Bad hires, they’re everywhere. It’s a seemingly impossible to avoid mistake that many of us have made or have been victim to. Whether they quit, or they are fired, a bad hire costs the company a lot of time and money. While every company and position therein will differing costs associated with a bad hire, the U.S. Dept. of Labor has estimated that the average cost is about 30% of the employee’s first-year potential earnings. So if that bad hire were to have made $50,000 that represents a $15,000 loss for the company.
If we start with the hiring life cycle, these candidates were sourced, background checked, interviewed, on-boarded and trained. Their desks were set up, their productivity didn’t match their pay and everyone around them is slowed down during the learning curve. Each and every one of these details of even a good hire take time, money and a lot of work from everyone on the team. So when this all falls through and the employee ends up leaving, it can be a big hit to the morale and resources of the company.
Each step of the hiring process is a use of resources. Paperwork isn’t automatically filled out, someone is paid to know what the proper documentation for a new hire is, then they are paid to get it filled out, then they are paid to file it. When even the first steps of a hire are considered, there are so many costs associated, and that’s just the tip of the ice berg. Here are some very helpful facts from a bad hire infographic from MindFlash. Each of these tid bits are meant to help employers avoid the painful bad hire.
- 41% of companies said that a bad hire in the last year as cost them at least $25,000
- 25% of companies said that a bad hire in the last year as cost them at least $50,000
Direct and Indirect Ways that Bad Hires Cost the Company
- 41% lost worker productivity
- 40% lost time due to recruiting and training another worker
- 37% expenses recruiting and training another workers
- 36% negative impact on employee morale
- 22% negative impact on client solutions
Top Reasons for Bad Hires
- 38% the company needed to fill the position quickly
- 34% it just didn’t work out
- 21% the company didn’t test or research the candidate’s thoroughly
- 11% the company didn’t perform adequate background/reference checks
Characteristics of a Bad Hire
- 63% failure to produce the proper quality of work
- 63% doesn’t work well with others
- 62% bad attitude
- 56% immediate problems with attendance
- 49% employee caused customer complaints
- 48% failure to meet deadlines
Recruiters and hiring managers living in fear of a bad hire is slowing down the hiring process and in turn costing companies even more money. Time is not what prevents a bad hire, knowledge is. When you know the risks and what to look for, a bad hire is easier to spot.