The Real Cost Of Hiring The Wrong Person

People are the single most important part of any organization. Most consumers are willing to pay more for a great experience solely based on the people involved in a given organization. Knowing that most consumers won’t settle for anything short of a clearly superior product or service, hiring the right person is critical for the success of your organization.

It is crucial to understand the costs associated with a bad hire, as it can negatively affect the organization as a whole.  The Society of Human Resource Managers found that there are five areas that are specifically impacted:

  • 41% Loss of productivity of the department
  • 40% lost time to recruit and train the replacement
  • 37% lost cost to recruit and train the replacement
  • 36% employee morale negatively affected
  • 22% negative impact on client engagement

Even high-churn positions can be greatly impacted by a bad hire.  Looking at the general causes of bad hires gives you the ability to address each one with a remedy that fits.  So, what causes a bad hire?

  • Need to fill the job quickly (unrealistic expectations)
  • Insufficient talent pool (many inexperienced people applying)
  • Incorrect evaluation process (didn’t check references, previous jobs, went on gut feeling, etc.)
  • Just made a mistake (hey we are all human)

The impact of these problem areas flow throughout the organization and can influence all business operations – even areas of the business where the employee was not directly hired.

The impact of a bad hire is not always understood in real response, but it has a powerful sway on the bottom line.  According to The Society of Human Resources Management and a Harris Interactive poll, the cost of a bad hire can be up to $50,000. Avoiding this brings more money to the table for retaining talent, growing the organization, and creating a better environment.

Still have questions about recruiting efficient employees? Feel free to contact us.