embrace it.