Executive Search Recruitment: Understanding the Cost of a Bad Hire
Posted by Talent Plus Staffing
Do you ever wonder what a bad hire can cost your organization? The wrong person can lead to hundreds or thousands of dollars wasted in training, lost productivity, payroll, termination costs and more. Something that you can’t put a price on is the reputation and morale of your company, which can also be negatively impacted with a bad hire.
Why Companies Hire the Wrong Candidates
The Harvard Business Review reports that as many as 80% of employee turnover is due to poor hiring decisions. Finding the right match takes patience and diligence, and not all hiring managers carve out the appropriate time for it. According to a recent survey, the most common reasons why companies hire the wrong people are because of unclear performance objectives and a poor skills match.
Because there are so many variables, it’s difficult to pinpoint the exact cost that bad hires cost a company. The U.S. Department of Labor estimates that it can cost an average of one-third of the new hire’s salary to replace him or her, and that number goes up for higher positions. The Society for Human Resources Management (SHRM) says it’s even higher – up to five times the person’s salary.
Why Do Bad Hires Cost So Much?
Consider all of the expenses that go into hiring a candidate. Some interviews require travel, hotels and meals. New hires also receive training and orientation. If your business involves employees in the training and mentoring process, they are taken away from their daily responsibilities, bringing down productivity.
Termination costs also need to be factored in, such as Cobra, unemployment and potential litigation if the bad hire sues you for wrongful dismissal. It happens. However, most of the costs come from having to do the hiring process all over again – and hoping for a better fit this time around.
How to Avoid Hiring the Wrong Person
Working with a recruiting agency that specializes in your field can significantly reduce the chance of bringing the wrong person into your company. Executive staffing firms are committed to filling positions with top talent, so you can expect all candidates to be prescreened and have passed multiple tests.
Better yet, agencies look beyond matching skill sets and tap into personality and character traits. The purpose is to find a candidate that not only possesses the appropriate skills but also fits into the culture of your organization.
Talent Plus Staffing provides exceptional results thanks to our highly qualified and prescreened pool of applicants. You will see a significant return on investment when using our services – and an end to bad hires.