The Ridiculous Costs of a Bad Hire
Hiring the wrong person for the wrong job will prove to be a costly mistake. There are many direct and indirect costs that will put a significant dent in the companies bottom line and productivity.
Bottom Line Costs
There are many costs to take into account when an employee has to be terminated from their role. Costs will come in the form of:
• Hiring costs
• Total compensation given
• Disruption costs
• Cost of maintaining employee
• Severance pay
• Failures, mistakes and missed business opportunities
As an example, a second level manger on a salary of $62K per year who has to be fired after two and a half year will cost the company to the tune of 840,000 dollars. You can apply these costs to any level candidate to find out exactly what it would costs the company.
Turnover Related Costs
On average, 75 % of demand for hiring new employees is to just replace the workers who have left the company for one reason or another. The average costs of a new hire is $57,968 (not including any potential training costs).
The American Society for Training & Development (ASTD) has estimated that Organizations in the U.S. have spend $125.8 billion on employee learning and development in 2009 alone. The cost of employee turnover for a small business with only 64 employees is almost $8,000.
The Cost of Loyalty
1 out of every 3 employed people maintains some sort of contact with coworkers, customers, management or supervisors outside of their regularly scheduled working hours. Among these employees, 44 % of them feel they are highly overworked.
It isn’t just the costs that should concern you when making a decision to hire a new employee. Your good and loyal employees might end up having to work even harder to make up for hiring the wrong person. This puts the good relationship with current employees in danger and there is a risk of losing valuable employees.
Always remember, a company is only as good as the people who work for it.