How Much is Your Bad Hire Really Costing You?

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Did you know that you can expect to spend $25,000 to $50,000 for each bad hiring decision you make? This is just the cost in addition to the salary you’ve offered and are paying during the time they continue to work. Careerbuilder surveyed companies in 2011 to determine the cost of bad hires and 41% of the responding companies indicated that a bad hire cost them an additional $25,000 at the time. 25% said the number was much closer to $50,000. These dollar amounts correlate to lost revenue, lack of productivity and other related costs.

Today’s job market is competitive. Many companies are concerned about the skills gap and are finding it challenging to hire qualified individuals for their open jobs. Hiring is not inexpensive and includes everything from advertising and pre-screening to the cost of training. Some managers will make a quick decision based on gut instincts which sometimes turn out to be the wrong move.

Here is a look at the costs and how to avoid a bad hiring decision.

  • What are the direct and indirect costs? The $25,000 to $50,000 per bad hire breaks down in a number of ways. It can be seen in lost productivity, time spent recruiting, the expense of training, and the impact on employee morale and client experience. A bad hire can infect a company and it could take a long time to recover from the damage caused by one bad employee.
  • What are the factors that lead to a bad hire? The Careerbuilder survey results showed that 38% of the responding companies said the bad hire was a result of rushing to fill the position. 11% didn’t conduct the proper background checks. 21% said the employees did not possess the skills they described in their experience.
  • What are the signs of a bad hire? It doesn’t take long to notice the negative impact of a bad hiring decision. Red flags begin to show up immediately. 63% of the new employee’s weren’t able to keep up with the work after training. 63% didn’t work well with the team already in place. 48% didn’t meet deadlines and 56% showed immediate problems with their attendance. As you can see, many of these issues overlapped for these employees.
  • How can you avoid a bad hire? The good news is that companies can take steps to avoid the negative consequences of a bad hire in several ways. The most important step is to evaluate your interviewing process and be sure to ask behavioral questions that will give insight on the candidate’s ability to do their job. Check their references thoroughly. Also evaluate your training process to ensure new employees have all the tools they need to succeed in your business.

Direct hire or contract services as offered by VincentBenjamin can also help your company avoid a bad experience with a new employee. Talk to us about how we can work with you to provide the best placement for your needs. We have recruiting offices located in Phoenix, Denver, Los Angeles and Orange County


CC, Flickr, Marvin Lee , 365.034 Tired and Frustrated