Cost of a Bad Hire

The team is desperate to fill that role but what happens if you make a bad hire? Someone who doesn’t fit in, is incompetent or who leaves within a year or so.

Making a bad hiring decision can be a costly mistake for businesses of all sizes. In fact, the average cost of a bad hire is around $17,000, according to a recent study by CareerBuilder. 😱 The cost only increases as the level of the employee rises. In relative terms according to the US Department of Labor, a bad hire can cost up to 30% of the employee’s first year compensation. According to Harvard Business Review, it takes approximately six months to break even on a new hire.

Turns out the costs of a bad hire extend beyond just compensation paid for no productivity. These other costs can include:

1️⃣Recruitment and onboarding expenses: This includes the cost of advertising, screening resumes, interviewing candidates, and training new employees.

2️⃣Lost productivity (as per above): A bad hire can disrupt team dynamics and workflow, leading to decreased productivity and lost revenue. 📉

3️⃣Damage to morale: A bad hire can create a negative work environment for other employees, leading to low morale and high turnover. 👎

4️⃣Legal costs: If a bad hire is involved in any legal issues, the company could be liable for damages. ⚖️

Some basic steps to avoid a bad hire can be as simple as:

💰Employing a written job description that reflects the tasks and goals of the role

💰Conducting an effective interview process involving major stakeholders and key interfaces (not everyone in the company)

💰Having a standardized onboarding process to ensure expectations are met on both sides

If your team is having problems with the hiring and/or retention process, let’s have a chat. Drop me a note or give me a shout!

#badhire #hiringmistakes #costofbadhire