What Does a Bad Hire Really Cost?

You have hired a new person to join your team and they haven’t worked out to be exactly what you were hoping for, so you are forced to let them go. What does this actually cost your company

There is the obvious salary you have been paying, time spent training them and the salary of the person doing the training of course, recruitment fees if you choose to go through an agency, the price to advertise on a job board and more.  But what about the hidden costs or expenses we don’t always think about as being actual out goings.

To start with, you have made the decision to start looking for someone new, you take the time out of your day ( let’s say an hour of your salary)  to put together a job description and advertisement or sit down with a Recruitment Consultant. You post your advertisement and the applicants start rolling in. How many hours do you spend going through resume after resume? or the top 3 resumes your Recruiter sends over?  (This can be extremely timely-  Insert hourly pay rate here!).

Next step is interviewing, you invite 2- 4 candidates into your office for an interview which is more time out of your day potentially 2- 6 hours depending on your interviewing style.  Now for reference checking, computer skills testing and second interviews if you choose to do so and are not going through an agency as they should cover this for you  (once again your hourly rate…what is your time worth?).

So now you have chosen a candidate and offered them the job ( insert recruitment fee here if going through an agency) and of course are hoping that they are perfect for the role and your team, so you invest your time and energy into training them and making them feel at home within your team and a few months in you realize, this is not the person for the job so you let them go…

Not only is turnover of staff costly in regards to monetary out goings , but having high turnover can be costly in regards to disrupting your team, Your reputation, lost productivity and much more. When job seekers see a position being advertised over and over again with the same company they become cautious and wonder why this is.  High turn over can cause your staff unnecessary stress.  Often when staff members  become close to other staff members letting someone go can often cause a ripple effect within the workplace resulting in other staff members  becoming insecure and eager to find another job themselves or unhappy with the lack of consistency in their work environment and don’t forget the risk of unfair dismissal claims if the person is not let go following the correct procedures.

So what can you do to ensure your making the right decision when deciding to offer someone a position within your company?

  • Hire a professional Recruiter with a strong reputation within your industry to do the job for you- You wouldn’t service your own car if you’re not a mechanic!
  • Think about hiring on a temporary to permanent basis. This way both parties can try before they commit!
  • Make sure you do your reference checking if you choose to hire yourself- You would be surprised at how many companies miss this step!
  • Know what it is you are looking for and do not change the job description half way through the process – this just costs you more time and money!

Do you have any tips for hiring the right people the first time around? Have you experienced any of the above first hand?


Posted On LinkedIn By Protege’s Senior Recruitment Consultant Sarah-Jane Thomas on 25.05.15